Sensex continues sanguine trades in late morning session

Indian stock markets went through a stable session on Thursday’s trade as the benchmark equity indices traded with good gains of around a percent and stayed firmly above the psychological 16,600 (Sensex) and 5,000 (Nifty) levels. After a strong opening, the frontline gauges held on to the gains and traded in a narrow range, as investors seldom showed signs of profit booking. Sentiments in the session were firmly supported by the encouraging cues from money market where rupee recovered by a hefty 60 paise to 53.24 against the US dollar after the Reserve Bank tightened norms for utilization of the foreign currency fixed deposit funds to check outflow of forex. Besides measures announced by the RBI to check outflow of forex, euro's gains against the US dollar overseas also helped the rupee to recover from all-time low and drive domestic equity market higher. Market participants remained in optimistic mood despite majority of stock markets in the Asian region trading on a cautious note with around a quarter percent cut. Investors in Asia remained worried following the overnight plunge in US markets where the Dow extended its losing streak for the sixth consecutive day. However, the downside in most markets were capped as sentiments were supported by reports that the board of European Financial Stability Facility (EFSF) has decided to make a payment of 5.2 billion euro in emergency aid to Greece, overcoming opposition from some euro zone member states.

Back home, there appeared absolutely no evidence of position squaring as investors resorted to across the board value buying after the recent sharp sell-off in local bourses. The Capital Goods counter remained the leading gainer in the BSE sectoral space with over one and half a percent gains while investors also were seen covering hefty short positions in the rate sensitive Banking and Auto pockets which soared over a percent each. Though no sectoral index languished in the negative terrain, some heavyweight individual names like Maruti Suzuki, Infosys and Coal India bucked the optimistic trend and traded with notable losses.

Moreover, the broader markets traded on an optimistic note with strong gains of around a percent in late morning trades. The bourses surged on good volumes of over Rs 0.8 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1431:837 while 117 scrips remained unchanged.

The BSE Sensex is currently trading at 16,658.20 up by 178.62 points or 1.08% after trading as high as 16,669.62 and as low as 16,515.62. There were 27 stocks advancing against 3 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 0.92% and Small cap climbed 0.65%.

On the BSE sectoral space, Capital Goods up 1.58%, Bankex up 1.46%, Oil & Gas up 1.44%, Auto up 1.11% and Power up 1.02% were the only gainers, while there were no laggards in the space.

BHEL up 2.71%, M&M up 2.40%, L&T up 1.99%, Cipla up 1.98% and Tata Power up 1.94% were the major gainers on the Sensex, while Maruti Suzuki down 1.51%, Infosys down 0.74% and Coal India down 0.23% were the only losers in the index.

Meanwhile, foreign insurers and their domestic partners have been demanding an increase in the FDI cap to 49% to fund business expansion. The Union cabinet is expected to approve the amended Insurance Laws Bill retaining FDI in insurance at 26%. It is also expected that the bill will be tabled in the Parliament in the current Budget session.

The government had introduced the Insurance Laws (Amendment) Bill in the Rajya Sabha in 2008 recommending that the FDI cap in the sector be raised to 49%, which was later sent to the Parliament’s standing committee. The standing committee however did not agree with the provision and stated that it was ‘without any sound and objective analysis of the status of the insurance sector following liberalisation’.

It further remarked that the ‘Increased role of foreign capital may lead to the possibility of exposing the economy to the vulnerabilities of the global market, flight of capital outside the country and also endangering the interest of the policy holders’.

Foreign insurers and their domestic partners have been demanding an increase in the FDI cap to 49% to fund business expansion. The panel, headed by senior BJP leader Yashwant Sinha, has agreed to the need of bringing in comprehensive changes in the outdated laws governing the insurance sector.

The S&P CNX Nifty is currently trading at 5,023.45, higher by 48.65 points or 0.98% after trading as high as 5,037.95 and as low as 4,984.15. There were 42 stocks advancing against 8 declines on the index.

The top gainers on the Nifty were IDFC up 4.73%, Cairn up 4.21%, BHEL up 2.55%, Axis Bank up 2.48% and Kotak Bank up 2.39%.

Ranbaxy down 1.81%, Maruti down 1.56%, PNB down 1.52%, Infosys down 0.98% and Asian Paints down 0.32% were the major losers on the index.

In the Asian space, Shanghai Composite gained 0.15%, KLSE Composite rose 0.22% and Taiwan Weighted added 0.11%.

On the other hand, Hang Seng declined 0.84%, Jakarta Composite eased 0.26%, Nikkei 225 slipped by 0.24%, Straits Times Index dropped by 0.25% and KOSPI Composite shed 0.24%.