Markets trade jubilantly as NDA heads for victory; Nifty surpasses 7,500 level

Indian equity benchmarks have made gap-up opening and are trading jubilantly with frontline gauges surpassing their crucial 25,200 (Sensex) and 7,500 (Nifty) bastions, as early trends indicated the pro-reform and business friendly BJP-led NDA is set to get a majority and form a stable government. Appreciation in Indian rupee against dollar too aided the sentiments. The Indian rupee gained sharply against the US dollar on hopes of further inflows from foreign institutional investors. Global cues remained sluggish with US markets ending lower overnight, as investors continued to book profit at higher levels while discouraging earnings from Wal-Mart too weighed on market sentiment. The Asian markets were trading mixed at this point of time with some indices trading notably lower in early deal, led by Nikkei which is down by around two percent as yen was near an eight-week high to the dollar. Back home, Financials were the top gainers on the Sensex on hopes that the BJP-led NDA would unveil reforms and stimulate economic growth. There was broad based buying witnessed in the markets as none of the sectoral indices were trading in the red. Banking and Oil and gas witnessed the maximum gain in trade. Capital goods, realty, power, metal, auto and consumer durables too were trading significantly higher. The broader indices too were trading with traction, while the market breadth on the BSE was positive; there were 1,133 shares on the gaining side against 531 shares on the losing side while 56 shares remain unchanged. The BSE Sensex is currently trading at 25346.00, up by 1440.40 points or 6.03% after trading in a range of 25353.16 and 24271.54. There were 29 stocks advancing against 1 decline on the index. The broader indices were trading in green; the BSE Mid cap index was up by 2.66% and Small cap index gained 1.73%. The top gaining sectoral indices on the BSE were, Bankex up by 10.34%, PSU up by 6.60%, Oil & Gas up by 6.30%, Auto up by 6.09% and Capital Goods up by 5.96%, while there was no loser. The top gainers on the Sensex were ICICI Bank up by 13.74%, Hero MotoCorp up by 11.69%, Axis Bank up by 10.00%, SBI up by 9.69% and Maruti Suzuki up by 8.17%. On the flip side, Dr Reddys Lab was down by 1.67% was the only the loser on the Sensex. Meanwhile, with an aim to enhance the investment in domestic equity benchmarks, the Securities and Exchange Board of India (SEBI) will soon propose for rationalization of tax structure of financial products to make them more attractive to retail investors. The SEBI has notified that tax incentive scheme similar to the US 401(k) plan can be introduced in the country. The scheme can enhance long term investments and bring greater depth in capital markets through mobilising household savings to the capital markets. High investment brought by domestic investors would help in curbing the unwanted volatility in domestic equity markets and would reduce the excessive reliance on the foreign investors. In India, only about 8% of the country's households invest in equities, directly or indirectly through mutual funds which is very low as compare to major economies like the US at 42% and China with 14% of households’ invest in equity markets. The market regulator also wants to increase the tax exemptions limits for retail investors in mutual fund retirement plans. Besides, the SEBI will also pitch for increasing investment limit in various mutual fund schemes such as equity-linked savings scheme and RGESS. The rational tax structure is viewed as an important factor which could draw investors towards equity markets. However, to enhance the investment in markets, the government had already introduced various schemes such as Rajiv Gandhi Equity Savings Scheme in the 2012-13 Budget, offering 50% tax rebate to new retail investors who invest up to 50,000 directly in equities. However, the scheme remained ineffective to encourage retail investors due to its complex structure including a lock-in period. The CNX Nifty is currently trading at 7,533.70 up by 410.55 points or 5.76% after trading in a range of 7,553.90 and 7,264.40. There were 48 stocks advancing against 2 declines on the index. The top gainers of the Nifty were ICICI Bank up by 12.91%, Hero Moto Co up by 12.52%, PNB up by 12.08%, Axis Bank up by 10.27% and SBI up by 9.77%. On the flip side, DR Reddy down by 1.58% and Tech Mahindra down by 0.20% were the top losers on the index. Most of Asian equity indices were trading in red; Shanghai Composite declined 5.94 points or 0.29% to 2,019.04, Hang Seng slipped by 147.07 points or 0.65% to 22,583.79, KLSE Composite dropped by 0.97 points or 0.05% to 1,878.86, Nikkei 225 tumbled by 280.93 points or 1.96% to 14,017.28, Straits Times contracted 10.96 points or 0.33% to 3,261.53, Seoul Composite decreased by 10.29 points or 0.51% to 1,999.91 and Taiwan Weighted was down by 37.79 points or 0.43% to 8,842.86. On the flip side, Jakarta Composite was up by 19.48 points or 0.39% to 5,011.12.