Indian equity indices trimmed off its loss to trade in a positive zone at the highest point of the day with buying witnessed among the broad based index and frontline equities. Meanwhile, in the broader market on reports that FDI holding in MNCs would be raised to 75%, media stocks witnessed an exuberant rally. According to the data made available by the Securities and Exchange Board of India (SEBI), foreign institutional investors (FIIs) now own Indian equities to the tune of $101 billion, the highest in history. FII ownership of Indian equities accounted for 16.9% of the BSE 500 market capitalization as of May 31, 2011. This is substantially higher than their $77 billion holdings a year ago, which accounted for 13.5% of the market cap. Most of the Asian markets are closed today on account of public holiday and those which are open are trading in red while the European markets are trading mix. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,500 and 18,400 levels, respectively. The market breadth on the BSE was in favor of declines in the ratio of 1182:1464 while 116 scrips remained unchanged.
Moreover, according to the Institute of Economic Growth (IEG), the headline inflation is expected to come under 8% after remaining above the 8% mark for more than year. The forecast of IEG is much in the line with Finance minister's view on inflation. The wholesale Price Index (WPI) inflation is likely to be 8.47%, 8.24% and 7.93% for May, June and July 2011 respectively, IEG said in its monthly monitor report. The inflation measured by WPI, stood at 8.66% for month of April. Inflation was 9.04% in March and 9.54% in February. This fall in inflation was mainly because of fall in certain food items.
The BSE Sensex gained by 48.71 points or 0.27% at 18,425.19. The index touched a high and a low of 18,434.11 and 18,258.42 respectively.
The BSE Mid-cap index declined 0.33% and Small-cap index gained 0.05%.
On the BSE sectoral front, IT up 0.76%, Teck up 0.67%, Capital goods up 0.66%, Healthcare up 0.50% and Consumer Durables up 0.32% remained the top gainers. While, Auto down 0.68%, Metal down 0.54%, Oil & Gas down 0.35%, PSU down 0.11% and Power down 0.07% were the major laggards in the BSE sectoral space.
The top gainers on the Sensex were Cipla up 2.07%, HDFC up 2.07%, TCS up 1.11%, L&T up 1.00% and HDFC Bank up 0.91%. On the flip side, JP Associates down 2.30%, M&M down 1.44%, Hindalco down 1.32%, ONGC down 1.05% and Maruti down 0.92% were the major losers on the index.
Meanwhile, the wait for new banking licenses is likely to be over soon as the Reserve bank of India (RBI) forwarded its recommendations to finance ministry and RBI is also in consultation with a number of stakeholders. Last year central bank had floated a discussion paper on new banking licenses which proposed that the Non-Banking Financial Company and corporates should be allowed to promote bank. According to the Finance Ministry, financial inclusion is one of the vital elements in the new banking guidelines.
The Ministry of Finance, Department of Economic Affairs (DEA), Secretary R Gopalan said, "Reserve Bank of India is in consultation with the finance ministry. They are also in consultation with a number of stakeholders. They will come up with draft guidelines soon and put it in the public domain for consultation."
DEA secretary also said there is also a need to amend the Banking Regulation Act, to make sure the RBI is in a position to obtain information from entities related to providing or getting a license. On the timeline issuance of the new banking licenses DEA secretary said, "It has been introduced in the parliament. The standing committee will go through it and give their findings. Then it will go back to the parliament for final approval."
The finance minister in his budget speech for 2010-11 had announced that the central bank is considering giving some additional banking licenses to private companies and NBFCs in order to expand the geographical coverage of banks. Since then, the list of candidates seeking banking licenses has been increased in the last year. The RBI is in against of granting licenses to private corporate houses and has raised its concerns over intra-group lending by banks.
The S&P CNX Nifty gained 14.80 points or 0.27% at 5,531.55. The index touched high and low of 5,534.65 and 5,479.85 respectively.
The top gainers on the Nifty were Cipla up 2.05%, HDFC up 2.01%, IDFC up 1.74%, SUN Pharma up 1.46% and ACC up 1.40%. On the other hand, JP Associates down 1.89%, GAIL down 1.76%, M&M down 1.67%, Sesa Goa down 1.66% and BPCL down 1.28% and were the major losers on the index.
On the Asian front, Jakarta Composite down 0.53%, KLSE Composite declined 0.49%, Nikkei 225 drifted 1.18% and Straits Times fell 1.09%. Stock markets in China, Hong Kong, South Korea and Taiwan remained closed on account of public Holiday.
The European markets are trading mix with France's CAC 40 lost 0.47%, Germany's DAX gained 0.21% and London's FTSE declined 0.12%.
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