Indian frontline indices are displaying a smart performance in the Monday afternoon trades as they have sharply bounced back from intraday lows amid extremely volatile trades. The psychological 4,800 and 16,050 levels proved as strong supports for the benchmarks as they got a technical bounce from those levels on the back of hefty short covering in beaten down rate sensitive counters like bankex, realty and automobile while some technology and software shares too pared losses. The sentiments improved after European stocks rebounded to trade on a positive note after getting off to a weak start. Meanwhile, Prime Minister Manmohan Singh's avowed that the Planning Commission has proposed to set the Twelfth Five Year Plan target at 9 percent GDP growth. He further affirmed that the commission has pointed out that given the uncertainties in the global economy, and the challenges in the domestic economy even a 9 percent target is feasible only if some difficult decisions are taken by the government. Moreover, the bourses also got a lift from rally in oil upstream and downstream company shares while the airline companies too flew higher after international crude oil prices came under severe pressure on reports that the six month long civil upheaval in OPEC member Libya appeared to be coming to an end as the momentum against the Gaddafi regime reached a tipping point. However, the upside chances for the markets were limited by the pessimistic leads evident in Asian markets. Domestically, the political overhang from the standoff between Team Anna and the government over the contours of the Lokpal institution also has did its share of damage on market sentiments. On the BSE secotral space, the gains in Oil & Gas, FMCG and Power counters outweighed the losses in Bankex, IT and Realty pockets.
Moreover, the broader markets also showed some resilience and recovered from the session's lows amid volatile trades, performing in line with their larger peers. The bourses plummeted on large volumes given that this is the first day of August month F&O expiry week while the market breadth on BSE was favor of advances in the ratio of 1259:1242 while 104 scrips remained unchanged.
The BSE Sensex is currently trading at 16,171.28 up by 29.61 points or 0.18% after trading as high as 16,237.41 and as low as 16,046.48. There were 13 stocks advancing against 17 declines on the index.
The broader indices were trading on a flat note; the BSE Mid cap index slipped 0.08% and Small cap rose 0.28% respectively.
On the BSE sectoral space, Oil & Gas up 0.79%, FMCG up 0.76%, Power up 0.71%, CG up 0.39% and CD up 0.32% were the only gainers while Bankex down 1%, IT down 0.86%, Realty down 0.67%, Healthcare down 0.52% and Auto down 0.48% were the major losers on the index.
JP Associates up 3.11%, Jindal Steel up 2.34%, Tata Power up 1.92%, BHEL up 1.77% and ONGC up 1.50% were major gainers on the Sensex, while DLF down by 2.30%, Sun Pharma down 2.24%, M&M down 1.96%, TCS down 1.70% and Cipla down 1.69% were the major losers on the index.
Meanwhile, the committee of secretaries (CoS) has decided to enlarge the definition of back-end infrastructure for the proposed Foreign Direct Investment (FDI) in multi brand retail, which allow big international retail companies to open their stores in India.
The CoS has asked the department of industrial policy and promotion (DIPP) to work out the definition and include three new areas as a part of back end infrastructure investment. The three new areas are design improvement, quality control and packaging of products. Earlier the definition mainly comprised investment in logistic and procession of agriculture goods.
The expansion of the back-end infrastructure will give greater flexibility to the foreign investors for structuring their investment in the retail sector. After the intense debate over the issue, the CoS has reached to the agreement that one of the key conditions for allowing FDI up to 51% in Multi-brand retail will be that minimum of 50 of their investment has to be compulsorily in the back-end infrastructure.
The recommended policy, which has been sent to cabinet for the final call, had set the minimum for investment in the retail sector is set to be around $100 million. The DIPP's decision of including design improvement was in the line to the recommendation of the ministry of micro, small and medium enterprises. The ministry of micro, small and medium enterprises has suggested that the foreign retailers must invest a small percentage of their profit, such as 1%, in design improvement, developing quality control mechanism and creating innovations in packaging for their small-scale suppliers.
The DIPP has agreed to include the recommendation and indicated it would be included in the definition of back end infrastructure to incentivize big retailers to investment. However, the DIPP is still in discussion, whether it should made compulsory and certain percentage of profit fixed for it. In order to provide more flexibility to foreign investors, the DIPP is also discussion on the issue of the investment in back end infrastructure by the foreign investors or by a different company on behalf of the investors.
Many different government departments are having intense debate over the issue of inclusion of this clause, the department of economic affairs under the finance ministry has strongly opposed this clause, arguing that there would be many commodities for which 50% back end infrastructure may not be needed. The ministry of statistics and programme implementation is in support of ministry of Finance's view. It has made argument that such limitation should not be laid because retailers would make such investments in any case to run their business successfully.
However, the department of consumer affairs is in support with the clause and it want to increase the limitation to the more than 75% from 50% for investment in back end infrastructure. It has recommended that the FDI in working capital should not be allowed. However, the DIPP rejected the recommendation of the department of consumer affairs stating it to be unreasonable. Money being fungible, distinguishing between capital expenditure and working capital would be a problem, DIPP said
The Reserve Bank of India argued that in the current working condition, data of investment were collected only for balance of payments purposes and post investment monitoring was not undertaken. Therefore, the RBI would not be in position to monitor compliance of the back-end investment clause. Hence, it was decided that foreign investors must be self-certify compliance with the condition and keep records so that the government can check.
The S&P CNX Nifty is currently trading at 4,854.45, higher by 8.80 points or 0.18% after trading as high as 4,868.35 and as low as 4,808.75. There were 24 stocks advancing against 26 declines on the index.
The top gainers of the Nifty were IDFC up 4.40%, JP associates up by 3.62%, R Infra up 3.23%, R Com up 2.64%, and Jindal Steel up 2.53%.
Seas Goa down 4.20%, Axis Bank down 2.78%, HCL down 2.58%, Sun Pharma down 2.35% and PNB down 2.28% were the major losers on the index.
Moreover, the broader markets also showed some resilience and recovered from the session's lows amid volatile trades, performing in line with their larger peers. The bourses plummeted on large volumes given that this is the first day of August month F&O expiry week while the market breadth on BSE was favor of advances in the ratio of 1259:1242 while 104 scrips remained unchanged.
The BSE Sensex is currently trading at 16,171.28 up by 29.61 points or 0.18% after trading as high as 16,237.41 and as low as 16,046.48. There were 13 stocks advancing against 17 declines on the index.
The broader indices were trading on a flat note; the BSE Mid cap index slipped 0.08% and Small cap rose 0.28% respectively.
On the BSE sectoral space, Oil & Gas up 0.79%, FMCG up 0.76%, Power up 0.71%, CG up 0.39% and CD up 0.32% were the only gainers while Bankex down 1%, IT down 0.86%, Realty down 0.67%, Healthcare down 0.52% and Auto down 0.48% were the major losers on the index.
JP Associates up 3.11%, Jindal Steel up 2.34%, Tata Power up 1.92%, BHEL up 1.77% and ONGC up 1.50% were major gainers on the Sensex, while DLF down by 2.30%, Sun Pharma down 2.24%, M&M down 1.96%, TCS down 1.70% and Cipla down 1.69% were the major losers on the index.
Meanwhile, the committee of secretaries (CoS) has decided to enlarge the definition of back-end infrastructure for the proposed Foreign Direct Investment (FDI) in multi brand retail, which allow big international retail companies to open their stores in India.
The CoS has asked the department of industrial policy and promotion (DIPP) to work out the definition and include three new areas as a part of back end infrastructure investment. The three new areas are design improvement, quality control and packaging of products. Earlier the definition mainly comprised investment in logistic and procession of agriculture goods.
The expansion of the back-end infrastructure will give greater flexibility to the foreign investors for structuring their investment in the retail sector. After the intense debate over the issue, the CoS has reached to the agreement that one of the key conditions for allowing FDI up to 51% in Multi-brand retail will be that minimum of 50 of their investment has to be compulsorily in the back-end infrastructure.
The recommended policy, which has been sent to cabinet for the final call, had set the minimum for investment in the retail sector is set to be around $100 million. The DIPP's decision of including design improvement was in the line to the recommendation of the ministry of micro, small and medium enterprises. The ministry of micro, small and medium enterprises has suggested that the foreign retailers must invest a small percentage of their profit, such as 1%, in design improvement, developing quality control mechanism and creating innovations in packaging for their small-scale suppliers.
The DIPP has agreed to include the recommendation and indicated it would be included in the definition of back end infrastructure to incentivize big retailers to investment. However, the DIPP is still in discussion, whether it should made compulsory and certain percentage of profit fixed for it. In order to provide more flexibility to foreign investors, the DIPP is also discussion on the issue of the investment in back end infrastructure by the foreign investors or by a different company on behalf of the investors.
Many different government departments are having intense debate over the issue of inclusion of this clause, the department of economic affairs under the finance ministry has strongly opposed this clause, arguing that there would be many commodities for which 50% back end infrastructure may not be needed. The ministry of statistics and programme implementation is in support of ministry of Finance's view. It has made argument that such limitation should not be laid because retailers would make such investments in any case to run their business successfully.
However, the department of consumer affairs is in support with the clause and it want to increase the limitation to the more than 75% from 50% for investment in back end infrastructure. It has recommended that the FDI in working capital should not be allowed. However, the DIPP rejected the recommendation of the department of consumer affairs stating it to be unreasonable. Money being fungible, distinguishing between capital expenditure and working capital would be a problem, DIPP said
The Reserve Bank of India argued that in the current working condition, data of investment were collected only for balance of payments purposes and post investment monitoring was not undertaken. Therefore, the RBI would not be in position to monitor compliance of the back-end investment clause. Hence, it was decided that foreign investors must be self-certify compliance with the condition and keep records so that the government can check.
The S&P CNX Nifty is currently trading at 4,854.45, higher by 8.80 points or 0.18% after trading as high as 4,868.35 and as low as 4,808.75. There were 24 stocks advancing against 26 declines on the index.
The top gainers of the Nifty were IDFC up 4.40%, JP associates up by 3.62%, R Infra up 3.23%, R Com up 2.64%, and Jindal Steel up 2.53%.
Seas Goa down 4.20%, Axis Bank down 2.78%, HCL down 2.58%, Sun Pharma down 2.35% and PNB down 2.28% were the major losers on the index.
Asian markets traded on a somber note, Shanghai Composite plunged 0.73%, Hang Seng sank 1.19%, Jakarta Composite slumped 1.89%, KLSE Composite shaved off 1.05% Nikkei 225 plummeted 1.04%, Straits Times sulked 1.79%, Seoul Composite nosedived by 1.96% and Taiwan Weighted receded 0.41%.
The European markets traded on mixed note as France's CAC 40 advanced 1.22%, Germany's DAX shed 0.56% and London's FTSE gained 0.44%. 
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