Benchmarks continue to trade in narrow range with negative bias

After making a positive start, benchmark equity indices have now slipped into negative territory and trading with slender loss as funds and retail investors engaged in reducing positions. Sentiment got a hit as traders remained concerned with the Reserve Bank of India’s (RBI) Financial Stability Report (FSR), stating that risks to India’s banking system continue to remain at elevated levels on concerns of further deterioration in the asset quality. The central bank has warned that banks’ bad loans will worsen if economy falters further. Besides, weak trend in other Asian stock markets coupled with depreciation in rupee value also weighed on the sentiment. However, losses remained capped as the Union Cabinet cleared ordinance on Land Acquisition Act including removal of consent clause for acquiring land for five areas of industrial corridors, PPP projects, rural infrastructure, affordable housing and defence. Also, Finance Minister Arun Jaitley has again pitched for a rate cut by the RBI, saying that the credit offtake is slow, infrastructure creation becomes slower, and the manufacturers find it difficult to afford costly capital, because it is going to add to each one of their costs.

On the global front, Asian stocks were mostly lower as concern about Greek politics and the shaky Russian ruble dented confidence in the global economy. Overnight, US markets closed flat in a thin trading session as volumes remained subdued ahead of the New Year’s holidays. Back home, Indian rupee weakened for the fifth consecutive day against the dollar in early trade due to sustained year-end demand for the American currency from importers.

On the sectoral front, stocks from Consumer Durables, Capital Goods and Power counters were supporting the markets’ uptrend, while those from Metal, Oil & Gas and Banking counters were adding to the underlying cautious undertone. In scrip specific development, Shares of Suven Life have surged after the company secured three product patents in Eurasia, Japan and Mexico. Moreover, IDBI Bank rose after receiving approval from its Board of Directors to divest its stake in Credit Analysis & Research.

The market breadth on BSE was positive, out of 2186 stocks traded, 1145 stocks advanced, while 946 stocks declined on the BSE.

The BSE Sensex is currently trading at 27375.95 down by 19.78 points or 0.07% after trading in a range of 27478.30 and 27336.33. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index up by 0.36%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.19%, Capital Goods up by 0.99%, Power up by 0.67%, IT up by 0.44% and Infrastructure up by 0.35% while, Metal down by 1.04%, Oil & Gas down by 0.98%, Bankex down by 0.32%, PSU down by 0.07% and Auto down by 0.00% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.01%, Larsen & Toubro up by 0.86%, Sun Pharma Inds. up by 0.84%, Cipla up by 0.68% and Mahindra & Mahindra up by 0.67%. On the flip side, Sesa Sterlite down by 1.56%, Reliance Industries down by 1.49%, Hindalco down by 1.43%, Tata Steel down by 1.34% and GAIL India down by 1.21% were the top losers.

Meanwhile, Foreign direct investment (FDI) in India during the April-October FY15 grew by 25% to $17.35 billion from $13.82 billion recorded in the corresponding period of the previous fiscal.

Commerce and Industry Minister Nirmala Sitharaman has asserted that improvement in the macroeconomic situation and investor sentiment on account of a series of steps taken by the new government has helped to attract higher foreign investments. Further, the minister added that in order to boost FDI, the government  has been taking several steps to cut red tape and rationalise existing rules and increased use of IT to make governance effective and user friendly.

During FY14, FDI increased by 8% to $24.29 from $22.42 billion recorded in the FY13. FDI is considered crucial for India, which requires around $1 trillion in the 12th five year plan (2012-2017) to overhaul its infrastructure sector such as ports, airports and highways to boost growth. However, to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. Recently, the government has eased the FDI norms in insurance sector. The government is of the view that hiking of the foreign investment cap in the insurance sector to 49 per cent will result in capital inflow of $6-8 billion.

To encourage manufacturing of equipments, including diagnostic kits and other devices, the government also allowed 100 percent FDI under automatic route in medical devices sector. Besides, the government’s 'Make in India' programme, launched by Prime Minister Narendra Modi is another big-ticket reform that the government expects the foreign investors to bring FDI worth billions of dollars into the country.

The CNX Nifty is currently trading at 8241.70 down by 4.60 points or 0.06% after trading in a range of 8268.25 and 8230.30. There were 23 stocks advancing against 27 declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 1.05% and Hindustan Unilever up by 0.94% and BPCL up by 0.91% and Sun Pharma up by 0.80% and Tech Mahindra up by 0.78%. On the flip side, Sesa Sterlite down by 1.63%, Cairn India down by 1.51%, Reliance Industries down by 1.49%, Hindalco down by 1.43% and GAIL India down by 1.14% were the top losers.

The Asian markets were trading mostly in the red; Hang Seng declined 0.93%, Nikkei 225 tumbled 1.10%, KOSPI Index decreased by 0.67%, Shanghai Composite dipped 0.4%, Straits Times slipped 0.08%, Taiwan Weighted down by 0.15% and FTSE Bursa Malaysia KLCI was down by 0.07%. On the flip side, Jakarta Composite was up by 0.18%.