SHORT COVERING

Indian frontline equity indices bounced in afternoon trades on Wednesday and are currently trading at the session's high levels thanks to the hefty across the board short covering. Benchmarks comfortably gyrated by the psychological 4,850 (Nifty) and 16,150 (Sensex) levels in the session as investors hunted for badly beaten down but fundamentally strong bargains amid the tentative recovery in risk appetite globally. After getting some indications that India's economic activity is re-gathering momentum with the manufacturing and services PMI signaling expansion, another confirmation of the fact came to the fore as Asia's third largest economy registered sharp surge of 56% in foreign direct investment (FDI) in the month of November 2011. However, the upside for local markets was limited as leads from Asian space remained mixed while the European futures too signaled cautious opening for the market there amid increasing nervousness in the region ahead of German, Spanish and Italian debt auctions which undermined the optimism over US corporate earnings and strong economic reports. Back home, on the BSE sectoral front, the rate sensitive Realty index once again led the gainers with over four and half a percent gains while the beaten down Metal counter too shone brightly with over two percent gains. On the flipside only information technology counter remained under moderate pressure as the rupee strengthened to one month highs in the previous session while investors also were cautious ahead of the quarterly earnings season which will formally commence with bellwether Infosys' result announcement on January 12, 2012.
Moreover, the broader markets fervently rallied to garner significant gains and even outperformed their larger peers by a fat margin. The bourses gained on good volumes of over Rs 0.50 lakh crore. The market breadth on BSE was dominantly in favor of advances in the ratio of 1877:724 while 95 scrips remained unchanged.
The BSE Sensex is currently trading at 16,243.41 up by 78.32 points or 0.48% after trading as high as 16,244.44 and as low as 16,145.19. There were 21 stocks advancing against 9 declines on the index.
The broader indices were trading on a positive note; the BSE Mid cap index surged 1.31% and Small cap soared 1.90%.
On the BSE sectoral space, Realty up 4.69%, Metal up 2.38%, CD up 1.34%, Bankex up 1.10% and Power up 0.94% were the major gainers while IT down 0.51% and TECk down 0.31% were the only losers in the space.
Sterlite up 4.54%, Hindalco up 4.47%, DLF up 3.98%, Tata Steel up 2.69% and Hero Moto up 1.79% were the major gainers on the Sensex, while M&M down 2.05%, TCS down 1.38%, Cipla down 1.04%, Bharti Airtel down 0.91% and Jindal Steel down 0.64% were the major losers in the index.
Meanwhile, the government has finally notified 100 per cent foreign direct investment (FDI) in single brand retail. Currently, only 51 per cent FDI is allowed in single brand retail. The notification was issued soon after the Foreign Investment Promotion Board (FIPB) cleared French retailer Christian Louboutin's proposal to set up retail chains in the country. The 100 per cent ownership of single brand is likely to attract brands including Swedish firm IKEA dealing in furnishing products which has shown keen interest in setting up shops in India with full ownership.
On November 24 last year, the government had allowed 100 per cent FDI in single brand retail and 51 per cent FDI in multi-brand retail. However after political uproar opening up of multi-brand retail was put on hold. The development can also be viewed as a signal on multi-brand retail opening in the near future. Though, the government might not buzz, at least till after the elections in five states.

As per notification, the foreign retailer setting up shop in the single-brand category must source at least 30 per cent from Indian small and medium enterprises (SMEs). Small industries have been defined as those where investment in plant and machinery is up to $1 million (around Rs 5 crore). The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.

'We have now allowed foreign investment up to 100 per cent with the stipulation that in respect of proposals involving FDI beyond 51 per cent there will be mandatory sourcing of at least 30 per cent of the total value of the products sold from Indian small industries/village and cottage industries, artisans and craftsmen. This step will provide stimulus to domestic manufacturing, add value and help in technical upgrade of our local small industry,' Commerce and Industry Minister Anand Sharma said.
The S&P CNX Nifty is currently trading at 4,874.15, higher by 24.60 points or 0.51% after trading as high as 4,877.20 and as low as 4,841.60. There were 36 stocks advancing against 14 declines on the index.
The top gainers on the Nifty were Hindalco up 4.75%, Sterlite up 4.75%, DLF up 4.52%, IDFC up 4.02% and Sesa Goa up 3.58%.
M&M down 2.04%, Power Grid down 1.46%, TCS down 1.40%, Cipla down 1.30% and Cairn down 1.27% were the major losers on the index.
Asian markets were trading mixed; Seoul Composite was down 0.44%, Jakarta Composite was down 0.45% and Shanghai Composite was down by 0.54%.
On the flip side, Hang Seng up 0.10%, Nikkei 225 was up 0.19%, Straits Times was up 0.36% and Taiwan Weighted was up by 0.13%.