Benchmarks add gains; Realty, Consumer Durables pull

Indian equity benchmarks added gains to continue their firm trade in the late afternoon session on account of buying in frontline blue chip counters. US Federal Reserve’s decision to keep interest rates near zero for a 'considerable time' has boosted the sentiments of the market participants. The sentiments also got some support after the Reserve Bank of India eased foreign direct investment (FDI) norms allowing companies to issue equity shares to a resident outside India against any type of fund subject to certain conditions. Traders were seen piling positions in Realty, Consumer Durables and Capital Goods sector stocks. In scrip specific development, Colgate-Palmolive (India) was trading firm after foreign brokerage firm upgraded the stock to buy from neutral.

On the global front, the Asian markets were trading on a mixed note. Back home, the NSE Nifty and BSE Sensex were trading above psychological 8,050 and 26,900 levels respectively. The market breadth on BSE was positive in the ratio of 1952:650 while 87 scrips remained unchanged.

The BSE Sensex is currently trading at 26923.05, up by 291.76 points or 1.10% after trading in a range of 26503.08 and 26966.06. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.52%, while Small cap index up by 2.41%. The gaining sectoral indices on the BSE were Realty up by 3.75%, Consumer Durables up by 2.71%, Capital Goods up by 1.79%, Power up by 1.56% and Infra up by 1.41%.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.49%, Sun Pharmaceuticals Industries up by 2.23%, BHEL up by 2.17%, Hero MotoCorp up by 2.15% and Wipro up by 2.15%. On the flip side, Infosys down by 0.81%, Hindustan Unilever down by 0.56% and Mahindra & Mahindra down by 0.53% were the top losers.

Meanwhile, giving a reason to cheer to the India Inc. Reserve Bank of India (RBI) has allowed companies to issue equity shares to a resident outside India against any type of fund, subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws. RBI reviewed the existing guidelines in consultation with the Government of India and, accordingly, decided to permit issue of equity shares against any other funds payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 or any rules/ regulations framed or directions issued thereunder

As per the latest RBI guidelines the equity shares shall be issued in accordance with the existing FDI guidelines on sectoral caps, pricing guidelines and the issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes.

Earlier, an Indian company under the automatic route could issue shares/convertible debentures to a person resident outside India against lump-sum technical know-how fee, royalty External Commercial Borrowings (other than import dues deemed as ECB or Trade Credit) and import payables of capital goods by units in Special Economic Zones. Through government route, FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance. Indian companies having foreign investment approval through FIPB route do not require any further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors.

The CNX Nifty is currently trading at 8066.65, up by 91.15 points or 1.14% after trading in a range of 7939.70 and 8077.15. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were DLF up by 3.43%, Hero MotoCorp up by 2.56%, Jindal Steel & Power up by 2.51%, Dr. Reddy’s Lab up by 2.48% and BPCL up by 2.41%. On the flip side, Hindustan Unilever down by 0.66%, Infosys down by 0.65%, Mahindra & Mahindra down by 0.45%, IndusInd Bank down by 0.42% and United Spirits down by 0.39% were the top losers.

The Asian markets were trading on a mixed note; Straits Times increased 0.37 points or 0.01% to 3,296.85, Jakarta Composite increased 22.21 points or 0.43% to 5,210.40, Taiwan Weighted increased 41.86 points or 0.46% to 9,237.03 and Nikkei 225 increased 208.07 points or 1.31% to 16,096.74.

On the flip side, Hang Seng decreased 233.1 points or 0.96% to 24,143.31, KOSPI Index decreased 14.87 points or 0.72% to 2,047.74, FTSE Bursa Malaysia KLCI decreased 5.04 points or 0.27% to 1,838.74 and Shanghai Composite decreased 2.96 points or 0.13% to 2,304.93.