Markets make a cautious but green start ahead of the interim budget

The Indian markets have made a cautious but positive start on Monday morning, extending their sudden spurt in the last session. Though, the traders are remaining a bit cautious ahead of the interim budget, scheduled to be presented by the Finance Minister P. Chidambaram later in the day. Much is not expected from the budget, but the minister is likely to read out the numbers that fiscal deficit was contained at 4.8% of GDP and is not spinning out of control. The Finance Minister is also expected to cut excise duties on products like automobiles to rev up the manufacturing sector, extend interest subsidies on bank loans to exporters and farmers, and announce increased allocations on schemes that benefit the rural masses. Back on street, while most of the sectoral indices barring few are holding their last session’s gains, the broader markets are yet not looking confident and are trading flat. There were lots of scrip specific actions based on the result announcements made on the last official earnings season.

The market breadth remained in favour of advances, as there were 893 shares on the gaining side against 646 shares on the losing side, while 97 shares remained unchanged.

The BSE Sensex opened at 20438.87; about 72 points higher compared to its previous closing of 20366.82, and touched a high and a low of 20481.76 and 20420.45 respectively. The index is currently trading at 20427.78, up by 60.96 points or 0.30%. There were 16 stocks advancing against 14 declines on the index.

The overall market breadth has made a strong start with 54.58% stocks advancing against 39.49% declines. The broader indices too were trading mixed; the BSE Mid cap index down was by 0.02% and Small cap gained 0.21%. 

The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.27%, Realty up by 0.67%, Power up by 0.56%, IT up by 0.47% and Bankex up by 0.56%, while Metal down by 0.71%, Auto down by 0.16%, Oil & Gas down by 0.13% and PSU down by 0.08% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 2.30%, Dr Reddys Lab up by 1.74%, ONGC up by 1.29%, HDFC up by 1.08% and Axis Bank up by 0.88%. On the flip side, Coal India was down by 1.09%, RIL was down by 0.71%, Sun Pharma was down by 0.57%, BHEL was down by 0.51% and  Hero MotoCorp was down by 0.48% were the top losers on the Sensex.

Meanwhile, in a major overhaul of corporate governance norms, market regulator Securities and Exchange Board of India (SEBI) has approved a new corporate governance code, aimed at improving transparency and disclosure standards of listed companies in India. The norms, which are consistent with the new companies’ law ratified last year to enhance shareholder rights, would come into effect from October 1,2014 and cover a wide range of subjects like CEO salaries, women on board, succession plans and mandatory whistle-blower policy.

Market regulator’s norms come against the backdrop of demands for clear information on the way Indian firms operate. The norms are expected to make stocks attractive to retail investors again, who have been selling heavily since 2008 due to trust deficit.

As per the new norms, companies will now have to disclose remuneration policies of CEOs and executive directors, related-party transactions and appointment and resignations of independent directors, a move which is likely to invite huge criticism from corporate.

Further, SEBI has recommended tax incentives for mutual funds and proposed that the Employee Provident Fund Organization (EPFO) should invest 15% of its corpus in equities and MF schemes. Besides, it added that members of EPFO, who are earning more than Rs 6,500 a month, be given an  option that a part of their corpus could be invested in a MF product.

Additionally, the market watchdog announced higher net worth for asset management companies, apparently aimed at weeding out smaller funds. It upped the minimum capital requirement for an asset management company from Rs 10 crore to Rs 50 crore.The CNX Nifty opened at 6,057.10; about 8 point lower as compared to its previous closing of 6,048.35, and has touched a high and a low of 6,079.35 and 6,057.10 respectively. The index is currently trading at 6,063.75, up by 15.40 points or 0.25%. There were 29 stocks advancing against 20 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were Tata Power up by 2.51%, Dr. Reddy's Laboratories up by 1.77%, HDFC up by 1.23%, Ambuja Cements up by 1.06% and HCL Tech up by 1.05%. On the flip side, NMDC down by 4.43%, Coal India down by 1.25%, BHEL down by 0.91%, Reliance Industries down by 0.90% and Sun Pharma down by 0.74% were the top losers on the index.

The Asian equity indices were trading in green; Shanghai Composite gained11.13 points or 0.53% to 2,126.98, Hang Seng strengthened by 187.24 points or 0.84% to 22,485.65, Jakarta Composite spurted 35.59 points or 0.79% to 4,543.63, KLSE Composite rose 9.57 points or 0.53% to 1,828.94, Nikkei 225 surged 92.18 points or 0.64% to 14,405.21, Straits Times gained 23.59 points or 0.78% to 3,062.30, Seoul Composite jumped 7.23 points or 0.37% to 1,947.51 and Taiwan Weighted was up by 20.03 points or 0.24% to 8,533.71.