Hopes of second wave of reforms turbo-drive benchmarks; Nifty heads closer to 5800 mark

Continued buying by funds and retail investors on expectations of “second wave of reforms” coming soon has mainly turbo- driven Indian equity markets, which now appear set for logging on fourth consecutive session of gains. Besides the upbeat global development, sanguine global leads are also doing well for Indian equity markets, which from the start of trade looked charged to conquer the fort upright straight. Much of the supports seems to be creeping in from stocks belonging to Realty, Bankex and Power stocks, which appearing to be on buyer’s radar, have toppled the BSE sectoral chart. However, the weak spells of the trade emerge to be stocks belonging from Information Technology and defensive Healthcare counters.  Nevertheless shrugging aside the negative, 30 share barometer index of BSE, Sensex, is comfortably sailing past the 19,000 psychological level, not seen since July 8, 2011 while 50 share index of NSE, Nifty, too puffing up gains of over a percent, appears on the way of conquering its 5800 level. The broader indices, additionally, to have lured investor’s attention, thereby clinching gains of over 0.75%.

On the global front, European shares have kick started the session on positive note ahead of key interest rate decisions by the European Central Bank (ECB) and Bank of England. Expectation is that ECB would keep its benchmark rate at a record low of 0.75 percent to allow for further news on the health of the euro zone economy and for Spain to request aid should it decide to do so. Meanwhile, Asian pacific shares look set for a mixed close as investor’s await fresh US economic data.

Back home, the BSE Sensex is currently trading at 19064.75 up by 195.06 points or 1.03% after trading in a range of 19087.60 and 18939.75. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.01% and Small cap index was up by 0.73%.

The top gainers on the BSE sectoral space were, Realty up by 3.98%, Bankex up by 2.16%, Power up by 1.81%, CG up by 1.60% and Oil & Gas up by 1.30. While, IT down by 0.34% and HC down by 0.31% were the top losers on the sectoral space.

The top gainers on the Sensex were BHEL up by 5.81%, ICICI Bank up by 3.31%, HDFC Bank up by 2.11%, Tata Steel up by 2.02% and Bharti Airtel up by 2.01%. On the other hand, Cipla down by 1.12%, Hero MotoCorp down by 0.94%, M&M down by 0.90%, Coal India down by 0.73% and TCS down by 0.44% were top losers on the Sensex.

Meanwhile, the government is ready to ram through the next batch of big-ticket reforms as the cabinet is likely to approve bills that would raise the cap on foreign direct investment (FDI) in insurance firms from 26 per cent to 49 per cent. Further, the cabinet in the same meeting could also deliberate upon the proposal of opening the pension sector to FDI, a controversial issue that has seen much opposition. However, the proposals if through, will come weeks after Prime Minister Manmohan Singh unveiled measures aimed at boosting government finances and attracting foreign investment to revive economic growth.

However, the second round of big-ticket policy changes planned by the government may be harder to impose because unlike foreign investment in retail and aviation, which are enacted by a cabinet decision, opening insurance and pensions requires parliamentary nod. Hence on clearance, the insurance and pension bills will be brought in Parliament in the winter session.

The proposals on FDI in pension and hike in FDI in Insurance was floated by the former finance minister Pranab Mukherjee, which was sent to the Cabinet for approval in May this year, but the decision was deferred, on account of underlying difficulty the centre faced in driving reforms. However, P Chidambaram, who took over as Finance Minister in July this year, immediately resurrected the move.

Insurance reform seems to be the need of the hour, as according to Insurance Regulatory and Development Authority (IRDA) estimates, the sector needs a capital infusion of over Rs 62,000 crore or $12 billion over the next five years.  Further, domestic and foreign insurers, who have invested much money in India over the last decade, have been convincing the government for years to raise the FDI limit to 49 per cent from 26 per cent.

Moreover, the Cabinet is also likely to consider today the final draft of the Companies Bill 2011, which has been prepared after considering recommendations of the Standing Committee and comments from the finance and law ministries. The new bill, which proposes many new norms including companies' spending on Corporate Social Responsibility (CSR) activities, has been in the works for some time.

The S&P CNX Nifty is currently trading at 5,794.50, up by 63.25 points or 1.10% after trading in a range of 5,798.60 and 5,751.35. There were 39 stocks advancing against 11 declines on the index.

The top gainers of the Nifty were BHEL up by 5.92%, BPCL up by 5.45%, DLF up by 4.31%, ICICI Bank up by 3.37% and AXIS Bank up by 3.29%. While, Lupin down by 2.59%, Cipla down by 1.01%, M&M down by 0.97%, Coal India down by 0.92% and Hero MotoCorp down by 0.85% were top losers on the index.

Most of the Asian equity indices were mostly trading in green; Straits Times was up by 0.07%, Hang Seng was up by 0.13%, Jakarta Composite was up by 0.43%, KLSE Composite was up by 0.69%, Nikkei 225 was up by 0.89%. While, Kospi Composite was down by 0.17% and Taiwan Weighted was down by 0.03%.

Markets in China remained closed today for holiday.

European markets kick started the session on sanguine note, with CAC 40 adding 0.13%, FTSE100 gaining 0.32% and DAX rising 0.56%