Sensex, Nifty, Midcap strong; Axis Bank, Tech Mahindra lead

Moneycontrol Bureau

12:58 pm Market Update: The Sensex gained 155.58 points or 0.55 percent at 28353.87 and the Nifty rose 54.35 points or 0.64 percent to 8578.15. About 1487 shares have advanced, 1068 shares declined, and 153 shares are unchanged on the BSE. 

12:45 pm: Finance Minister Arun Jaitley says: Cabinet approved composite cap on FDI and review of FDI policy on various sectors.

Axis Bank rallied 3.6 percent. Yes Bank gained 3 percent and Pipavav Defence climbed 6 percent.

Jaitley says AP Shah panel will submit its report on MAT next week.

12:30 pm Steel sops?: A Credit Suisse report has recently suggested that the steel sector is expected to be a key source of stress for banks in FY16 and FY17. Gross banking credit to steel sector stands at Rs 2.77 lakh crore and 54 percent of total credit exposure is accounted by top eight steel projects, sources tells CNBC-TV18.

Sources are suggesting that banking secretary has sought urgent intervention from steel ministry to ease constraints of steel companies.

Expressing his concern that steel projects are facing issues of cost overruns and erosion of networth, the banking secretary highlighted eight steel projects with sub-optimal level of production. They are Bhushan Steel, Electrosteel, Essar Steel, Jindal Stainless, Usha Martin, Visa Steel, Bhushan and Monnet Ispat.

The banking secretary has asked his steel counterpart to allow sale of iron ore, including low grade of ore, via NMDC, oil marketing companies and SAIL till auction of mines kick off. He has also asked the steel secretary to identify logistics required to transport iron ore and avail benefit of railways for classified primary steel projects.

12:15 pm Market Expert: While the market may be within striking distance of all-time high, it continues to be overvalued, says Nilesh Shetty of Quantum AMC.

In an interview to CNBC-TV18, Shetty says there is a significant disconnect between what is happening in the stock market and what is happening on the ground level.

He believes, the institutional flows can drive the market further but there is no taking away the fact that the entire last year has been a disappointment and earnings cycles have been weak for quite some time now.

While sectorally Shetty is bullish on largecap IT stocks, he says he will be very surprised if anyone makes any strong returns from the market from a one-year perspective.

12:00 pm Market Check

The market continued to see buying interest in noon trade. The Sensex gained 134 points at 28332.29 and the Nifty advanced 43.60 points to 8567.40, supported by banking & financials, auto and pharma stocks.

The broader markets, too, gained strength. The BSE Midcap and Smallcap indices rose 0.9 percent and 0.6 percent, respectively. About 1387 shares have advanced, 991 shares declined, and 148 shares are unchanged on the Bombay Stock Exchange.

Tech Mahindra and BPCL rallied more than 2 percent. HDFC, Kotak Mahindra Bank, HDFC Bank, Reliance Industries and Sun Pharma gained 0.8-1.8 percent. However, M&M, Vedanta, Hindalco, Wipro, Hero Motocorp, NMDC and Bank of Baroda declined 0.6-1 percent.

Axis Bank surged 2.8 percent and Yes Bank gained 1 percent. The cabinet today is expected to clear a proposal to do away with the distinction between different types of foreign investments through a composite cap on all kinds of FDI investments

The rally in bank stocks may be on hopes of some relief for distressed steel companies. Sources told CNBC-TV18 that banking secretary has asked steel ministry to consider an effective anti-dumping duty and levy of appropriate duties.

Pipavav Defence surged 6 percent after Anil Ambani said the company will invest an additional Rs 5,000 crore over next few years towards indigenisation and that it will develop "combat management systems" for future naval vessels.

Globally, Asian markets remained steady as Greek parliament voted in favour of a new bailout plan. European markets, too, are expected to open higher. Dollar index rose above the 97 mark on expectations of a rate hike in US as early as September.