Sensex gains momentum on fresh buying by funds and retail investors

A late recovery in the US markets overnight, bounce back of Asian peers and moderation in crude oil prices has created the feel-good sentiment for the Indian equity markets which are trading confident enough ahead of the much awaited RBI's mid quarterly monetary policy review tomorrow. Local Indices have gained more momentum in the mid morning session, thanks to fresh buying by funds and retail investors, driven by recovery in other Asian bourses after Tuesday's meltdown. On the global front, Asian stocks bounced back in trade due to short covering, while, US future indices continued to trade low in the screen trade. Another fire broke out on Wednesday at a stricken Japanese nuclear plant that has sent low levels of radiation drifting into Tokyo.  Backhome, strong buying was seen almost across the board all the sectoral indices on the BSE were trading in green, however, outperforming among them were the stocks from Consumer Durables, Realty, Banking counters. The benchmark 50 share index--Nifty --on National Stock Exchange (NSE) after claiming back its 5500 level was contently trading above it, while 30 share index--Sensex-- on Bombay  Stock Exchange (BSE) was off the day's high of 18400 but was still up by 182 points. The broader indices were doing better than their larger peers and were up by 1.32% (Midcap Index) and 1.59% (Smallcap index) respectively. The overall market breadth on BSE was in the favour of advances that lashed declines in the ratio of 1740:537, while, 74 shares remained unchanged.

The BSE Sensex is currently trading at 18,350.05, up by 182.41 points or 1.00%. The index has touched a high of 18,400.55 and a low of 18,263.68 respectively. There were 28 stocks advancing against just 2 declines on the index.

The broader indices were out performing benchmarks; the BSE Mid cap and Small cap indices surged 1.32% and 1.59% respectively. 

The top gaining sectoral indices on the BSE were, Consumer Durable (CD) up by 2.33%, Realty up by 1.64%, Bankex up by 1.49%, PSU up by 1.34 and Power up by 1.27%. While there were no losers on the index.

The top gainers on the Sensex were Reliance Infra up by 4.14%,ICICI Bank up by 2.14%,  Sterlite Industries up by 2.12%, DLF up by 1.88% and M&M up by 1.85%.

HUL down by 0.97% and Hero Honda down by 0.25%, were the only losers on the index.

Hero Honda have been on loosing spree since the catastrophe striked Japan as the company has Japanese partners where a powerful earthquake has led to massive destruction. Seemingly the struggle with erstwhile Japanese partner Honda over the Joint Venture has costed Hero Honda both market share as well as profitability in the Indian motorcycle market. Meanwhile, HUL lost momentum post reports of the company reporting lower Q4 advance tax numbers of Rs 150 crore against 170 crore in the similar period a year ago.

The S&P CNX Nifty is currently trading at 5,507.50, higher by 57.85 points or 1.06%.The index has touched a high of 5,517.60 and a low of 5,475.95 respectively. There were 46 stocks advancing against just 4 declines on the index.

The top gainers of the Nifty were Reliance Infra up by 4.11%, BPCL and Reliance Power were up by 2.45%, Sterlite Industries up by 2.19% and ICICI bank up by 2.13%.

HUL down by 1.20%, GAIL down by 0.59%, Hero Honda down by 0.46% and Wipro was down by 0.19%, were the major losers on the index.

Meanwhile, in the wake of rising inflation, volatility of markets, increase in crude oil prices and foreign investors pulling their money out of India, the government is mulling over scrapping the contentious Press Note 1 of 2005, a move that would let all foreign investors go solo or set up a new joint venture (JV) in the same line of business where they already have a JV in India.

Press Note 1 of 2005 seeks to protect the interest of domestic companies in JVs by ensuring that foreign companies obtain the permission of their local partner, if they decide to go it alone or partner with another Indian company in the same line of business as the existing venture. Press Note 1 requires the foreign investor to get a no-objection certificate (NOC). The NOC has to be obtained under the supervision of the Foreign Investment Promotion Board (FIPB).

The Committee of Secretaries (CoS) under the chairmanship of Cabinet Secretary KM Chandrasekhar will take the decision regarding the same soon as it is restricting several foreign firms to invest in India and a positive step in this direction will help the country to attract more foreign direct investment (FDI), at a time when India's FDI has shown a fall. Getting FIPB approval and NOC from Indian partners is a time-consuming exercise, which is a hurdle to multinational companies (MNC) keen to invest in India and which is leading to MNCs bypassing India to invest in China.

Meanwhile, the relaxed guidelines will enable foreign companies to invest in India without these hurdles leading to free flow of foreign investments. India's FDI during April-January 2010-11 declined by 25% to $17 billion from $22.9 billion in the same period last year. The government in the Union Budget 2011-12 had announced various other policy initiatives to attract foreign investments.

The Asian markets were trading mostly in the green; Shanghai Composite was up by 0.39%, KLSE Composite added 0.14%, Nikkei 225 gained 3.27%, Straits Times rose 0.20%, Seoul Composite increased 1.40% and Taiwan Weighted surged 1.06%.

On the flip side, Hang Seng was down  by 0.44% and Jakarta Composite declined 0.65%.

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