Markets remain lethargic in trade; Sensex down 52 points

Although still into the negative, the markets managed to recoup some of the losses during the previous hour of trade as the Budget session of parliament kicked off with the President's joint address. The benchmark indices -- Sensex and Nifty -- were trading near their day's low levels. The global cues were also not very encouraging as most of the Asian markets were trading in the red amid prevailing tensions in the Middle East. The US index futures were also showing down-tick in screen trade at this point of time. Back home, among the sectoral indices, oil & gas, capital goods and fast moving consumer goods segments witnessed significant traction while auto, realty, banking, healthcare and consumer durables counters were the major laggards during trade. The broader markets were also mirroring their larger counterparts with BSE mid-cap and small-cap indices declining by 0.77% and 0.68%, respectively. The market breadth on the BSE was in favour of declines in the ratio of 1637:957 while 95 scrips remained unchanged.

The BSE Sensex dropped 52.33 points or 0.29% at 18,159.19. The index touched a high and a low of 18,306.75 and 18,128.36, respectively.

The BSE Mid-cap and Small-cap indices declined 0.77% and 0.68%, respectively.

In BSE sectoral space Auto down 1.84%, Realty down 1.29%, Bankex down 0.76%, Healthcare (HC) down 0.58% and Consumer Durables (CD) down 0.39% were the major losers.

On the flip side, Oil & Gas up 0.29%, Capital Goods (CG) up 0.20%, Fast Moving Consumer Goods (FMCG) up 0.14% and Information Technology (IT) up 0.10% were the only gainers on the BSE sectoral space.

Meanwhile, in order to give a boost to the affordable housing concept, Industry body Assocham has urged the government to re-introduce the tax based incentive scheme in the forthcoming Budget for 2011-12. It also wants a core sector tag for the real estate industry to help bring down prices of homes and hence boost demand.

The industry body has, in a letter addressed to the Union Finance Minister Pranab Mukherjee said the tax based incentives under the section 80IB (10) of the Income Tax Act should be extended by five years in the coming budget.  The industry body feels that these incentives will not only help boost the demand for real estate sector but also help social inclusion by generating more affordable houses. 

The government had in last year's budget extended a similar scheme by one year keeping in mind the state of the economy, but given the fiscal constraint is understood to be unwilling to extend the scheme again. The real estate industry however feels that continuation of the scheme is a must for increase in affordable housing construction, something that the government would also like to see as part of its social inclusion agenda.

'The realty firms must be encouraged through fiscal incentives to construct small dwelling units at affordable prices, which should go a long way in uplifting the social status of 'aam aadmi',' said the industry body adding that tax incentives will not impact revenue much as these will boost the volumes, compensating for lower rate of taxation. Another demand raised by Assocham is that the sector should be accorded the long pending status of an industry for purpose of availing long term and short term finances like other industries. It should be provided with a separate ministry for better policy making and should have an independent regulator to ensure such policies in letter and spirit by all the parties concerned.

The industry body is also seeking core sector status for real estate, particularly for integrated affordable housing project development from the regulators like the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI). This will help solve the funding problem for the realtors and help bring down the cost of projects and making the 'affordable houses' all the more affordable. Finally, the industry body also wants greater tax concession for first time house buyers to distinguish them for people who houses as an investment.

The top gainers on the Sensex were Wipro up 2.67%, Sterlite Inds up 1.87%, Jindal Steel up 1.13%, Rel Infra up 1.11% and RIL up 0.82%.

Tata Motors down 3.66%, DLF down 2.32%, Tata Power down 2.30%, Hero Honda down 2.28% and NTPC down 1.74% were the top losers on the index.

India Inc wants the government to ease the rules for overseas merger and acquisition (M&A) in order to let the growing industry expand its footing overseas rapidly. The Industry body CII has taken the demand to the government and urged the finance ministry to come up with requisite changes in forthcoming General Budget to be presented on Feb 26.

Global economic scenario has changed rapidly over last few years and a lot of assets are now available at much more attractive prices that they were like a decade ago. Also, with their rising size the strength of Indian companies has been rising and these are now looking to adopt best international practices for which overseas acquisition are very helpful.

The CII has submitted a memorandum to the Department of Industrial Policy and Promotion (DIPP), which is the apex body framing the foreign direct investment (FDI) norms for the country, saying that the current provisions in Companies Act, Competition Act and SEBI Takeover Code have a lot of confusion due to contradicting clauses and leaves the Indian companies in grey over this important emerging trend.

It has therefore requested the DIPP that it should frame new norms for allowing Indian companies to enter into M&A with foreign companies and also for the vice versa. Even as the DIPP will have to address the technical part, the finance ministry should go ahead and announce the agenda in the forthcoming Budget so that the companies can have clarity on the matter at the earliest.

The S&P CNX Nifty dipped 20.20 points or 0.37% to 5438.75. The index touched a high and a low of 5483.55 and 5432.20, respectively. 

The top gainers of the Nifty were Wipro up 2.84%, Sterlite Inds up 1.84%, Rel Infra up 1.49%, ACC up 1.32% and Rel Capital up 1%.

The top losers of the index were Tata Motors down 4.02%, Hero Honda down 2.53%, DLF down 2.43%, Tata Power down 2.34% and Sesa Goa down 2.33%.

Rest of the Asian markets were trading mostly in the red. Hang Seng dipped 0.26%, Jakarta Composite tripped 0.01%, Straits Times declined 0.51%, Seoul Composite shed 0.39% and Taiwan Weighted slipped 0.05%.

On the flip side, Shanghai Composite jumped 0.94%, KLSE Composite rose 0.55% and Nikkei 225 gained 0.14%.

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