Benchmarks pare gains; Nifty below 5,300 mark

Indian equity indices are still trading in a positive zone but pared off some gains after Finance Minister Pranab Mukherjee said that the government has resumed talks with Mauritius on a double taxation avoidance agreement. The Indian government has been under pressure from opposition parties to renegotiate a treaty blamed for huge revenue losses, as Indian investors ship their money to Mauritius and then funnel it back untaxed. Market participants were seen piling up the positions in IT, Oil & Gas and Teck while, selling was witnessed among Realty, Power and FMCG. All the Asian markets were trading strong in green while, the European markets too were trading on optimistic note as concerns about a potential Greek debt default eased. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,300 and 17,700 levels, respectively. The market breadth on the BSE was in favor of advances in the ratio of 1387:1254 while, 134 scrips remained unchanged.

Moreover, Reliance Communications (RCom), India's second-biggest mobile carrier, has added 25 lakh cellular users in May. Following the said addition, the company's total subscriber count stood at 14.12 crore. Earlier, the company had a total of 13.87 crore mobile subscribers at end of April. State-owned Mahanagar Telephone Nigam (MTNL) has added 20,604 new users during the month of May, boosting its total base to 52.30 lakh at the end of May, 2011. Idea Cellular, India's fifth-biggest mobile carrier has added up 18 lakh new subscribers during the month of May. Following the said addition, the company's total subscriber count stood at 9.37 crore. Bharti Airtel has added 24.50 lakh mobile subscribers in May, taking its total base to 16.71 crore.

The BSE Sensex is currently trading at 17,622.43  up by 115.80 points or 0.66% after trading as high as 17,714.88 and as low as 17,504.27. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap and Small cap indices advanced by 0.32% and 0.27% respectively. 

On the BSE sectoral space, IT up 1.16%, Oil & Gas up 1.11%, Teck up 0.99%, Bankex up 0.64% and Metal up 0.54% were the major gainers, while, Realty down 0.62%, Power down 0.13%, FMCG down 0.08%, Consumer Durables down 0.07% and Capital Goods down 0.06% were the only losers on the index.

The top gainers on the Sensex were TCS up by 2.81%, HDFC up by 1.99%, RIL up by 1.69%, Hero Honda up 1.55% and Hindalco up 1.40%. On the flip side, JP Associates down by 2.91%, DLF down by 1.26%, Wipro down by 0.83%, BHEL down by 0.71% and Cipla down by 0.69% were the top losers on the index.

Meanwhile, after the three months of consecutive decline, foreign direct investment (FDI) flows into India jumped by 43% to $3.12 billion in April 2011, against $2.17 billion received in April 2010.  This increase in FDI inflow is mainly because of recovery in global markets, mainly in western economies. 'The figure is showing a recovery in the global markets, especially in European economies,' an official said.

In April, the sectors that attracted the maximum FDI, includes service sector ($658 million), construction activities ($311 million), power ($256 million), computers and hardware ($96 million), telecommunications ($46 million), Automobile industry ($266 million), computer software and hardware ($36 million) and housing and real estate ($38 million).

During April, the maximum FDI came from Singapore ($1.17 billion), followed by Mauritius ($976 million), Japan ($235 million), France ($220 million) and Cyprus ($170 million). The major investors in India are Mauritius, Singapore, the US, UK, Netherlands, Japan, Germany and the UAE.

The increase of 43% in April is viewed as a positive indication in the global recovery; the FDI inflows registered a decline of 48% ($1.2 billion) in January, 30% ($1.04 billion) in February and 11% ($1 billion) in March. This continues reduction in FDI inflow was due to the slow global recovery and debt crisis of European economies. During 2010-11 foreign direct investment reduced by 25% to $19.4 billion from $25.83 billion in 2009-10, and in 2009-10 FDI fell by 5% to $25.83 billion from $27.33 billion in 2008-09.

The Department of Industrial Policy and Promotion (DIPP) has also initiated steps, including consolidation of all related rules and regulations into a single document, to boost FDI in the country. By relaxing FDI norms, the DIPP had allowed Indian companies to issue equity against the import of capital goods and liberalized the conditions for foreign investment for production and development of seeds.

The S&P CNX Nifty is currently trading at 5,293.80, higher by 35.90 points or 0.68% after trading as high as 5,322.45 and as low as 5,257.00. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were IDFC up by 3.43%, TCS up by 2.92%, Ambuja Cement up by 2.79%, HDFC up by 2.36% and Axis Bank up by 2.17%. On the flip side, JP Associates down by 2.85%, DLF down by 1.53%, BPCL down by 1.13%, Maruti down by 1.09% and SAIL down 0.94% were the major losers on the index.

All Asian markets have shunned their recent somber run and have bounced back in the session as Shanghai Composite climbed 1.01%, Hang Seng surged 1.16%, Jakarta Composite soared 1.76%, KLSE Composite added 0.10%, Nikkei 225 jumped 1.13%, Straits Times amassed 1.64%, Seoul Composite accumulated 1.41% and Taiwan Weighted advanced 0.78%.

The European markets are trading in green, with France's CAC 40 rose 1.04%, Germany's DAX added 0.86% and London's FTSE gained 0.77%.

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