Benchmarks turn positive after a soft opening

The Indian equity markets have opened with moderate losses amid volatility, but it immediately turned positive on sustained buying by funds and retail investors. On the global front, Greece polity finally has an agreement on austerity on Thursday; Greek Finance Minister said they have struck a deal with private bondholders. But global markets were flat yesterday even after this deal approved. While, most of the Asian equity indices were trading in the red at this point of time. Back home, investors are keenly awaiting the Indian industrial production (IIP) numbers which economists at large expect to expand at 2.7% versus 5.9%, on month-on-month basis. The sentiment was also supported after; ACC hit record high after strong Q4 results. HPCL also surged after strong Q3 results. Tata Steel gained as the company issued an encouraging future outlook after reporting third quarter net loss after trading hours on February 9, 2012. On the sectoral front, auto, consumer durable and metal remained the top gainers while, realty, software and technology remained the only losers on the index. The broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 1,159 shares on the gaining side against 520 shares on the losing side while 49 shares remained unchanged.

The BSE Sensex opened at 17,817.59; about 13 points lower compared to its previous closing of 17,830.75, and has touched a high and a low of 17,888.59 and 17,798.11 respectively.

The index is currently trading at 17,868.62, up by 37.87 points or 0.21%. There were 19 stocks advancing against 11 declines on the index.

The overall market breadth has made a positive start with 67.07% stocks advancing against 30.09% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.69% and 0.92% respectively.

The top gaining sectoral indices on the BSE were Auto up by 0.89%, CG up by 0.89%, Metal up by 0.78%, Oil and Gas up by 0.74% and PSU up by 0.64%. While, Realty down by 1.04%, IT down by 0.39% and TECk down by 0.12% were the only losers on the index.

The top gainers on the Sensex were Tata Steel up by 2.67%, Tata Power up by 2.33%, L&T up by 1.31%, Bajaj Auto up by 1.28% and M&M up by 1.06%.

On the flip side, DLF was down by 2.47%, Maruti Suzuki was down by 1.39%, Hindalco was down by 1.26%, ICICI Bank was down by 0.82% and Cipla was down by 0.78% were the top losers on the Sensex.

Meanwhile, exports from the Special Economic Zones (SEZs) during April-December 2011, registered an increase of 17% year-on-year (y-o-y) to Rs 2.60 lakh crore. On the other hand, for the financial year 2010-11, the total exports from the tax-free zone stood at Rs 3.15 lakh crore, a growth of 43.11% over the same period previous year. Further, shipments from Export Oriented Units (EOUs) have contributed 34% to the country's total exports in 2010-11.

Investments worth Rs 2.49 lakh crore had been made in SEZs and direct employment of 815,308 persons had been generated as on December 2011. These facts were stated by the Chairman of Export Promotion Council for EOUs and SEZs (EPCES), Jatin R. Mehta. He stated that EOUs and SEZs are engines of economic growth and urged the Finance Minister, Pranab Mukherjee, to restore exemption from minimum alternate tax (MAT) for SEZ units and developers since it was felt that the imposition of MAT on SEZs had led to a fall in investments. The EPCES also asked the finance minister to revamp the EOU scheme by favourably considering the recent recommendations of a government panel.

The government had granted 584 formal approvals for setting up of SEZs. Out of which, 381 SEZs have been notified so far and 148 SEZs are in operation as on December 31, 2011. Out of operational SEZs, 17 are multi-products SEZs and remaining are IT/ ITES, engineering, electronics, hardware, textile, bio-technology, gem & jewellery.

The SEZs, which were publicized as major vehicles for investment and export promotion, were allowed a host of tax exemptions under a special SEZ Act of 2005. Under the law, incentives for SEZ units include 100% income tax exemption on export profits earned for the first 5 years, a 50% for the next 5 years and another 50% exemption on re-invested profits in the following 5 years.

The early phase saw developers lining up in big numbers for the projects. It was also seen as a real estate opportunity. However, following concerns about loss of tax revenue by the finance ministry, the government has proposed phasing out the tax sops for the units commencing operations after 2014. Moreover, farmer’s protests have made land acquisition a problem area.

The S&P CNX Nifty opened at 5,399.80; about 13 points lower compared to its previous closing of 5,412.35, and has touched a high and a low of 5,427.75 and 5,399.15 respectively.

The index is currently trading at 5,423.90, higher by 11.55 points or 0.21%. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were BPCL up by 3.99%, Tata Steel up by 3.01%, Sesa Goa up by 2.77%, Tata Power up by 2.38% and ACC up by 1.58%.

DLF down by 2.94%, Hindalco down by 1.26%, Siemens down by 1.09%, Maruti down by 1.07% and Reliance Infra down by 0.73%, were the major losers on the index.

All the Asian markets barring Chinese Shanghai were trading in the red; Hang Seng was down 121.33 points or 0.58% to 20,888.68, Jakarta Composite was down 67.09 points or 1.69% to 3,911.90, Nikkei 225 was down 30.92 points or 0.34% to 8,971.32, Straits Times was down 5.92 points or 0.20% to 2,975.25, Seoul Composite was down 20.08 points or 1.00% to 1,994.54 and Taiwan Weighted was down by 24.48 points or 0.31% to 7,886.30.

On the flip side, Shanghai Composite was up by 8.39 points or 0.36% to 2,357.98.