Benchmarks continue firm trade in late morning session

Indian equity markets continued to trade in fine fettle in late morning deals on emergence of buying by funds and retail investors amid positive cues from other Asian markets. Sentiments remained buoyant with a US Treasury Department report that amid weaker outlook across emerging market economies India's recovery has strengthened under a new reform agenda, since it is not a large importer. Further, dismissing Standard and Poor’s cautious remarks on the Indian economy as a mere “point of view”, the Finance Ministry said GDP will expand by over 7.5 per cent in the current fiscal and more reforms measures would be taken by the government to push growth. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 523.69 crore on October 20, 2015. Meanwhile, the World Bank has lowered its 2015 forecast for crude oil prices from $57 per barrel in its July report to $52 per barrel, a development that could bring in additional savings to the Indian treasury.

On the global front, Asian stock markets were mostly higher as Japan's weak export figures boosted hopes for more central bank stimulus. Shares in Tokyo and Jakarta led gains, driving the MSCI Asia Pacific Index to its first gain this week. Further, US stocks ended slightly lower on Tuesday as a decline in healthcare and biotech stocks offset gains in United Technologies and Verizon.

Back on street, stocks from Metal, TECK and IT counters were supporting the markets’ uptrend, while those from Realty and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, shares of Mphasis have rallied after the company reported 18.2% quarter-on-quarter (QoQ) growth in consolidated net profit at Rs 185 crore for the quarter ended September 2015, on back of strong operational performance. On the other hand, Federal Bank had plunged after the company reported 33% year on year decline in net profit to Rs 161 crore for the quarter ended September 30, 2015 (Q2), due to higher provisioning as a spike in bad loans.

The market breadth on BSE was positive, out of 2253 stocks traded, 1308 stocks advanced, while 827 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27424.12, up by 117.29 points or 0.43% after trading in a range of 27304.44 and 27445.24. There were 24 stocks advancing against 6 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 0.32%.

The top gaining sectoral indices on the BSE were Metal up by 1.13%, TECK up by 0.75%, IT up by 0.59%, Oil & Gas up by 0.46% and Auto up by 0.41%, while Realty down by 0.22% and Capital Goods down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.38%, Vedanta up by 2.37%, Hindalco up by 2.01%, Reliance Industries up by 1.61% and ONGC up by 1.34%. On the flip side, Dr. Reddys Lab down by 2.62%, Sun Pharma down by 0.90%, Larsen & Toubro down by 0.44%, Maruti Suzuki down by 0.25% and GAIL India down by 0.23% were the top losers.

Meanwhile, Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines on Foreign Direct Investment (FDI), in order to bring clarity on the issue of compliance with the manner of Indian-owned and -controlled companies. According to the Insurance Laws (Amendment) Act 2015, the total foreign investment including both direct and indirect in Indian insurance companies cannot exceed the limit of 49 percent. The guidelines will come into force from the date of issue.

IRDAI further said that the guidelines are also applicable to insurance intermediaries such as brokers, third party administrators, surveyors and loss assessors. However, guidelines shall not be applicable to insurance intermediaries who are having more than 50 percent of its revenue from the non-insurance activities. The applicability of the guidelines may come into existence after notification of the Act.

The law provides for 'Indian Owned and controlled requirement' for an Indian insurance company. In such a case the law will be applicable where the companies proposes to hike their foreign investment from the existing level or even when they do not intend to increase their current foreign stake from the existing level.

On the other side while stating about the Indian control, IRDAI said the domestic firm shall ensure that majority of the directors, excluding independent directors, should be nominated by Indian promoter/investors and appointment of key management person, including Chief Executive Officer or Managing Director or Principal officer, should be through the Board of Directors or by the Indian promoter. However, key management person, excluding CEO, may be nominated by the foreign investor provided that the appointment of such key management person is approved by the Board of Directors, wherein majority of the directors excluding independent directors are the nominees of Indian promotor.

Further, it said that the control can be exercised by any one or more of criterion like by virtue of shareholding; management rights; shareholders agreements; voting agreements; any other manner as per the applicable laws.

The CNX Nifty is currently trading at 8288.35, up by 26.70 points or 0.32% after trading in a range of 8255.00 and 8294.40. There were 32 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.52%, Bharti Airtel up by 2.22%, Hindalco up by 1.95%, Reliance Industries up by 1.57% and Bosch up by 1.40%. On the flip side, Dr. Reddys Lab down by 2.54%, Asian Paints down by 2.19%, Tech Mahindra down by 1.24%, Sun Pharma down by 0.91% and Tata Power down by 0.85% were the top losers.

Asian markets were trading mostly in green, FTSE Bursa Malaysia KLCI was up by 0.22%, KOSPI Index up by 0.36%, Shanghai Composite up by 0.28%, Jakarta Composite up by 1.18% and Nikkei 225 was up by 1.8%. On the flip side, Taiwan Weighted was down by 0.43%.