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Sensex, Nifty rally; Tata Power up 2%, Axis Bank drags 1%

13:00

The News International Team

1:55 pm Market outlook: Market expert Deepak Shenoy, Capitalmind says the market has not yet reached frothy levels in terms of valuation numbers if you look at trailing price to earnings (PEs) from 2007 or 2000 levles, we are talking of forward PE now of 25.  However, if one compares the consolidated results of Nifty companies for the December quarter of FY15 to that of December quarter of FY14 then profits have dropped minus seven percent and drop in revenues too, he said. So a lot depends on what the government does in the Budget and potentially through next few months to revive the economy.

1:45 pm FII view: The first full fledged Budget is most likely to announce a slew of reforms, but the key is in implementation since India has an history of bureaucratic red tapes that seal all efforts, says Marc Faber, who is editor and publisher of The Gloom, Boom and Doom report. Faber has been overweight on banks but right now Indian equities do not appear compelling due to steep valuations, he told CNBC-TV18 in an interview. He reminds foreign investment flows has a big role to play in equity market’s performance, and right now global investment scenario appears shaky on the back of Chinese slowdown.

1:30 pm Buzzing: Shares of Mumbai-based real estate companies are up on Brihanmumbai Municipal Corporation’s (BMC) stress on further construction in the island city. Stocks like  HDIL and Oberoi Realty jumped 2-3 percent intraday on Wednesday.

In the new development plan for the next 20 years (2014-34), BMC has made a proposal to allow more floor space index (FSI) of 6.5 and 8 in the vicinity of major railway stations near central business districts and other employment nodes. FSI is the ratio of the permissible built-up area to the plot area.

Gulam Zia of Knight Frank says a new breed of developers too may rise to seize the opportunity.

Don’t miss: Tata Motors up 2% despite weak JLR Jan sales; MS overweight 

The market is still holding gains as the Sensex is up 166.40 points or 0.6 percent at 29302.28. The Nifty up 44.40 points at 8853.75. About 1557 shares have advanced, 1168 shares declined, and 197 shares are unchanged.

HDFC, Tata Power, M&M, NTPC and Tata Motors are top gainers in the Sensex. Among the losers are Hero Moto, Bharti, Sesa Sterlite, Axis Bank and Tata Steel.

Meanwhile, Investors facing zero interest rates in the developed world are turning to Asian debt for higher returns through exchange traded funds (ETFs), driving a nearly 50 percent rise in assets under management last year.

At about a tenth of the size of Europe’s volume and a fraction of the U.S. market, Asian bond ETFs have plenty of room to grow but may face limits from structural problems that they can only partly address by pooling bonds in an index. Sweden last week helped to accelerate the search for yield when it joined the global race to adopt negative interest rates to stave off deflationary pressures.

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