Markets holding early gains but came a bit off the day's high

The Indian equity markets continue trading positive and witnessed buying spree across the board, especially in Auto, realty, IT and pharma. Benchmarks have come a bit off the high point of the day. The markets witnessed some rebounds in the opening trade followed by rally in Asian and US markets after the US Federal Reserve pledged to hold rates near zero for an extended period. Sensex rose by 300 points while Nifty was hovering around 5,150 levels. On sectoral front all the sectors were trading in positive. Sectors like technology, realty, auto, bank, metal and capital goods, which got butchered in previous five sessions, were seeing huge buying interest. Their respective sectoral indices rallied by around 2-3%. On global front Asian stocks were also trading in green on a rebound in U.S. shares, after the Federal Reserve interest rate move. Back home, the market breadth too witnessing positive trend; there were 2,126 shares on the gaining side against 425 shares on the losing side while 64 shares remained unchanged.

The BSE Sensex is currently trading at 17,162.85, up by 304.94 points or 1.81%. The index has touched a high and low of 17,256.46 and 17,093.63 respectively.  There were 26 stocks advancing against just 4 declining ones on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 2.19% and 2.82% respectively.

The top gaining sectoral indices on the BSE were, Auto up by 3.36%, Realty up by 3.28%, IT up by 2.85%, CD up by 2.55%, and Metal up by 2.41% While, there were no losers on the index.

The top gainers on the Sensex were Tata Motors up by 5.90%, Hindalco Industries up by 5.31%, M&M up by 4.61%, DLF up by 4.14% and Infosys up by 3.28%.

On the flip side, ONGC down by 1.92%, Hindustan Unilever down by 0.97%, Bharti Airtel down by 0.76% and Sun Pharma down by 0.35% were the losers on the Sensex.

Meanwhile, in order to further liberalize the portfolio investment route, the government and capital market regulator the Securities and Exchange Board of India (SEBI) on August 9 allowed foreign investors who meet the Know-Your-Customer (KYC) norms, to invest around $3 billion in debt instruments issued by the domestic infrastructure companies.

Finance Minister Pranab Mukherjee in this year's budget had announced to allow foreign investors to invest in SEBI registered Mutual Funds (MFs), who meet the KYC norms. This announcement of Finance Minister was to liberalize the portfolio investment route in the Indian Capital Market. The foreign investor will get the benefits which are available to them for investing in equities. 

Now foreign investors can directly invest around $13 billion in the Indian capital market by using mutual fund route. Earlier, government had limited the investment by foreign institution investors (FIIs) however, in order to bring more stability in the capital flow, government had expanded the limit. Investment from retail investors are considered to be more stable than the portfolio, often called hot money.  

However, the announcement by the government has come at a time when the sentiment in the global markets is bearish on the degrading of the US sovereign and debt crisis in the Euroland. This uncertain global condition has raised fears of slowdown in the capital inflow into India and possible withdrawal of FIIs. This announcement by ministry of finance has come after the Pranab Mukherjee's discussion with the regulators and stakeholders.

On August 9, both Reserve Bank of India and SEBI issued the notification for the same, SEBI said that qualified financial investors (QFI) - which can include individuals, groups or associations, resident in a foreign country that has complied with the KYC norms - can buy units of equity or debt funds in the primary market, but cannot trade in the secondary market. However, the limit for equities is $10 billion, after reaching QFIs investment to $8 billion in equity scheme; SEBI would auction the remaining limit to foreign investors who can then buy the units from funds of their choice. Likewise process would be followed for the investment in debt scheme, after hitting $2.5 billion. The overall limit for investing in debt will be around $25 billion, including FIIs set by the RBI in corporate debt issued by infrastructure companies.

Qualified Foreign Investors (QFIs) is an individual, group or association, resident in a foreign country that is compliant with Financial Action Task Force (FATF) standard and that is a signatory to International Organization of Securities Commission's Multilateral Memorandum of Understanding. QFIs do not include Foreign Institutional Investors or Sub-accounts as these are already permitted to invest in Equity and Debt markets in India as per the extant guidelines of SEBI and RBI.

The S&P CNX Nifty is currently trading at 5,167.35, higher by 94.50 points or 1.86%. The index has touched a high and low of 5,197.95 and 5,146.15 respectively.  There were 42 stocks advancing against 8 declines on the index.

The top gainers of the Nifty were Tata Motors up by 6.15%, Hindalco Industries up by 5.10%, M&M up by 4.96%, DLF up by 4.21% and Reliance Infra up by 3.30%.

On the flip side, ONGC down by 1.80%, HUL down by 1.06%, BPCL down by 1.03%, Bharti Airtel down by 0.92% and GAIL down by 0.77%, were the top losers on the index.

All the Asian equity indices barring Straits Times were trading in the green; Shanghai Composite was up by 1.65, Hang Seng was up by 3.08%, Jakarta Composite was up by 3.07%, KLSE Composite was up by 0.96%, Nikkei 225 was up by 0.95, Seoul Composite was up by 0.62 and Taiwan Weighted was up by 3.25%.

On the flip side, Straits Times was down by 0.62% 

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