Markets make a flat start; trade cautiously in early deals

Indian markets showing similar trend to their US counterparts made a flat start with a negative bias. Alhough they have started showing signs of recovery, there was still cautiousness with ratings agency Icra in its latest report saying that the Indian economic growth may have slowed to 5 per cent in the July-September quarter due to a low kharif harvest, a slowdown in exports and muted government spending. Official GDP data for the second quarter of the current fiscal year ending March is due for release this Friday. There was selective buying and traders were trading cautiously ahead of Thursday’s F&O series expiry. Though MSCI India Index rejig impact continued to weigh HDFC Bank, there was some recovery in Reliance Capital, RPower and Jaiprakash Associates, which were excluded from the index. Recovery is also seen in the cigarette major ITC which has gained over two percent after witnessing sharp fall in last session, as there may soon be a ban on sale of loose cigarettes in India after the government accepted a new tougher framework for tobacco sale. On the sectoral front, defensive FMCG was taking the lead among some gainers, with power, consumer durables and capital goods closely following, while auto, tech and reality were reeling in red.

The BSE Sensex is currently trading at 28332.17, down by 5.88 points or 0.02% after trading in a range of 28276.80 and 28379.27. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.42%, while Small cap index gained 0.58%.

The gaining sectoral indices on the BSE were FMCG up by 1.03%, Power up by 0.77%, Consumer Durables up by 0.56%, PSU up by 0.56%, Capital Goods up by 0.41% while, Realty down by 0.70%, Auto down by 0.38%, Bankex down by 0.29%, TECK down by 0.28%, IT down by 0.18% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.55%, ITC up by 2.05%, BHEL up by 1.36%, Cipla up by 0.97% and Mahindra & Mahindra up by 0.96%. On the flip side, Bajaj Auto down by 2.40%, Hindalco down by 1.03%, Tata Motors down by 0.98%, Bharti Airtel down by 0.97% and ICICI Bank down by 0.87% were the top losers.

Meanwhile, amid concerns over increasing misuse of Offshore Derivative Instruments (ODI) or P-Notes for money laundering and other such purposes, the Securities and Exchange Board of India (SEBI) has notified that foreign portfolio investments coming in through ODI route will now be aligned with the eligibility and investment norms applicable to foreign portfolio investors (FPI).

P notes used by investors or hedge funds that are not registered with the Securities and Exchange Board of India to invest in Indian through registered foreign institutional investors. Any dividends or capital gains collected from the underlying securities go back to the investors.The investments through P-Notes in India rose to nearly seven-year high of over Rs 2.65 lakh crore by the end of October 2014.

SEBI clarified that an FPI shall issue ODIs only to those subscribers which meet the eligibility criteria as laid down in SEBI’s FPI Regulation 4 which stated that an FPI applicant shall not be granted registration unless the entity is the resident of a country whose securities market regulator is a signatory to International Organization of Securities Commission’s (IOSCO). SEBI further clarified that investment restrictions applicable to foreign portfolio investors would also apply to ODIs. Two or more ODI subscribers having common Beneficial Owner (BO) will be considered together as a single ODI subscriber, in the same manner as is being done in the case of FPIs.

Further, the market regulator noted that foreign portfolio investor or FPI can issue ODIs, which predominantly comprise of participatory notes (P-notes), only to those subscribers that do not have an opaque structure. Foreign funds with 'opaque' structures would not be allowed to come in under the new FPI regime.

The CNX Nifty is currently trading at 8460.00, down by 3.10 points or 0.04% after trading in a range of 8439.45 and 8468.70. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.57%, ITC up by 2.11%, Asian Paints up by 1.68%, BHEL up by 1.41% and Tata Power up by 1.11%. On the flip side, Zee Entertainment down by 3.91%, Bajaj Auto down by 2.45%, DLF down by 2.29%, HCL Tech down by 1.37% and Hindalco down by 1.21% were the top losers.

The Asian markets were trading mostly in green, KOSPI Index was up by 2.58 points or 0.13% to 1,982.79, FTSE Bursa Malaysia KLCI gained 4.07 points or 0.22% to 1,842.63, Nikkei 225 added 6.9 points or 0.04% to 17,414.52, Taiwan Weighted was up by 11.48 points or 0.13% to 9,127.72, Shanghai Composite gained 13.25 points or 0.52% to 2,580.85 and Hang Seng was higher by 24.44 points or 0.1% to 23,868.35. On the other hand Straits Times declined by 7.97 points or 0.24% to 3,337.02 and Jakarta Composite was lower by 5.65 points or 0.11% to 5,113.30.