TIGHT RANGE WITH NEGATIVE BIAS

The Indian equity markets were trading within a tight range with a negative bias waning as global risk appetite trimmed down, given the uncertainty over global growth prospects. Investors not making any position as they were doubtful  about whether the RBI will cut rates next week, which exacerbated concerns over a sector facing an acute liquidity crunch and lower lending due to high interest rates. On sectoral front metal, bank and capital goods stocks were among the most prominent losers. Oil, realty and power stocks too were mostly trading weak, while healthcare and IT stocks were finding some support. However, shares in Indian airlines jumped on expectations the government will soon allow foreign carriers to invest in local airlines, providing a lifeline to cash-starved and debt-laden carriers such as Kingfisher Airlines. On the global front, Asian shares were trading in red. Back home, the market breadth favoring the positive trend; there were 1,147 shares on the gaining side against 1,198 shares on the losing side while 107 shares remained unchanged.

The BSE Sensex after plunging 101.47 points or 0.59% was trading at 17,142.37. The index has touched a high and low of 17,152.42 and 17,075.89 respectively. There were 5 stocks advancing against 25 declining ones on the index.

The broader indices too were trading on a mixed note; the BSE Mid cap index declined by 0.32% and small cap index was up by 0.09%.

Metal down by 1.44%, Capital Goods (CG) down by 1.16%, Realty down by 0.90%, Bankex down by 0.81% and Power down by 0.80% were the top losers on the index. On the flip side, Health Care (HC) up by 0.64%, Consumer Durables (CD) up by 0.15% and IT up by 0.07% were top gainers on the BSE sectoral front.

The few gainers on the Sensex were ONGC up by 0.77%, Infosys up by 0.55%, Sun Pharma up by 0.31%, Cipla up by 0.19% and Mahindra & Mahindra up by 0.17%. On the flip side, Sterlite Industries down by 2.78%, Jindal Steel down by 2.41%, Tata Steel down by 1.71%, Reliance Industries down by 1.44% and BHEL down by 1.37% were the top losers on the Sensex.

Meanwhile, foreign institutional investors (FIIs) will no longer require government permission to invest in the commodity exchanges as per the new FDI norms announced by the Ministry of Commerce & Industry. However, foreign direct investment (FDI) will continue to need the approval of the Foreign Investment Promotion Board (FIPB).

At present, foreign investment, by both FIIs and FDIs is capped at 49%. Within this overall limit of 49%, investment by registered FIIs, under the portfolio investment scheme (PIS) is limited to 23% and investment under the FDI scheme is limited to 26%. Both require government approval. But now as per the consolidated FDI policy, investments done by FIIs will no longer require approval of the FIPB with effect from April 10, 2012.

This change aligns the policy for foreign investment in commodity exchanges, with that of other infrastructure companies in the securities markets, such as stock exchanges, depositories and clearing corporations. Further, the government has also changed foreign investment norms for non-banking finance companies, retail, pharma and foreign institutional investors. The norms also seek to disincentivise import of second-hand capital goods, while encouraging e-commerce activities.

Also issue of equity shares under the FDI policy is currently allowed under the Government route for import of capital goods/ machinery/ equipment -including second-hand machinery. However it has been decided to exclude second hand machinery from its purview to promote state-of-the-art technology, compliant with international standards, in terms of being green, clean and energy efficient.

The S&P CNX Nifty was trading lower by 35.60 points or 0.68% at 5,208.00. The index has touched a high and low of 5,213.90 and 5,190.80 respectively. There were 8 stocks advancing against 42 declining ones, while a stock remained unchanged on the index.

The top gainers of the Nifty were Ranbaxy up by 1.92%, Dr Reddy up by 0.95%, ONGC up by 0.77%, Infosys up by 0.61% and Sun Pharma up by 0.29%.

On the flip side, Ambuja Cement down by 3.12%, Jaiprakash Associates down by 2.87%, Reliance Infra down by 2.79%, Sesa Goa down by 2.78% and Sterlite Industries down by 2.78% were the major losers on the index.

Most of the Asian markets were trading in the red; Shanghai Composite declined by 0.07%, Hang Seng plummeted 1.22%, Jakarta Composite slid 0.81%, Nikkei 225 shed 0.53%, Straits Times sank 1.17%.

On the flipside only Taiwan Weighted up by 0.21% was the lone gainer among the Asian pack.

Stock markets in Malaysia remained closed on Wednesday on account of a nationwide holiday for Installation of the Yang Di-Pertuan Agong. The South Korean markets remain shut on account of Assembly Members Election Day.