Benchmarks recover from day’s low; bounce back into positive territory

Bouncing back from day's low, benchmark equity indices were trading in green, with slender gains of about one tenth of a percent, which kept both Sensex and Nifty above crucial 27,850 and 8,450 levels respectively. Sentiments got a boost with Finance Minister Arun Jaitley’s statement, who making a case for interest rate cut has said that that RBI will take note of the declining inflation and take a decision accordingly. The FM has also asserted that India must completely open up its economy to global investment, except for rare sectors. He said that while macroeconomic indicators like inflation and industrial production were positive, he said the challenges included slow credit off-take. Some support also came with Union Parliamentary Affairs Minister M Venkaiah Naidu’s statement that the Centre would hold discussions with Congress and other parties to bring them around to facilitate passage of the GST before the winter session of Parliament. The broader indices continuing with their outperformance were trading with gains of around half a percent. However, gains remained capped on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 255.42 crore on August 18, 2015. Depreciation in Indian rupee against dollar too weighed down the sentiments.

On the global front, concerns about the health of China’s economy kept pressure on Asian markets and commodities, a day after stocks in Shanghai tumbled more than 6%. Shares of importers and firms with high US dollar-denominated debt have been under pressure following last week’s yuan devaluation. Besides, Wall Street shares also retreated on Tuesday with Nasdaq losing over 0.6%. back home, Indian rupee fell 9 paise to trade at a two-year low of 65.40 against the dollar as the US currency strengthened overseas.

Back on street, stocks from Consumer Durables, Realty and Oil & Gas counters were supporting the markets’ uptrend, while those from Metal, PSU and Capital Goods counters was adding to the underlying cautious undertone. In scrip specific development, shares of Glenmark Pharmaceuticals have surged after the company received final approval from the US drug regulator for drospirenone and ethinyl estradiol tablets. Furthermore, Rajesh Exports rose after the company bagged an export order worth Rs 1170 crore of designer range of gold and diamond studded jewellery and medallions from A1 Malek Jewellery, UAE.

The market breadth on BSE was positive, out of 2293 stocks traded, 1356 stocks advanced, while 846 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27859.37, up by 27.83 points or 0.10% after trading in a range of 27721.25 and 27865.85. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.35%, while Small cap index up by 0.58%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.76%, Realty up by 0.59%, Oil & Gas up by 0.50%, IT up by 0.40% and Infrastructure up by 0.16%, while Metal down by 0.45%, PSU down by 0.37%, Capital Goods down by 0.23%, Power down by 0.12% and FMCG down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.97%, Cipla up by 2.30%, Lupin up by 1.75%, ICICI Bank up by 1.05% and Reliance Industries up by 0.70%. On the flip side, Bharti Airtel down by 1.51%, Hindalco down by 1.23%, SBI down by 1.22%, HDFC down by 1.07% and BHEL down by 0.98% were the top losers.

Meanwhile, moving a step further in the government’s policy of improving the ease of doing business in the country, the government will soon finalise three new important laws - the litigation policy, the bankruptcy code and an arbitration law. Finance Minister Arun Jaitley stated that the litigation policy is more or less ready, after being cleared by a small informal group of ministers. The bankruptcy code was to be ready by the end of July and it's going to be ready any of these days. The arbitration law is already cleared by Cabinet and it will be introduced in Parliament. So, all the three are ready.

Jaitley further stated that when legal reforms are involved, it's not merely between the litigant or the industry at one hand and the government on the other, but there is a third agency which is the courts. Therefore, courts not being a part of the legislative process, are only interpreters of the legislative decisions.

India is ranked at 142th position in terms of ease of doing business among the 189 nations that the World Bank ranks. In 2015, of the 10 parameters that the World Bank considers while giving final cumulative rankings, India improved on only one, protecting minority investors, while it came close to the bottom in two categories. It stood a wretched 184th in the category “Dealing with Construction Permits,” and 186th in “Enforcing Contracts.”  According to World Bank getting construction permits in India involved an average of 25 procedures that took 186 days, and cost 28 per cent of the warehouse value. Enforcing contracts took 46 procedures and 1420 days - nearly four years. Getting electricity took 106 days and registering a property took 47 days.

India plans to improve its position in terms of ease of doing business to 50th by 2017.  World Bank President Jim Yong Kim had in July last year said India could jump 50 spots by just implementing the Gujarat model of reforms. According to the World Bank report, the overall ease-of-doing-business ranking tells only part of the story, and so do changes in rankings.

The CNX Nifty is currently trading at 8473.20, up by 6.65 points or 0.08% after trading in a range of 8425.95 and 8474.80. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.88%, Cairn India up by 2.40%, Cipla up by 2.22%, Lupin up by 2.03% and ACC up by 1.97%. On the flip side, Bank of Baroda down by 1.64%, Bharti Airtel down by 1.62%, Idea Cellular down by 1.47%, SBI down by 1.32% and NMDC down by 1.31% were the top losers.

Asian markets were trading mostly in red; Hang Seng was down by 1.03%, Nikkei 225 down by 1.36%, Taiwan Weighted down by 1.73%, Shanghai Composite down by 3.12%, Straits Times down 0.01%, KOSPI Index down by 1.4% and Jakarta Composite was down by 0.63%. On the flip side, FTSE Bursa Malaysia KLCI was up by 0.3%.