Markets bounce back into positive territory; albeit trade with slender gains

Markets managed to bounce-back into positive territory with gains of around one tenth of a percent which lifted both Sensex and Nifty above psychologically crucial 28,700 and 8,700 levels respectively on bargain buying activity by market-participants at lower levels. Nevertheless, the gains also were supported by report from Moody’s Investors Service, who expressing optimism in the efforts of the new government and the Reserve Bank of India, has raised the rating outlook of the country to positive. The session however was productive for broader indices, which outperforming larger peers were trading with gains in the range of 0.40-0.65%.

On the global front, Asian shares were mixed on Thursday, with gains supported by lower oil prices, firmness in U.S. markets and strong buying in Hong Kong by mainland Chinese investors. U.S. stocks closed higher on Wednesday as the mostly dovish minutes from the last Federal Reserve meeting helped markets overcome the impact of plunging energy prices.

Closer home, most of the sectoral indices on BSE were trading into positive territory, among those maximum demand was witnessed by stocks from banking, PSU and Infrastructure counters. On the flip side, maximum drubbing was witnessed by stocks from Realty, Capital Goods and Auto counters which were the prominent losers of the session. Notably, banking stocks made a comeback in today’s session after witnessed drubbing in last two sessions post RBI left key rates unchanged at previous levels in first bi-monthly monetary policy 2015-16. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1126:847; while 44 shares remained unchanged.

The BSE Sensex is currently trading at 28735.04, up by 27.29 points or 0.10% after trading in a range of 28622.44 and 28875.08. There were 13 stocks advancing against 17 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 up by 0.65%.

The gaining sectoral indices on the BSE were Bankex up by 1.93%, PSU up by 0.33%, INFRA up by 0.17%, Metal up by 0.11% and IT up by 0.08% while, Realty down by 0.43%, Capital Goods down by 0.41%, Auto down by 0.28%, TECK down by 0.06% and FMCG down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.14%, Axis Bank up by 1.99%, Tata Steel up by 1.59%, ICICI Bank up by 1.49% and HDFC Bank up by 1.22%. On the flip side, Bharti Airtel down by 2.72%, Sun Pharma Inds. down by 2.71%, GAIL India down by 2.38%, Cipla down by 1.69% and Dr. Reddys Lab down by 1.49% were the top losers.

Meanwhile, following government’s approval, the Reserve Bank of India (RBI) has notified the increase in foreign direct investment (FDI) limit in the insurance sector to 49%. RBI in its notification said that the extant FDI policy for insurance sector has since been reviewed and further liberalised. Accordingly, with immediate effect, FDI in insurance sector shall be permitted up to 49 per cent subject to the revised conditions. The central bank further said that “Foreign direct investment up to 26% shall be under automatic route and beyond 26% and up to 49% shall be with government approval and Indian insurance company shall ensure that its ownership and control remains at all times in the hands of resident Indian entities.”

RBI has included a new term ‘Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999’ under the definition of ‘Insurance’. RBI added that “any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank under the Foreign Exchange Management Act, 1999.”

The government has already notified rules to implement the decision to increase foreign direct investment limit in the insurance sector to 49 per cent. The Indian Insurance Companies (Foreign Investment) Rules, 2015 allow up to 26 per cent foreign investment through the automatic route, while foreign partners can increase their stake beyond that limit up to 49 per cent with the approval of the Foreign Investment Promotion Board (FIPB). The rules will also apply to insurance brokers, third party administrators, surveyors and loss assessors, and other insurance intermediaries appointed under the provisions of the IRDA Act, 1999. Foreign portfolio investment in an Indian insurance company shall be governed by the provisions contained in the relevant sub-regulations/regulations under FEMA Regulations, 2000 and provisions of the Securities Exchange Board of India (Foreign Portfolio Investors) Regulations.

The CNX Nifty is currently trading at 8729.65, up by 15.25 points or 0.17% after trading in a range of 8682.45 and 8759.90. There were 23 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 4.84%, PNB up by 4.06%, Zee Entertainment up by 3.63%, Indusind Bank up by 3.29% and IDFC up by 2.32%. On the flip side, Lupin down by 2.98%, GAIL India down by 2.86%, Sun Pharma Inds. down by 2.68%, Bharti Airtel down by 2.62% and Idea Cellular down by 1.95% were the top losers.

Asian markets were trading mixed ; with Nikkei 225 trading higher by 147.91 points or 0.75% to 19,937.72; Hang Seng trading higher by 702.1 points or 2.68% to 26,938.96. On the flip side, Shanghai Composite down by 46.35 points or 1.16% to 3,948.46; Straits Times down by 6.35 points or 0.18% to 3,454.33; FTSE Bursa Malaysia KLCI down by 4.56 points or 0.25% to 1,845.75; Jakarta Composite down by 4.05 points or 0.07% to 5,482.54; Taiwan Weighted down by 3.93 points or 0.04% to 9,568.04 and KOSPI Index down by 0.39 points or 0.02% to 2,058.87 were the prominent losers of the session.