Indian frontline equity indices rebounded in afternoon trades on Tuesday and are currently trading at the session's high levels thanks to the hefty short covering in technology and software counters while the sanguine opening for European counterparts too buttressed local sentiments. The psychological 4,850 and 16,200 levels proved as strong supports for the benchmarks as they bounced from those levels after investors hunted for badly beaten down but fundamentally strong bargains amid the tentative recovery in risk appetite globally. Marketmen across the globe rejoiced as Chinese manufacturing data, which rose to highest levels in two months, eased concerns of a downturn in the world's second-largest economy, injecting some confidence into recently battered markets. While, the European equities too garnered strength following the positive leads from Asia and all the indices surged by around one and half a percent in early trades. On the domestic front, political sentiment weighed on the markets as the anti corruption crusader Anna Hazare's health appeared to be deteriorating on the eighth day of his hunger strike. Meanwhile, the international crude oil prices rebounded as traders scaled back expectations that Libyan oil would be quickly restored to world markets as fighting raged in Tripoli between rebels and forces loyal to leader Moammar Gadhafi, hurting shares of Airline and oil upstream and downstream companies. On the BSE sectoral space, the badly beaten down IT and TECk shares witnessed huge buying interests while the Consumer durables, capital goods and rate sensitive counters too gained traction. On the other hand, only the defensive - FMCG and PSU shares languished in the red terrain.
Moreover, the broader markets showed a resilient performance and traded with strong gains, outperforming their larger peers by quite a margin. The bourses climbed on good volumes given that this is the second day of August month F&O expiry week while the market breadth on BSE was favor of advances in the ratio of 1555:878 while 101 scrips remained unchanged.
The BSE Sensex is currently trading at 16,448.20 up by 106.50 points or 0.65% after trading as high as 16,455.93 and as low as 16,213.18. There were 17 stocks advancing against 13 declines on the index.
The broader indices were trading on a positive note; the BSE Mid cap index gained 0.87% and Small cap rose 1.04% respectively.
On the BSE sectoral space, IT up 2.71%, TECk up 2.47%, CD up 1.49%, CG up 1.18% and Realty up 0.95% were the major gainers while FMCG down 0.46% and PSU down 0.34% were the only losers on the index.
Bajaj Auto up 7.66%, JP Associates up 5.88%, Bharti Airtel up 5.19%, Jindal Steel up 4.12% and TCS up 3.70% were major gainers on the Sensex, while Coal India down by 2.51%, CIPLA down 2.50%, ONGC down 1.52%, NTPC down 1.18% and ITC down 1.16% were the major losers on the index.
Meanwhile, the aviation Ministry is planning to allow more foreign carriers in the upcoming policy to meet the increasing demand for the international travel that domestic airlines are unable to service. As of now, India has done bilateral air service agreement with 97 nations. However, around half of them are not used as the routes are unprofitable. This move of the government is expected to improve international connectivity and it is also expected to offer competitive rates to consumers.
The Aviation Ministry is planning to work on its policy on air traffic growth projections, the number of nations that remained unconnected and ways to connect them with domestic and foreign carriers. According to an Aviation Ministry official "Why should passengers suffer if domestic carriers can't provide adequate connectivity? They should be given more choice. We have to align transportation with national needs," he added that the work on the new policy would start after October.
Aviation sector experts have opinion that the present sector does not make for an open system, because nations get flying rights depending on sovereignty of air space and negotiations. Moreover, government owned Air India gets first preference to fly on new foreign routes. The private airlines get go-ahead only after Air India is consulted. Along with this, the private players must have five years of domestic operations before they can apply for international flights.
The restoration of existing policy will not only increase the international traffic but it also expected to improve the connectivity. However, for revamp of current policy, ministry has to discuss it with other ministries such as external affairs, commerce and tourism along with the other stakeholders of the aviation sector. The ministry official said "there were no set guidelines on how to capitalize on international aviation."
However, experts have view that, allowing international carriers is unexpected to hit domestic carriers. The increase in competition in the sector would help to check prices and will make domestic carriers competitive and improve their services. Other sectors such Auto, Insurance and Telecom has set the example that, increased competition has benefited domestic consumers. However, entry of foreign carriers would have adverse impact on Air India.
According to experts India needs to be connected with Eastern Europe and African nations in the wake of rise in tourism and business. Further, the five year waiting period for private carriers has been criticized. Former civil aviation ministry joint secretary Sanat Kaul said, 'Young South East Asian airlines take away a lot of international traffic from our country, while our airlines (like IndiGo or SpiceJet) are made to wait for five years. It is an unfair practice and needs a relook.' The ministry official also accepted that the pre-condition on domestic carriers had adversely affect growth on international sector. On the other hand, this rule is not imposed on foreign carriers and is hence distortionary. The S&P CNX Nifty is currently trading at 4,931.60, higher by 32.80 points or 0.67% after trading as high as 4,938.90 and as low as 4,863.80. There were 28 stocks advancing against 22 declines on the index.
The top gainers of the Nifty were TCS up 5.02%, Bajaj Auto up by 3.92%, Axis Bank up 3.42%, Bharti Airtel up 2.76%, and Infosys up 2.62%.
Cipla down 2.69%, NTPC down 1.72%, ONGC down 1.54%, Power Grid down 1.21% and ITC down 0.99% were the major losers on the index.
Asian markets traded on a optimistic note, Shanghai Composite surged 1.29%, Hang Seng soared 1.21%, Jakarta Composite climbed 0.71%, KLSE Composite advanced 0.26% Nikkei 225 jumped 1.22%, Straits Times gained 0.68%, Seoul Composite rocketed by 3.68% and Taiwan Weighted accumulated 3.25%.
The European markets traded on optimistic note as France's CAC 40 advanced 1.73%, Germany's DAX surged 1.22% and London's FTSE gained 1.16%.
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