Post Session: Quick Review

The new derivative series got a jubilant start on Friday, with marketmen exhibiting strong optimism on continued across-the-board buying that led the benchmarks reclaim the crucial psychological levels of 28000 (Sensex) and 8500 (Nifty). Traders rejoiced the government notifying the composite cap in the FDI policy, allowing up to 49 per cent foreign portfolio investment (FPI) through the automatic route in most sectors, including brownfield pharmaceuticals, single-brand retail, insurance, pension and facsimile editions of foreign newspapers. This is part of the new foreign investment policy, which allows composite foreign investment caps in all sectors barring private banking and defence. Apart from pharma and insurance the stocks related to the retail business were clear winners, as it was clarified that foreign investors in multi-brand retail can bring in investments in the form of FPI up to 49 per cent without government approval.

On the global front, while the US markets ended on a flat note in overnight trade, the Asian markets snapped the session mostly in green, though Chinese market ended in red. The Shanghai Composite extended losses and posted biggest monthly drop since August 2009 on some report that Chinese regulators had asked financial institutions in Singapore and Hong Kong for stock-trading records as part of efforts to track down investors betting against shares in China. The European markets made a mostly a positive start, heading for their biggest monthly jump since February.

Back home market jubilation reached its peak in the second half with both the benchmarks rallying in triple digit. Positive earnings announcement from select blue-chip companies coupled with steady global markets kept the markets in upbeat mood. ICICI Bank, India's biggest private sector lender by assets, reported a 12 per cent rise in quarterly profit, beating estimates, and its bad loan ratio too fell sequentially. Sun TV reported Q1 net profit rise of 19%, while Religare Enterprises reported a jump of over five fold in its net profit at Rs 37.94 crore. Shares of public sector bank spiked up on the news of the recapitalization, as the government sought approval for an additional allotment of Rs 12,110 crore from the Parliament to be used for the recapitalisation of public sector banks. It was reported that 40% of the total amount will be given to 6 big banks that require support, while 20% will be given to banks based on their performance in remaining 3 quarters of the FY16, further the government will spend Rs 10,000 crore each in FY18 and FY19 and will infuse Rs 70,000 crore in PSU banks over next four years for recapitalization. The government also said that it will enable PSU banks to raise Rs 1.11lakh crore from market in over 4 years. back on the street, in other sectoral performance realty, auto, FMCG and metal were the major gainers.

The BSE Sensex ended at 28089.37, up by 384.02 points or 1.39% after trading in a range of 27814.51 and 28161.17. There were 24 stocks on gainers side against 6 stocks on the losers side on the index. (Provisional)

The broader indices performed in tandem to the benchmarks; the BSE Mid cap index was up by 0.95%, while Small cap index ended higher by 0.84%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.94%, Auto up by 1.81%, FMCG up by 1.72%, Metal up by 1.58%, Bankex up by 1.55%, while Power down by 0.73%, Oil & Gas down by 0.23% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 4.90%, Coal India up by 4.90%, Dr. Reddys Lab up by 4.54%, Lupin up by 4.52% and Hero MotoCorp up by 3.42%. On the flip side, BHEL down by 2.91%, Tata Steel down by 1.05%, NTPC down by 0.59%, HDFC down by 0.18% and Bajaj Auto down by 0.15% were the top losers. (Provisional)

Meanwhile, the government in its effort to simplify FDI norms, has notified the changes in the foreign direct investment (FDI) policy under which there will be a composite cap on overseas investment in various sectors, except in banking and defence segments. The move simplifies procedures and leaves room for further investments by overseas entities. Government in its release has said that portfolio investment up to 49 percent, subject to the sectoral ceiling, will not need government approval, if they do not result in transfer of ownership or control from Indian citizens to non-Indian entities.

The press note further stated that there will not be any sub-limits of portfolio investment and other kinds of foreign investments in commodity exchanges, credit information companies, infrastructure companies in securities market and power exchanges. However, in private sector banking, it said, there will a sub-limit of 49 per cent on portfolio investment within the overall foreign investment limit of 74 per cent.

Government has reasoned that the decision to keep defence and banking sectors out of the purview of composite foreign investment caps was to avoid “fly-by-night operators” and “quick money” entering these sensitive sectors. At present, in the defence sector, foreign investment limit of 49 per cent is allowed under the automatic route. Similarly, in private sector banking, the FPI limit is 49 per cent.

The Cabinet had earlier this month approved introduction of concept of composite caps. At present, 100 percent foreign investment under government approval route is permitted in these sectors, except insurance and pension, where the cap is 49 percent. However in case of FDI, a foreign investor is required to obtain government approval above 26 percent, though there is no such restriction on portfolio investments.

The CNX Nifty ended at 8528.90, up by 107.10 points or 1.27% after trading in a range of 8448.00 and 8548.95. Finally there were 35 stocks 14 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bank Of Baroda up by 5.81%, Coal India up by 4.72%, SBI up by 4.67%, HCL Tech. up by 4.59% and Lupin up by 4.48%. On the flip side, BHEL down by 3.08%, Kotak Mahindra Bank down by 2.86%, BPCL down by 2.17%, Tata Power down by 1.94% and Tata Steel down by 1.19% were the top losers. (Provisional)

European markets were trading mixed, France’s CAC was up by 13.53 points or 0.27% to 5,059.95, on the other hand UK’s FTSE 100 declined by 15.25 points or 0.23% to 6,653.62 and Germany’s DAX was tad lower by 0.28 points to 11,256.87.

Asian markets, barring Shanghai Composite and Straits Times closed mostly in green on Friday. China’s committee members have promised to step up targeted adjustments to economic policy to foster stable growth in the world’s second-largest economy. To ensure that the economy can sustain a reasonable pace of growth, the members reiterated the government’s line that it would keep economic policies broadly stable, while increasing targeted adjustments. Japan’s National Core CPI remained unchanged at a seasonally adjusted 0.1%, compared to the preceding month. The percentage of the total work force that is unemployed and actively seeking employment during the previous month rose to a seasonally adjusted 3.4%, from 3.3% in the preceding month. Japanese Housing Starts rose to a seasonally adjusted 16.3%, from 5.8% in the preceding quarter while Japanese Household Spending fell to a seasonally adjusted -2.0%, from 4.8% in the preceding month. South Korean Industrial Production rose to a seasonally adjusted annual rate of 1.2%, from -3.0% in the preceding month whose figure was revised down from -2.8%. Taiwanese GDP fell to 0.64%, from 3.37% in the preceding month.