Local equity markets remain range bound in positive terrain

The local equity markets are trading in positive terrain in the late-afternoon session. The major indices have been moving in a tight range for well over a couple of hours, and have edged up a bit towards the final hours as investors mood remain positive on the eve of new year and positive cues from regional peers.Meanwhile Dow futures, and all European markets were also trading in positive terrain with over one percent of gain.Back home the Sensex was trading firm above 20,600 mark and the Nifty was trading above 6,150 level. Metals gained the most followed by realty, consumer durables and banking stocks. It is expected that steel prices will go up by about 5% later this week due to higher raw material prices, making it the second price hike in two months in the world's fastest growing steel market after China and it has given a spurt in the metal counters. On the flip side, Information Technology stocks were witnessing some profit booking in trade. The broader market is outperforming the frontline counters and the market breadth on the BSE is extremely positive; there were 2124 shares on the gaining side against 780 shares on the losing side, while 93 shares were unchanged. 

The BSE Sensex increased 92.59 points or 0.45% at 20,601.68. The index touched a high and a low of 20,664.80 and 20,566.93 respectively.

The BSE Mid-cap and Small-cap indices rose 1.02% and 1.74%, respectively.

The main gainers in the BSE sectoral space were Metal up 2.22%, Consumer Durables (CD) up 0.97%, Reality up 0.89%, Bankex up 0.74%, Power up 0.74%.

On the other hand,Information Technology (IT) down 0.16% was the only loser in the BSE sectoral space.

The major gainers on the Sensex were  Reliance Infra  up 3.56%,Tata Steel up 3.48%, Sterlite  Indutries up 3.43%, Reliance Communication  up 3% and  JP Associates was up by 2.83%.

On the flip side, Bajaj Auto down 3.67%, Wipro down 1.23%,NTPC down 0.95%, NTPC down 0.87%, TCS down 0.56%, Hero Honda down 0.55% were the major losers in the BSE sectoral space

The Indian government is considering a proposal to cap the foreign direct investment (FDI) in the pharmaceutical sector under the automatic route at 49%. For buying more than 49% stake, a foreign company will have to take approval from the foreign investment promotion board (FIPB). At present 100% FDI is allowed under the automatic route in pharma sector. 

There have been a lot of discussions between officials from the ministry of commerce and industry and the ministry of health on the issue. Both the ministries are in favour of a 49% cap on the automatic route and mandating the rest of investment to be routed through the FIPB. A note in this regard has been sent to the finance ministry which has the final say in terms of allowing or capping the FDI.

The reason behind the proposal is that the multinational pharma giants are increasingly looking towards acquiring Indian drug players. Already some of the domestic heavyweights have sold their business fully or in part to multinational players. The trend however threatens to put the healthcare system in the country at mercy of foreign players leading to both the commerce and health ministries raising concerns about it.

The department of industrial policy and promotion (DIPP) has pointed out two major negative impacts of the MNCs taking over the Indian companies. First, after the takeover, the multinationals will use the domestic unit as per their global plans and there would be little in it specifically for Indian needs. Secondly, the takeovers also have implications for affordability of healthcare as pricing of drugs might rise significant under the large foreign companies.

However, the finance ministry is not in favour of immediately rolling back the 100% FDI under the automatic route. The ministry feels that the rollback of a previously liberal regime can send wrong signals about the consistency of government policies. In this wake the commerce and health ministries are conducting a study to ascertain the actual impact of MNC acquisitions following which a discussion between the commerce, health and finance ministries will happen.

The S&P CNX Nifty surged 30.90 points or 0.50% to 6165.40. The index touched a high and a low of 6,178.55 and 6,152.30, respectively. 

The top gainers on the Nifty were Tata Steel up 3.62%, Sterlite up 3.56%, Reliance Infra down 3.31%, Sesa Goa up 3.12% and Jaiprakash Associates up 2.93%.

The top losers on the index were Bajaj Auto down 3.72%, Wipro down 1.28%, ACC down 0.82%, NTPC down 0.77% and TCS down 0.66%.

All regional peers settled in  the green; Hang Seng increased by 1.74%, Jakarta Composite advanced 0.65%, KLSE Composite rose by 0.96%, Straits Times inched 1.43%, Seoul Composite surged  0.93% and Taiwan Weighted moved by 0.59%.

All European markets were also trading positive. CAC-40 zooms 1.45%  and  DAX  increased 1.13% .

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