Nifty continues to trade in green in afternoon session

Indian equity benchmark Nifty continued to trade in green in afternoon session supported by gains in pharma, auto and metal stocks. Factors like appreciation in rupee value against dollar, FIIs inflows and hopes of reform measures in coming budget 2014-15 to boost economic growth has aided to the optimistic sentiments. Further, the latest government’s decision to extend the validity period of industrial licence to three years with a provision for further extension of two years also provided support to domestic equity market. The move is likely to help in expeditious clearance of fresh industrial license applications and the extension of the existing industrial licenses. Metal stocks were continued on buyer radar on the back of improving China manufacturing sector. However, the gains remain capped on account of selling witnessed in oil and gas, realty and infrastructure stocks. Scrip specific movement, shares of Sun Pharmaceutical Industries and Ranbaxy Laboratories continue their rally and were trading higher by 4% each after USFDA granted approval to Ranbaxy's subsidiary Ohm Laboratories to manufacture and sell generic Diovan in the US. Shares of Tech Mahindra soared around 2.2% to Rs 2117 on signing a joint venture agreement with Midad Holdings, a subsidiary of Al Fozan, Kingdom of Saudi Arabia.

On global front, Asian equity indices were trading mixed with Jakarta Stock Index down by 0.26% and Shanghai Composite up by 0.31% as investors waiting for the US nonfarm payrolls report. Back home, the NSE Nifty was trading above their psychological 7,700 level respectively.

The CNX Nifty is currently trading at 7,736.35 up by 11.20 points or 0.14% after trading in a range of 7,754.65 and 7,708.65. There were 24 stocks advancing against 26 declining on the index.

The top gainers of the Nifty were Sun Pharma up by 2.39%, Tata Motors up by 2.08%, Coal India up by 1.84%, Wipro up by 1.61% and McDowell up by 1.52%. On the flip side, Hero Motocorp down by 2.23%, Bajaj Auto down by 2.12%, Ultra-tech cement down by 1.35%, Indusind Bank down by 1.15% and NTPC down by 1.10% were the major losers on the index.

Meanwhile, In order to boost the industrial activities in the country, the government has agreed to extend the benefits of special economic zones (SEZs) and National Investment and Manufacturing Zones (NIMZs) to the proposed industrial parks which would be developed in collaboration with China.

Both zones in the country enjoy tax related benefits. The SEZs benefit 100 percent income tax exemption on export income for the first five years, 50 percent for the next five years thereafter and 50 percent of the ploughed back export profit for next five years. On the other hand, NIMZs, under the National Manufacturing Policy, has provisions of tax incentives to small and medium enterprises (SMEs).

Since 1991 when India opened up its economy, the investment from China remained sluggish at mere $469 million till now as compared to $16-17 billion from Japan. The bilateral trade between China and India declined from around $75 billion in 2011 to $65.45 billion in 2013.  China had already established five industrial parks in ASEAN countries like Vietnam, Cambodia and Indonesia and is keen to set up similar industrial parks in India.

Recently, India and China signed the memorandum of understanding (MoU) on the creation of industrial parks. As per the MoU between India and China, both countries have agreed for an Industrial Park Cooperation Working Group comprising equal number of representatives from both the countries. The group will share mutually agreed relevant information on the regulatory framework and investment priorities/projects as may be needed during the preparation of investment proposals. The MoU would enhance Chinese investments in India which in turn would help India for bridging the ballooning trade deficit with China, which now average around $35 billion a year.

Asian equity indices were trading mixed; Nikkei 225 down by 0.21% to 15,338.18, Hand Seng down by 0.05% to 23,537.69 and Jakarta Stock Index down by 0.26% to 4,895.54. On the flip side, Taiwan Weighted up by 0.44% to 9,526.23, Shanghai Composite up by 0.31% to 2,065.96, and Straits Times up by 0.43% to 3,277.47