Markets pare most of their initial gains

Indian equity benchmarks, paring most of their initial gains, are trading slightly in green in noon deals. Markets traded jubilantly in early deals as some sense of encouragement came in from report that India's retail inflation eased to 3.78% in July from 5.40% in June and the growth in factory output accelerated to 3.8% in June from 2.5% in the previous month. However, markets trimmed most of their gains after a turbulent and largely unproductive monsoon session of Parliament ended this afternoon without legislation including the Goods and Services Tax (GST) proposal being cleared. Sentiments were also weighed down after Indian rupee reversed its gains to slip near the key 65 per dollar mark against the US dollar on the back of unexpected devaluation of yuan.

Global cues remained supportive with European counters making a firm start with CAC, DAX and FTSE all trading in green in early deals. All the Asian markets were trading in green at this point of time, with investors cautiously watching China’s next move after it allowed the yuan to decline for two straight sessions. On the sectoral front, consumer durables, fast moving consumer goods and healthcare witnessed the maximum gain in trade, while metal, capital goods and realty remained the top losers on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was negative; there were 1,131 shares on the gaining side against 1,423 shares on the losing side while 99 shares remain unchanged.

The BSE Sensex is currently trading at 27541.51, up by 29.25 points or 0.11% after trading in a range of 27535.97 and 27791.10. 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 up by 0.36%, while Small cap index down by 0.16%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.30%, FMCG up by 0.61%, Healthcare up by 0.59%, TECK up by 0.57% and IT up by 0.54%, while Metal down by 1.32%, Capital Goods down by 0.41%, Realty down by 0.23% and Power down by 0.07% were the few losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.34%, Cipla up by 2.27%, Bharti Airtel up by 2.24%, Infosys up by 1.51% and Coal India up by 1.33%. On the flip side, Tata Steel down by 3.51%, Vedanta down by 3.07%, Hindalco down by 2.09%, GAIL India down by 2.00% and Wipro down by 1.51% were the top losers.

Meanwhile, Narendra Modi’s two-day visit to UAE next week mainly focuses to boom trade and investments between the two regional economic powerhouses and also aims to attract much needed foreign investment to boost the economy. The visit aims to attract the huge untapped potential of the Abu Dhabi Investment Authority (ADIA) sovereign wealth funds estimated at over $800 billion for infrastructural needs in the backdrop of the $1 trillion infrastructure spending planned by India. India's on-going talks with the Gulf countries on finalizing Free Trade Agreement (FTA) are also expected to get a new boost with the Indian leader's visit. Attracting more foreign direct investments to India, which is among the top three trade partners of the UAE, is certainly one of the main agendas of the Indian leadership.

Further this visit will also give impetus to Bilateral Investment Protection Agreements (BIPA) which earlier has not functioned to its potential to attract investments due to fluctuation in the Indian economy in the last two years. India is committed to implementing the BIPA signed with the UAE to encourage further investment flow into the country. Earlier in December 2013 the deal was signed to ensure protection of cross border investments by India and the UAE which aimed to speed up the investments and also giving a fresh momentum to stalled joint venture projects.

Currently, the UAE investments in India are estimated to be $8 billion of which around $3.01 billion as of January 2015 is in the form of foreign direct investment, while the remaining is portfolio investment. Due to curb on gold imports the two-way trade has declined from a record high of $75.45 billion in 2012-13 to $59.54 billion in 2013-14. The UAE's investments in India are mainly concentrated in five sectors which include 15.52% in Construction Development, 13.09% in Power, 9.90% in Metallurgical Industries, 9.58% in Services Sector and 4.90% in Computer Software & Hardware.

UAE is the tenth biggest investor in India in terms of FDI, investments by Indian companies in the UAE are estimated to be in excess of $55 billion, making the Gulf country a sought-after destination of Indians.

The CNX Nifty is currently trading at 8360.10, up by 10.65 points or 0.13% after trading in a range of 8339.75 and 8429.50. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.16% and Lupin up by 2.04%, Bharti Airtel up by 1.56%, HCL Tech. up by 1.34% and Tech Mahindra up by 1.34%. On the flip side, Tata Steel down by 3.63%, Vedanta down by 3.21%, NMDC down by 2.85%, Hindalco down by 2.29% and GAIL India down by 2.10% were the top losers.

All the Asian markets were trading in green; KOSPI Index increased 7.99 points or 0.4% to 1,983.46, FTSE Bursa Malaysia KLCI gained 15.12 points or 0.94% to 1,625.05, Taiwan Weighted rose 28.36 points or 0.34% to 8,311.74, Straits Times jumped 36.86 points or 1.2% to 3,098.35, Shanghai Composite soared 59.02 points or 1.52% to 3,945.34, Jakarta Composite surged 104.76 points or 2.34% to 4,584.25, Hang Seng added 164.47 points or 0.69% to 24,080.49 and Nikkei 225 was up by 202.78 points or 0.99% to 20,595.55.

European Markets were trading in the green; Germany’s DAX gained 1.59%, France’s CAC surged 1.85% and UK’s FTSE was up by 0.81%.