Benchmarks make a positive start on Tuesday

After a sharp fall in previous session, Indian equity markets have made a positive start, trading marginally in green. Sentiment on the street improved after the Finance Minister Arun Jaitley assured investors that the government will not take any action that may jeopardise investment climate. Some support also came with Chief Economic Advisor (CEA) Arvind Subramanian stating that India can grow at 8-10 percent, provided exports put up a strong show. However, gains remained capped on reports that Foreign Portfolio Investors (FPIs) were the net sellers to the tune of Rs. 860 crore on July 27, 2015 as per the provisional stock exchange data. Some volatility is likely to prevail in the markets ahead of the derivatives expiry for the month of July later this week. In scrip specific development, Torrent Pharmaceuticals was trading higher after the company reported a strong 75% year-on-year (YoY) rise in consolidated net profit at Rs 449 crore for the first quarter ended June 2015 (Q1), mainly on account of a new product launch in the US.

On the global front, the US markets ended lower after the steepest decline in Chinese stocks in eight years. Asian markets were trading in red as the rout in Chinese stock markets drove global equities lower and increased risk aversion.

Back home traders were seen piling up position in Capital Goods, Consumer Durables, IT, TECK and Healthcare, while selling was witnessed in Realty, Metal, INFRA, PSU and Auto.  The market breadth on BSE was negative in the ratio of 1028: 651, while 75 scrips remained unchanged.

The BSE Sensex is currently trading at 27573.94, up by 12.56 points or 0.05% after trading in a range of 27542.07 and 27661.46. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was down by 0.15%, while Small cap index up by 0.29%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.58%, Consumer Durables up by 0.50%, IT up by 0.34%, TECK up by 0.32% and Healthcare up by 0.15%, while Realty down by 1.52%, Metal down by 0.45%, INFRA down by 0.44%, PSU down by 0.43% and Auto down by 0.40% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 1.23%, Larsen & Toubro up by 0.83%, Dr. Reddys Lab up by 0.73%, ICICI Bank up by 0.70% and Maruti Suzuki up by 0.57%. On the flip side, ONGC down by 2.03%, Tata Motors down by 2.01%, Wipro down by 0.98%, Hindalco down by 0.86% and Tata Steel down by 0.76% were the top losers.

Meanwhile, in its bid to soothe the nerves of panic-stricken investors, Finance Minister Arun Jaitley has said they need not fear any “knee-jerk” reaction from the government on the SIT report, which had recommended tough measures to check investment flows through P-Notes. Jaitley said that 'It is too early to say what view the government would take. But it will certainly not take any such action in a knee-jerk reaction, particularly one which has any adverse impact on investment environment.' Jaitley also said government will wait for public comments on draft finance code before forming any view on monetary policy committee.

The Supreme Court-appointed SIT on black money last week recommended a host of measures, including suggesting the securities regulator SEBI to tighten norms related to participatory notes investments into India. The SIT said that Sebi does not have information about the ultimate beneficial owner of these transferable instruments, making it prone to be abused for round-tripping of tax-evaded funds back to India.

The SIT suspects that the P-note route is being used for the purpose of tax evasion and has also asked Sebi to compulsorily identify real owners of foreign funds coming through the controversial P-Note route and also prosecute those using equities for tax evasion, and take other steps required to curb black money and tax evasion through the stock market route.

Participatory Notes (P-Notes) are used by large number of foreign investors to invest in equity markets without disclosing their identity to the market regulator Sebi. Mostly, high net worth individuals, hedge funds and other foreign institutions tap this channel to invest in India through foreign institutional investors (FIIs). Investments through P-notes into India's capital market were at a whopping Rs 2.75 lakh crore at the end of June, over 11 per cent of total foreign institutional investment (FII) into the Indian markets.

The CNX Nifty is currently trading at 8367.15, up by 6.15 points or 0.07% after trading in a range of 8357.35 and 8391.75. There were 26 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were BHEL up by 1.91%, Tech Mahindra up by 1.03%, Larsen & Toubro up by 0.98%, Zee Entertainment up by 0.87% and Ultratech Cement up by 0.82%. On the flip side, NMDC down by 2.58%, ONGC down by 2.25%, Tata Motors down by 2.15%, PNB down by 1.29% and Cairn India down by 1.24% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite decreased 50.05 points or 1.05% to 4,721.23, Nikkei 225 decreased 46.56 points or 0.23% to 20,303.54, Shanghai Composite decreased 37.08 points or 1% to 3,688.48, Straits Times decreased 17.33 points or 0.52% to 3,296.09 and KOSPI Index decreased 4.7 points or 0.23% to 2,034.11

On the flip side, FTSE Bursa Malaysia KLCI increased 2.78 points or 0.16% to 1,712.54, Taiwan Weighted increased 49.57 points or 0.58% to 8,606.25, Hang Seng increased 312.55 points or 1.28% to 24,664.51