Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session on sustained buying activities by both funds and retail investors. Besides, covering-up of pending short positions by participants on the last day of August series expiry in the derivatives segment also buoyed market sentiments. some support also came from Finance Minister Arun Jaitley’s statement that the General Anti Avoidance Rules (GAAR) were being revisited and that a decision would be taken soon, adding that the date of GAAR coming into force would also be looked at afresh. The market sentiment was boosted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session. Foreign portfolio investors (FPIs) bought shares worth a net Rs 290.18 crore on August 27, 2014.

On BSE Sectoral front, stocks from Oil & Gas, Capital Goods and Auto counters were supporting the markets’ uptrend, while those from Realty, Power and Metal counters were adding to the underlying cautious undertone. Railway-related stocks were trading higher after the government notified FDI norms for rail infrastructure, allowing 100% investment through the automatic route. Besides, Defence shares were up for the second consecutive day after the Department of Industrial Policy and Promotion on Tuesday issued the final notification on an increase in foreign direct investment (FDI) announced by the government earlier this month.

In scrip specific development, shares of Nitesh Estates have surged as much as 7% after the company signed a joint development agreement for Rs 170 crore project at Bangalore. On the flip side, DLF continues to be under pressure for second day in row after the Supreme Court directed the company to deposit Rs 630 crore in the registry within three months and is down 3% to Rs 178 on the BSE.

The market may remain volatile in the latter half of the trading session as traders roll over positions in the futures & options (F&O) segment from the near month August 2014 series to September 2014 series. On global front, Asian stocks declined as a rising yen dragged Japan’s Topix index lower and materials and consumer shares retreated. Besides, US stocks ended a quiet Wednesday session little changed, while the S&P 500 made a small advance to another record close. Back home, the market breadth on BSE was positive, out of 2260 stocks traded, 1181 stocks advanced, while 989 stocks declined on the BSE.  

The BSE Sensex is currently trading at 26647.90 up by 87.75 points or 0.33% after trading in a range of 26674.38 and 26596.67. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.08%, while Small cap index gained 0.42%.

The gaining sectoral indices on the BSE were Oil & Gas up by 1.05%, Capital Goods up by 0.64%, Auto up by 0.63%, PSU up by 0.56% and Infrastructure up by 0.48%, while Realty down by 1.32%, Power down by 0.21%, Metal down by 0.16%, Healthcare down by 0.15% and Consumer Durables down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were GAIL up by 1.77%, Tata Motors up by 1.58%, ONGC up by 1.44%, BHEL up by 1.11% and Wipro up by 1.04%. On the flip side, NTPC down by 1.29%, Tata Power down by 0.85%, Hindalco down by 0.64%, Cipla down by 0.63% and Infosys down by 0.51% were the top losers.

Meanwhile, in a move which could be a shot in the arm for the cash-strapped Indian Railways, the government notified liberalised Foreign Direct Investment (FDI) norms for rail infrastructure, permitting 100% FDI through automatic route in the sector, just a day after it notified FDI for the defence sector. 

According to a press note issued by the department of industrial policy and promotion (DIPP), the policy for private investments in rail infrastructure has been amended to allow FDI in the railway transport sector, including suburban corridor projects through Public Private Partnership (PPP), dedicated freight lines, rolling stock including train sets, locomotives/coaches manufacturing and maintenance facilities, railway electrification, signalling systems, freight terminals, passenger terminals and infrastructure in industrial parks like railway line/sidings and mass rapid transport systems.

However, proposals involving foreign direct investment (FDI) beyond 49% in sensitive areas, from security point of view, will be placed before the Cabinet Committee on Security (CCS) for approval by the Railway Ministry on a case-to-case basis. Also, FDI will not be allowed in train operations and safety.

Further, through a notification, the government also widened the definitions of 'infrastructure' and 'common facilities' in the consolidated FDI policy circular of February 2014, to include railway lines or sidings, including electrified tracks and connectivity to main railway line.

This move would definitely help mop up resources for the sector, which is currently facing a cash crunch of around Rs 29,000 crore. Despite many announcements of projects in the private-public-partnership mode in Railway Budgets, actual private investment via this route since 2000 has been just Rs 3,000 crore, of this, less than 10% has come from private companies, according to a report by the Comptroller and Auditor General of India.

The CNX Nifty is currently trading at 7,963.50 up by 27.45 points or 0.35% after trading in a range of 7,967.80 and 7,942.25. There were 32 stocks advancing against 18 declining on the index.

The top gainers on Nifty were BPCL up by 3.03%, Asian Paints up by 2.28%, Tata Motors up by 1.82%, Gail up by 1.69% and ONGC up by 1.47%. On the flip side, DLF down by 2.60%, Jindal Steel & Power down by 2.25%, NTPC down by 1.29%, Bank of Baroda down by 0.87% and Tata Power down by 0.85% were the top losers.

Most of Asian markets were trading in red; Nikkei 225 contracted by 0.55%, Taiwan Weighted tumbled by 0.18%, KOSPI Index down by 0.39%, FTSE Bursa Malaysia KLCI declined by 0.01% and Shanghai Composite was down by 0.54%. On the flip side, Hang Seng added by 0.11%, Jakarta Composite gained by 0.43% and Straits Times was up 0.35%.