Indian equities gain strength; trade hovers near day's high

Indian equities gain strength to continue its firm trade hovering near the highest point of the day in the late afternoon session on back of buying in front line counters. The market mood was on optimistic note and investors paid no heeds towards weak trading in European counterparts. The sentiments in the market were bolstered as provisional data showed continuation of buying of Indian stocks by foreign funds on Tuesday, August 07, 2012. Besides, all eyes are now set on the industrial production data for June 2012 which the government will unveil it tomorrow i.e. August 09, 2012. Traders were seen piling up position in Metal, Auto and PSU sector while selling was witnessed in Realty and Consumer Durable sector. In the scrip specific development, Tulip Telecom was trading in green as the company had tied up Rs 400 crore for FCCB repayment and raised Rs 400 crore via debt, internal accruals. Kingfisher Airlines is trading under pressure after the company cancelled over 30 flights from Delhi and Mumbai due to a strike by a section of its employees protesting non-payment of salary. Indiabulls group stocks were reeling under pressure after Veritas Investment Research recommended sell on all the group stocks, on the principle that corporate governance being sacrificed for enriching the controlling shareholders.

On the global front, the Asian markets were trading in green barring Hang Seng and Straits Times while the European markets were trading on pessimistic note. The Italian economy extended the decline for the fourth quarter in a row and German factory orders fell 1.7%, more than estimated in June. Italy’s economy contracted by 0.7 percent in the second quarter, compounding the difficulties for Mario Monti’s technocrat government as it grapples with a debt crisis that threatens the whole euro zone. Besides, ratings agency Standard & Poor’s yesterday revised Greece’s outlook to negative, stating that the debt-ridden euro zone country need more help from its international creditors. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,350 and 17,600 levels respectively. The market breadth on BSE was negative in the ratio of 1262:1390 while 131 scrips remained unchanged.

The BSE Sensex is currently trading at 17,688.86, up by 87.08 points or 0.49% after touching a high of 17,700.36 and a low of 17,605.62. There were 22 stocks advancing against 8 declines on the index.

The broader indices continued to trade in fine fettle; the BSE Mid cap index and Small cap indices added 0.27% and 0.13% respectively.

The top gainers on the BSE sectoral space, Metal up by 1.56%, Auto up by 1.50%, PSU up by 1.39%, IT up by 0.66% and Oil & Gas up by 0.65%, while Realty down by 0.93% and Consumer Durable down by 0.13% were the only losers on the sectoral space.

Mahindra & Mahindra up by 2.88% Hindalco Industries up by 2.82%, Jindal Steel up by 2.27%, Tata Motors up by 2.20% and Sterlite Industries up by 1.87%, were the major gainers on the Sensex, while Bharti Airtel down by 2.48%, Gail India down by 1.59%, ICICI Bank down by 1.07%, ONGC down by 1.04% and TCS down by 0.60% were major losers on the index.

Meanwhile, considering deficient monsoon rains and its impact on rural areas in India, the Reserve Bank of India (RBI) has come up with a breather to the farmers by easing repayment norms for Kisan Credit Cards (KCC). The apex bank has omitted the clause pertaining to mandatory repayment of loans by card holders within a year and has permitted banks to fix the repayment period based on the anticipated harvesting and marketing period for the crops for which loan has been granted.

The decision is expected to benefit over 10 crore KCC holders. RBI notified that KCC could now also be used for making mandatory crop insurance, while continuing with the existing options of withdrawing money from ATMs and getting benefits of asset insurance, personal accident insurance scheme and health insurance. The Finance Ministry confirmed that aids for farmers in replanting alternate crops as well as supply of drinking water and fodder will be assured to tide over the difficult situation.

Monsoon is the life-line of the agriculture sector as only 40 percent of the cultivable area is irrigated. Rain has been 20 percent lower during June-July 2012; affecting kharif crops mainly coarse cereals and pulses. Karnataka, Gujarat, Maharashtra and Rajasthan are facing drought-like situation. Last week, Empowered Group of Ministers (EGoM) on drought had approved diesel subsidy of 50 percent to farmers for saving standing crops and Rs 2,000 crore package for states affected by drought-like situation.

The government had launched KCC Scheme in 1998-99 with a view to provide adequate and timely support from the banking system to the farmers for their cultivation needs including purchase of inputs in a flexible and cost effective manner.

The S&P CNX Nifty is currently trading at 5363.45, up by 26.75 points or 0.50% after trading in a range of 5,367.80 and 5,338.70. There were 36 stocks advancing against 14 declines on the index.

The top gainers on the Nifty were M&M up by 3.27%, Hindalco Industries up by 3.11%, BPCL up by 2.53%, Tata Motors up by 2.14% and Jindal Steel up by 2.12%. While, Bharti Airtel down by 2.47%, GAIL India down by 1.90%, ONGC down by 1.13%, ICICI Bank down by 1.08% and Cairn India down by 1.06% were the top losers on the index.

Most of the Asian indices were trading in green; Kospi Composite Index added 0.87%, Nikkei 225 shot higher by 0.88%, Jakarta Composite rose 0.08%, KLSE Composite jumped by 0.39%, Taiwan Weighted amassed gains of 0.33% and Shanghai Composite inched higher by 0.16%, while Hang Seng index declined by 0.04% and Straits Times shed 0.70%.

The European markets were trading in red with, France’s CAC 40 descended 0.33%, Germany’s DAX dropped 0.26% and the United Kingdom’s FTSE 100 lost 0.42%.