Markets trade higher in early deals; shrug-off tepid global cues

Indian equity benchmarks, after making sluggish opening, have clawed back into the green terrain in early deals on Monday and are trading with a gain of over a quarter of a percent. Sentiments remained jubilant after Finance Minister P Chidambaram emphasized that the economy is presently more stable as the fiscal and current account deficits are under control and the economy is more stable than it was 18 months ago. Consistent buying from foreign institutional investors (FIIs) in the past seventeen consecutive sessions too supported the sentiments. FIIs bought shares worth Rs 5,044.54 crore in the week, including provisional data of March 7, 2014.

On the global front, the US markets made a flat closing on Friday and trade remained in consolidation mood despite good jobs data, traders were a bit cautious with the rising unemployment rate. Most of the Asian equity benchmarks were trading lower at this point of time after China reported an unexpected plunge in exports, raising concern the slowdown in economic growth is accelerating.

Back home, stocks of banking license aspirants edged higher in early deals as the RBI Governor Raghuram Rajan said that the central bank would take a decision in the next few weeks, subject to approval of the Election Commission. Telecom stocks like, IDEA Cellular, Bharti Airtel and Reliance Communication too edged higher, as the Planning Commission deputy chairman Montek Singh Ahluwalia said that operationalisation of the model code of conduct would delay spectrum sharing and trading by three to four months though the government had in principle approved the concept.

On the sectoral front capital goods, banking and oil and gas witnessed the maximum gain in trade, while software, healthcare and technology remained the top losers on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 979 shares on the gaining side against 639 shares on the losing side while 79 shares remain unchanged.

The BSE Sensex opened at 21819.19; about 100 points lower compared to its previous closing of 21919.79, and touched a high and a low of 21710.43 and 21539.44 respectively. The index is currently trading at 21977.55, up by 57.76 points or 0.26%. There were 16 stocks advancing against 14 declines on the index.

The overall market breadth has made a strong start with 57.69% stocks advancing against 37.65% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.67% and Small cap gained 0.39%. 

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.99%, Bankex up by 1.80%, Oil and Gas up by 1.36%, Power up by 1.17% and Realty up by 0.78%, while IT down by 1.42%, Healthcare down by 0.93%, TECK down by 0.76%, FMCG down by 0.38% and Metal down by 0.19% were the top losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 2.67%, RIL up by 2.30%, L&T up by 2.29%, HDFC Bank up by 2.02% and Bharti Airtel up by 1.92%. On the flip side, TCS was down by 1.68%, Coal India was down by 1.64%, Infosys was down by 1.63%, Hindalco was down by 1.56% and Dr Reddys Lab was down by 1.48% were the top losers on the Sensex.

Meanwhile, Upholding its decision over increased net worth requirement for mutual funds companies, the Securities and Exchange Board of India (SEBI) has stated that it is imperative to raise net worth requirement for asset management companies as industry players need strong financial base for better penetration as well as to boost growth. SEBI has recently raised the minimum capital requirement for setting up a mutual fund house to Rs 50 crore from the existing Rs 10 crore.

The recent SEBI’s move has become an issue for small mutual fund houses which now have to raise their capital to comply with the new rule. On the other hand, SEBI member S Raman has asserted that there is less scope for the market regulator to have a rethink on this issue. Highlighting sound financial strength a necessary requirement for mutual fund industry, S Raman asserted that around 87 percent of mutual fund AUM is concentrated in top 15 centres and there is a need to go beyond T-15 cities to increase mutual funds penetration. Referring to the issue of declining retail investors investment in mutual fund products, Raman emphasized that SEBI is planning to give more additional tax concession of Rs 50,000 for investors who invest in pension products through mutual fund route and also demanded the government for higher income tax cap to facilitate more savings into MF products.

SEBI has been taking measures over the past few months to revive the growth of Indian mutual funds industry. The regulator has also planned to come out with a long-term policy soon for mutual funds to help the industry create more understanding and better positioning of products amongst investors. It expects its new long-term policy for mutual funds to help their total asset base grow to Rs 20 lakh crore within five years, from about Rs 9 lakh crore currently. Furthermore, SEBI and the government are also making changes in some policies of mutual funds so that industry could get access to a substantial amount of money from the state-administered provident fund and other retirement programmes.

The CNX Nifty opened at 6,491.70; about 35 point lower as compared to its previous closing of 6,526.65, and has touched a high and a low of 6,548.75 and 6,487.35 respectively. The index is currently trading at 6,542.85, up by 16.20 points or 0.25%. There were 28 stocks advancing against 21 declines and one stocks remain unchanged on the index.

The top gainers of the Nifty were IndusInd Bank up by 4.62%, Bank of Baroda up by 2.99%, IDFC up by 2.81%, HDFC Bank up by 2.44% and RIL up by 2.32%. On the flip side, Ranbaxy down by 2.94%, Coal India down by 1.85%, TCS down by 1.75%, Infosys down by 1.59% and Dr. Reddys Laboratories down by 1.47% were the top losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 34.69 points or 1.69% to 2,023.22, Hang Seng decreased by 365.62 points or 1.61% to 22,294.87, KLSE Composite contracted 8.97 points or 0.49% to 1,823.29, Nikkei 225 crumbled by 118.88 points or 0.78% to 15,155.19, Straits Times dropped 14.10 points or 0.45% to 3,122.16, KOSPI Composite slipped by 19.56 points or 0.99% to 1,955.12 and Taiwan Weighted was down by 48.27 points or 0.55% to 8,665.69.

On the flip side, Jakarta Composite was up by 0.41 points or 0.01% to 4,686.30.