Nifty trades above 5,400 mark; broader markets also trade on firm note

The benchmark equity indices pared some of their gains but are still trading in positive territory in late afternoon session. Meanwhile, most of the Asian markets settled in green and all of the European markets were trading in positive territory while US index futures were also trading in the green in screen trade, these positive global sentiments boosted the local investors sentiments back home. In the BSE sectoral space, realty counter surged on the back of short covering in DLF, which surged more than three percent and was the major index gainer, while auto stocks also advanced. There was no sectoral loser on the BSE. The broader markets are also trading firm; the BSE Mid-cap and Small-cap indices rose 0.86% and 0.92%, respectively. The market breadth on the BSE was in favour of advances in the ratio of 1545:1040 while 120 scrips unchanged.

Some readymade garment manufacturing companies are trading higher as FM is likely to announce some relief for ready-made garments in his statement on the Finance Bill in Parliament. Stocks like Arvind, Raymond, Alok Industries and Welspun were trading higher as under pressure from the garment industry over levy of excise duty on branded garments. The finance ministry may also suggest some changes to its Budget proposals. While a complete rollback of the duty is ruled out, it is likely to make the duty optional for garment manufacturers, although with some riders.

The BSE Sensex surged 154.16 points or 0.86% at 17,993.21. The index touched a high and a low of 18,041.22 and 17,878.80, respectively.

The BSE Mid-cap and Small-cap indices rose 0.86% and 0.92%, respectively.

All the sectoral indices were trading in the green. Realty up 1.97%, Auto up 1.46%, Public Sector Undertakings (PSU) up 1.17%, Healthcare (HC) up 1.13% and Consumer Durables (CD) up 1.06% were the major gainers.

The top gainers on the Sensex were Maruti Suzuki up 3.42%, DLF up 3.19%, Bharti Airtel up 2.36%, Jaiprakash Associates up 2.05% and Cipla up 1.89% whereas HDFC Bank down 0.15% and HUL down 0.06% were the only losers on the index.

The Reserve Bank of India (RBI) said on Tuesday that it preferred greater amount of long-term and stable flows through foreign direct investment (FDI) into the country rather than often short-term oriented foreign institutional investment (FII) to bridge the current account deficit (CAD) that faces.

The Governor of the central bank D Subbarao said that while inflow of foreign capital was welcome for bridging the CAD, the RBI would always prefer the stable inflows in terms of FDI, which comes with a long term commitment, rather than volatile portfolio inflows which can reverse in case of even a small change in either domestic of global economic scenario.

In fact the RBI had raised the issue in its last two monetary policy reviews as well. The Central bank had expressed concern about the widening of the CAD and the nature of its financing in its third quarter review released on Jan 25. Going by the recent robust export performance though, the CAD for 2010-11 is now estimated to come lower than earlier expected, at around 2.5% of GDP.

However, even as the CAD this year has been financed comfortably, the central bank stressed in its latest policy review released last Thursday that funding pattern of CAD was still a concern. It observed that there should be continued focus on the quality of capital inflows with greater emphasis on attracting long-term funds, including through the FDI, so as to enhance the sustainability of the balance of payments (BoP) over the medium-term.

The concerns raised by the central bank are in face of the fact that FDI into India has registered a sharp decline in the last calendar year. While policy makers have been blaming the decline on week global economic scenario, the development has been rather against the trend seen in other developing countries. A recent report by the United Nations Conference on Trade and Development (UNCTAD) had observed that in the last calendar year, emerging market economies (EMEs) attracted more foreign investment than developed countries for the first time in history as the global economic engine shifts to the EMEs. Despite the fact that FDI into India has gone down which has been attributed at least partly to lengthy procedures and delays in environmental and other clearances.

The S&P CNX Nifty advanced 49.75 points or 0.93% at 5414.50. The index touched a high of 5428.15 and a low of 5376.15, respectively.

The top gainers on the Nifty were Maruti Suzuki up 3.89%, DLF up 2.91%, Bharti Airtel up 2.84%, SAIL up 2.16% and M&M up 1.96%.

On the other hand, Suzlon down 0.76%, BPCL down 0.34%, Power Grid down 0.31% and HDFC Bank down 0.07% were the only losers on the index.

Most of the Asian markets settled in the green. Shanghai Composite added 0.34%, Hang Seng soared 0.76%, Nikkei 225 advanced 4.36%, KLSE Composite climbed .09% Seoul Composite gained 0.51%, Straits Times advanced 0.64% and Taiwan Weighted jumped 0.48%; while Jakarta Composite dipped 0.03%.

European markets were trading in green; FTSE surged 0.26%, DAX climbed 0.03% and CAC 40 gained 0.38%.

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0nMycDCwcjA==