GAINING STRENGTH

The Indian markets are gaining strength-to-strength, trading near the high points of the day in the afternoon trade. The sector that can be called pulling the markets higher is IT after the better than expected numbers of sector heavyweight TCS which was trading up by over 12%, the company's profit were reported higher by 19% for the quarter, while the full year standalone profit surged by 45%. The numbers have encouraged the other majors of the sector and HCL Technology too was trading higher by over 4% at this point of time. However, there was heavy selling pressure seen in the telecom stocks as the TRAI has proposed a near tenfold increase in the price of 2G spectrum as compared to the 3G. But, justifying the prices set for spectrum allocation, TRAI Chairman J S Sarma said that the recommendations are aimed at liberalising spectrum and enabling operators to take up any technology. Power, consumer durables, and metals too have moved higher, while capital goods sector, down by about half a percent was the laggard. Though the Asian markets showed a mixed trend but the European markets have made a positive start despite all the concerns and have supported the domestic markets to move higher.

However, the broader markets are not showing much enthusiasm and are trading flat. The BSE Mid-cap and Small-cap indices both were up by less than a point. While the market breadth on BSE was partially in favor of declines in the ratio of 1161:1195 while 123 scrips remained unchanged.

The BSE Sensex is currently trading at 17,202.61 up by 105.93 points or 0.62% after trading in a range of 17,231.74 and 17,046.72 respectively. There were 18 stocks advancing against 12 declines on the index.

On the BSE sectoral space, IT up by 4.48%, TECk up by 2.95%, Power up by 0.87%, Metal up by 0.68% and PSU up by 0.58% were the major gainers, while CG down by 0.62%, HC down by 0.29%, Oil & gas down by 0.24%, Auto down by 0.17% and FMCG down by 0.16% were the laggards in the space.

TCS up by 12.17%, Wipro up by 2.95%, Hindalco Inds up by 2.35%, Tata Power up by 1.86% and Coal India up by 1.78% were the major gainers on the Sensex, while Bharti Airtel down by 3.09%, L&T down by 1.81%, M&M was up by 1.59%, Jindal Steel down by 1.52% and Maruti Suzuki down by 1.26% were the major losers in the index.

Meanwhile, the global executives are still wary of under taking any merger and acquisition (M&A) activities, as per the survey by Ernst and Young (E&Y). Even though the global environment is improving with better access to credit and cash, caution rather than confidence is driving global M&A sentiment.

According to E&Y's Capital Confidence Barometer, which covered over 1,500 senior executives in 50 countries, a more favorable deal making environment is not yet convincing large corporates to engage in M&As. A change, if at all is expected only when there comes a point when shareholders exert pressure or governments incentivise companies to do something with excess cash. Until then the business sentiment is expected to be cautious.

Mirroring the findings of survey, the first quarter of this calendar year, M&A volumes globally were down 22% compared to the same period last year. The survey further noted that companies headquartered in India, UK, US and Germany were among the most bullish, while their counterparts in Japan and Russia are less so. In fact China, India, US, Brazil and Indonesia are the top five target markets.

Corporates are now more focused on creating value by organic growth, portfolio optimisation and divestment. The proportion of companies planning to sell assets over the next 12 months has risen from 26% in October 2011 to 31% till date. Divestment is especially pronounced in North America; and is likely to grow across Europe and Japan in the coming months as companies look to re-position themselves as a result of Euro-zone crisis, the survey added.

In terms of global economic situation, 52% of respondents thought that it is improving as against 26% in October 2011, while only 20% remain pessimistic about the economy compared with 37% six months ago.

The S&P CNX Nifty is currently trading at 5,220.95, up by 20.35 points or 0.39% after trading in a range of 5,232.35 and 5,180.35. There were 30 stocks advancing against 20 declines on the index.

The top gainers on the Nifty were TCS up by 11.79%, HCL Tech up by 4.60%, Wipro up by 2.88%, Tata Power up by 2.26% and Hindalco was up by 2.19%.

On the other hand, Bharti Airtel down by 3.15%, Ambuja Cements down by 3.01%, Kotak Bank down by 1.99%, L&T down by 1.88% and ACC down by 1.77% were the major losers on the index.

The Asian markets were showing mixed trend, Shanghai Composite was marginally up by 0.01%, Hang Seng gained 0.19%, Jakarta Composite was up by 0.07%, Straits Times added 0.38% and Taiwan Weighted gained 0.24%.

On the flip side, KLSE Composite shed 0.20%, Nikkei 225 was down by 0.78% and Seoul Composite lost 0.47%.

The European markets have made a positive start, France's CAC 40 was up by 0.60%, Germany's DAX gained 0.55% and Britain's FTSE 100 rose by 0.25%.