Benchmarks magnify gains; Nifty above 8450 mark

Extending their early gains, Indian equity markets continued to trade with vigor on sustained buying by funds and retail investors amid a firm trend in the other Asian markets. At present, Sensex and Nifty were trading above the crucial 27,950 and 8,450 levels respectively, with gains of over 0.40%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by 0.47% and 0.42% respectively. Sentiment got a boost with government’s decision of relaxing FDI norms for NRIs, PIOs and OCI. Government has decided that non-repatriable investments by NRIs, OCIs and PIOs will be treated as domestic investments and will not be subject to foreign direct investment caps. Some support also came in from reports that Reserve Bank of India in consultation with the Government of India, is working on simplifying, liberalising and rationalising the procedures relating to foreign exchange regulations, including the foreign direct investment, to facilitate ease of doing business. However, some investors remained cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 186.26 crore on May 21, 2015.

On global front, most Asian stock indexes rose, with China's benchmark at its highest in seven years, after Wall Street eked out another record close. Further, Bank of Japan maintained its massive stimulus programme and offered a slightly more upbeat view of the world's third-largest economy, as a modest rebound in consumption helped service-sector sentiment improve to a one-year high. Back home, Indian rupee edged higher marginally by 5 paise to 63.59 against the US dollar in early trade on continued selling of the American currency by banks and exporters.

Back on street, barring Metal, all other BSE sectoral indices were trading significantly in the green. Among them, Banking index was the star-performer and was up 0.89 per cent, followed by FMCG 0.87 per cent, PSU 0.72 percent and Consumer Durables 0.71 percent, while Metal index was down 0.18 percent. In scrip specific development, shares of Britannia Industries have soared after its net jumped by 55% to Rs 167 crore in Q4. On the flip side, shares of Rane (Madras) have weakened by more than 6% this morning after posting a weak set of numbers for FY2014-15.

The market breadth on BSE was positive, out of 2115 stocks traded, 1186 stocks advanced, while 846 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27968.52, up by 159.17 points or 0.57% after trading in a range of 27828.61 and 27985.40. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index up by 0.42%.

The gaining sectoral indices on the BSE were Bankex up by 0.89%, FMCG up by 0.87%, PSU up by 0.72%, Consumer Durables up by 0.71% and Capital Goods up by 0.64%, while Metal down by 0.18% was the only losing index on BSE.

The top gainers on the Sensex were SBI up by 3.28%, ITC up by 1.42%, ONGC up by 1.23%, HDFC up by 1.21% and ICICI Bank up by 0.91%. On the flip side, Vedanta down by 1.08%, Bajaj Auto down by 1.02%, Hindalco down by 0.97%, Hero MotoCorp down by 0.75% and Wipro down by 0.68% were the top losers.

Meanwhile, Libralising further the Foreign Direct Investment (FDI) policy, Union Cabinet, chaired by Prime Minister Narendra Modi, had approved amendments, including changes in definition of NRIs, to be incorporated in the FDI policy. The government has decided that non-repatriable investments by non-resident Indians (NRIs), overseas citizens of India (OCIs) and persons of Indian origin (PIOs) will be treated as domestic investments and will not be subject to foreign direct investment caps.

As per the amendments for foreign investment purposes, the definitions of OCIs and PIOs were merged with that of NRIs and NRI investment and will be treated as domestic investment. So far, investments by NRIs in only the aviation industry were excluded from the FDI limit of 49%; NRIs were permitted full ownership in the sector.

The government statement added that, since the investments made under Schedule 4 (of the Foreign Exchange Management Act) are on non-repatriable basis, it needs to be clearly provided that such investments, for the purposes of FDI policy, are domestic investments. This will enable investments by NRIs, OCI cardholders and PIO cardholders under Schedule 4 on non-repatriation basis, across sectors without being subjected to any of the conditions associated to foreign investments.

The decision is likely to stoke a fresh round of fund flows into the country, with the overseas Indians now falling outside the FDI ceilings and the space vacated by them can be filled by foreign investors. At the same time, domestic companies can attract investments from overseas Indians without violating foreign investment norms.

The CNX Nifty is currently trading at 8458.20, up by 37.20 points or 0.44% after trading in a range of 8420.60 and 8464.50. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were SBI up by 3.01%, Bank of Baroda up by 1.82%, IDFC up by 1.72%, ITC up by 1.36% and Ambuja Cement up by 1.31%. On the flip side, Ultratech Cement down by 1.42%, Vedanta down by 1.32%, Hindalco down by 1.19%, Bajaj Auto down by 1.01% and Coal India down by 0.80% were the top losers.

Asian markets were trading mostly in the green; Straits Times increased 0.28%, Nikkei 225 rose 0.11%, KOSPI Index jumped 0.83%, Taiwan Weighted added 0.76%, Shanghai Composite surged 1.93% and Hang Seng was up by 1.43%. On the flip side, Jakarta Composite decreased 0.1% and FTSE Bursa Malaysia KLCI was down by 0.17%.