Benchmarks retract from day’s low; Nifty holds 7,750 marks

Weakness at Dalal Street has gone a little subtle as the benchmark indices have retracted from day’s low. However, the discouraging milieu continues to envelop Dalal Street. Indian bourses are currently trading around the psychological 25,650 (Sensex) and 7,750 (Nifty) levels down by over half a percent as market participants continued to remain concerned about  disappointing macro-economic data that suggests a slump in the September factory output numbers and a sharp rise in the October inflation numbers. Annual consumer price inflation edged up to 5.0 per cent in October, up for the third straight month, compared with 4.41 per cent a month ago, while Annual industrial output grew at a slower-than-expected pace of 3.6 per cent in September, dampened by a slower expansion in the mining sector.  Also, global commodity prices slumped to a new multi-year low, fearing a supply glut on the back of a slowdown in global growth. However, losses remained capped with the Fitch Ratings’ report that indicate Liberalisation of foreign direct investment (FDI) rules in 15 sectors is a significant structural macroeconomic reform that will support investment and real GDP growth over the long term. Furthermore, India Inc also expressed its confidence by saying that the Government's move to relax foreign investment rules in 15 sectors and ease the process for FDI approval proves the reforms agenda is on track and will send a positive signal to global investors.

On the global front, Asian markets were trading mostly in red following sharp losses on Wall Street as a slump in commodities markets deterred investors from riskier assets and expectations grew that the U.S. would soon move to raise interest rates. Crude prices hit two-and-a-half-month lows on Thursday after the U.S. government reported a stockpile build four times above market expectations, while gold tumbled to its lowest level since 2010, depressed by expectations that the Federal Reserve is on track for a rate liftoff in December for the first time in nearly a decade.  Back on street, stocks from Metal and Consumer Durables counters were supporting the markets’ uptrend, while those from FMCG, IT and TECK counters were adding to the underlying cautious undertone. In scrip specific development, state-run Coal India have surged after company invited bids from international companies in order to establish a washery in Jharkand. On the other hand, shares of National Aluminium Company (Nalco) have declined after the company reported a 34% decline in its net profit to Rs 226 crore for the September quarter as against Rs 342 crore in the corresponding quarter last year.

The market breadth on BSE was negative, out of 2193 stocks traded, 658 stocks advanced, while 1414 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25650.27, down by 216.68 points or 0.84% after trading in a range of 25590.96 and 25724.09. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.12%, while Small cap index down by 0.60%.

The top gaining sectoral indices on the BSE were Metal up by 0.94% and Consumer Durables up by 0.55%, while FMCG down by 1.62%, IT down by 1.58%, TECK down by 1.41%, Capital Goods down by 1.24%, Auto down by 0.93% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.61%, Tata Steel up by 0.77%, Axis Bank up by 0.58%, Bajaj Auto up by 0.34% and Bharti Airtel up by 0.33%. On the flip side, TCS down by 2.73%, ONGC down by 2.66%, Cipla down by 2.33%, Vedanta down by 2.20% and ITC down by 1.76% were the top losers.

Meanwhile, In order to give much needed momentum to the economic reforms and to drum up investment and speed up growth, Prime Minister Narendra announced Foreign Direct Investment (FDI) reforms in as many as 15 sectors which includes mining, civil aviation, defence, broadcasting, construction, agriculture and animal husbandry, plantation and manufacturing.

The government has opened up the manufacturing Sector for wholesale, retail and e-Commerce so that the industries are motivated to Make In India and sell it to the customers here instead of importing from other countries. In the construction development sector, minimum capitalisation norms and floor area restrictions have been removed. The government has also eased exit norms for foreign players in the sector. 100 per cent FDI under automatic route has been allowed in completed projects for operation and management of townships, malls/shopping complexes and business centres.

In the defence sector, 49 per cent foreign investment has been allowed under the automatic route and anything beyond through the FIPB nod.  Further, in the broadcasting sector, 100 per cent FDI has been allowed in DTH, teleports, mobile TV and cable networks. Of this, 49 per cent will be allowed under automatic route and beyond that will need FIPB nod.

Besides, the proposed reforms also enhance the limit of Foreign Investment Promotion Board (FIPB) to Rs 5,000 crore from current Rs 3,000 crore. It also contain many other long pending corrections including those being felt by the limited liability partnerships as well as NRI owned companies who seem motivated to invest in India. Few other proposals seek to enhance the sectoral caps so that foreign investors don't have to face fragmented ownership issues and get motivated to deploy their resources and technology with full force.

According to the government's release, 'The root of these reforms is to further ease, rationalise and simplify the process of foreign investments in the country and to put more and more FDI proposals on automatic route instead of government route where time and energy of the investors is wasted. The government’s decision on liberalising FDI policy is a welcome step and is part of improving ease of doing business. The reforms came just a day before PM Modi left for his first visit to the United Kingdom, focused predominantly on business and investment.

The CNX Nifty is currently trading at 7760.60, down by 64.40 points or 0.82% after trading in a range of 7741.20 and 7774.80. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Coal India up by 2.82%, BPCL up by 1.22%, Kotak Mahindra Bank up by 1.21%, Axis Bank up by 0.69% and Tata Steel up by 0.61%. On the flip side, Cairn India down by 3.47%, HCL Tech down by 3.11%, ONGC down by 2.93%, Ambuja Cement down by 2.80% and TCS down by 2.67% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 2.1%, Nikkei 225 down by 0.79%, Taiwan Weighted down by 0.83%, Shanghai Composite down by 1.06%, KOSPI Index down by 0.83% and FTSE Bursa Malaysia KLCI down by 0.11%. On the flip side, Jakarta Composite was up by 0.3%.