Bourses gain momentum; broader indices crawl higher

Local equity markets have once again picked up momentum as the investors grabbing the opportunity are picking up fundamentally strong beaten down stocks. However, the flip flop of the bourses could be attributed to the persisting volatility on account of traders shuffling their positions from May to June series since the near month May 2011 derivatives contract expires on Thursday. Indian benchmark indices are showcasing resilience despite negative global cues on the back of surge of the large cap stocks.  Market Bellwether -- Reliance Industries (RIL) gained over 1%. The company has recently reported to be in talks with banks to arrange as much as $1.5 billion in dollar-denominated loans to replace debt maturing in about two years that has higher interest costs. Meanwhile, another Index heavyweight --BHEL-- too was enticing a gain of over 0.50% after being smashed by over 7% in previous trading session. Short covering on the prevailing value has led the stock into green. Also, ICICI Bank is one of the top gainers on the 30 scrips sensitive Index.

On the global front, the U.S. stocks closed at their lowest levels in a month on Monday as renewed concerns about the euro zone debt crisis triggered a steep sell-off.  Meanwhile, Asian stocks  though are trading mixed at this point of time but may resume declines after the prior session's sell-off as fears about the euro zone's worsening debt problems and volatile commodity prices kept investors on edge. The US future indices too are trading mixed in the screen trade.

Back home, Stocks from Realty, Metal and Fast Moving Consumer Goods (FMCG) counters are the weak spells. Realty stocks are down as India's largest realty firm by sales DLF has plunged over 2% ahead of its Q4 results due today. Meanwhile, Metal shares edged lower following reports of prosecution against the mining major Sesa Goa by SFOI (Serious Fraud Investigation Office), a corporate fraud investigation body for under invoicing export and import of Rs 1,000 crore. Sesa Goa was down over 2%, National Aluminum Company was down over 1%and SAIL too plunged over 2%. The barometer index on Bombay Stock Exchange (BSE) --Sensex-- reclaiming its 18,000 physiological level is seen at a sniffing distance of 18,100 mark. Similarly, the widely followed benchmark index on National Stock Exchange (NSE)--Nifty-- is trading above its 5,400 physiological level. Meanwhile, the broader indices after edging lower in the initial trade are currently seen in the shade of green. The overall market breadth on the BSE is broadly in the favour of advances which have thumped declines in the ratio of 1052:942, while 90 shares remained unchanged.

The BSE Sensex is currently trading at 18,071.53, up by 78.20 points or 0.43%. The index has touched a high and a low of 18,109.05 and 17,996.34 respectively. There were 19 stocks advancing against 11 declines on the index.

The broader indices too were up with marginal gains; the BSE Mid cap index gained 0.11% while Small cap index added 0.04%. 

The top gaining sectoral indices on the BSE were, Capital Goods (CG) up by 1.43%, Consumer Durable (CD) up by 0.91%, Bankex up by 0.85%, Power up by 0.67% and Oil & Gas up by 0.52%. While, Realty down by 1.17%, Metal down 0.66 %, FMCG down 0.50 %, PSU down 0.13% down by 0.17% remained the major losers on the index.

The top gainers on the Sensex were BHEL up by 1.82%, L&T up by 1.68%, ICICI Bank and Maruti Suzuki were up by 1.44%, and HDFC up by 1.14%.

DLF down by 2.15%, Hindalco down by 1.88%, Mahindra & Mahindra down by 1.35%, Hindustan Unilever down by 0.84% and ITC down by 0.76% were the top losers on the index.

Meanwhile, it seems, once much hyped attraction and interest of Special Economic Zones (SEZs) is slowly fading among the industrial houses and promoters in India, there was enormous hurry to set up SEZs across the country after the idea got concretized once the SEZ Act came into force in February 2006. However, apart from land acquisition-related issues the introduction of Minimum Alternate Tax (MAT) to be levied on the developer and occupiers of SEZs, effective this fiscal, seems to be the reason behind the apathy and now around 53 promoters including Parsvnath SEZ, Unitech Realty Projects and Uttam Galva Steels developers have requested more time from the government for completing their project.

Other developers like Reliance Haryana SEZ, NIIT Technologies, Navi Mumbai SEZ , Indiabulls Industrial Infrastructure and Mahindra and Mahindra have also appealed for extra time from the Board of Approval (BoA), headed by Commerce Secretary Rahul Khullar, a 19 member inter ministerial body that look after the SEZs related issues.  In addition to this, 6 promoters have already approached the ministry of commerce for surrendering their projects; these include Maharashtra Industrial Development Corporation for its sector specific SEZ and Satyam Computer Services for its IT/ITeS zone. The promoters and developers who applied for de-notification are giving the rationales like global economic slowdown, problems related to land acquisition and imposition of minimum, alternative tax (MAT) on the development and units.

The 46th meeting of BoA is scheduled to be held on May 31. At its last meeting held on March 25, the board had deferred the decisions on some applications, most of which were from poll-bound states like Tamil Nadu, West Bengal, Kerala and Assam. So far, 377 SEZs have been formally notified, of which 133 are in operation. SEZs have emerged as a major source for attracting investment and increasing exports in the country and Exports from these zones grew by 43.1 per cent during the 2010-11 fiscal. However, uncertainty over tax exemptions to new SEZs has led declining interest in the tax free enclaves. Investors are also cautious about the new draft Direct Taxes Code (DTC).

The S&P CNX Nifty is currently trading at 5,409.10, up by 22.55 points or 0.42%. The index has touched a high and low of 5,417.75 and 5,384.85 respectively. There were 33 stocks advancing against 17 declines on the index.

The top gainers of the Nifty were BHEL up by 1.99%, L&T up by 1.76%, Maruti Suzuki up by 1.59%, ICICI Bank up by 1.38% and Ambuja Cement up by 1.30%.

The top losers of the index were DLF down by 2.44%, Hindalco down by 2.07%, HCL Tech down by 1.30%, Gail India down by 1.23% and Sesa Goa down by 1.16%.

Asian markets were trading mostly in the green; Hang Seng gained 0.07%, Nikkei 225 added 0.11%, Straits Times rose 0.05% and Seoul Composite expanded 0.35%.

On the flip side, Shanghai Composite declined 0.68%, KLSE Composite dropped 0.07%, Taiwan Weighted was down by marginal 0.02% and Jakarta Composite lost 0.18%.

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