Benchmarks erase gains to trade in red

Indian equity markets erased all gains and started trading in red in the late afternoon session on account of selling in front line blue chip counters and taking cues from global counterparts. Traders were cautious as expressing concern over slowdown in the pace of reforms, global rating agency Standard & Poor’s stated that India’s rating could come under stress if government fails to pursue reforms agenda and overshoots fiscal deficit target. The sentiments also remained under pressure on reports that overseas investors have pulled out more than $1billion from the Indian capital markets since the beginning of the month due to lacklustre quarterly earnings and concerns over a possible rate hike by the US Federal Reserve. Traders were seen piling position in Realty, Consumer Durables and Auto stocks while selling was witnessed in Metal, FMCG and PSU sector stocks. In the scrip specific development, metals and mining major Vedanta and Aditya Birla group flagship firm Hindalco Industries were trading in red as these stocks will be shifted out of the BSE benchmark Sensex with effect from December 21.

On the global front, the Asian markets were trading mixed, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 7,850 and 25,800 levels respectively. The market breadth on BSE was positive in the ratio of 1373:1092 while 196 scrips remained unchanged.

The BSE Sensex is currently trading at 25790.34, down by 78.15 points or 0.30% after trading in a range of 25752.27 and 25958.04. There were 11 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.28%, while Small cap index up by 0.42%.

The gaining sectoral indices on the BSE were Realty up by 0.78%, Consumer Durables up by 0.78%, Auto up by 0.30%, TECK up by 0.22% and Capital Goods up by 0.21%, while Metal down by 1.26%, FMCG down by 1.04%, PSU down by 0.30%, Power down by 0.19% and Bankex down by 0.04% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 3.65%, Bajaj Auto up by 2.25%, Dr. Reddy’s Lab up by 1.40%, Lupin up by 0.94% and GAIL India up by 0.90%.

On the flip side, Hindalco down by 4.01%, Vedanta down by 3.60%, Tata Steel down by 2.18%, ITC down by 2.13% and HDFC down by 1.17% were the top losers.

Meanwhile, the government has recently made some changes to the investment regulations, in order to attract foreign inflows into Alternative Investment Funds (AIFs), Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). The inflows are believed to be one of the key drivers for India’s economic growth. AIFs, REITs and InvITs are expected to provide impetus to various crucial sectors of the Indian economy. Therefore, foreign investment in these Investment Vehicles has been on the radar of the Union Government in recent times.

As per the latest changes, Investments by non-resident Indians and other foreign investors into such funds or trusts will now be allowed under the automatic route. The recent changes also do away with a number of ambiguities surrounding the status of the trusts from an FDI point of view. Earlier, while the trusts were regulated by SEBI, there was no provision under the FDI policy for classification of such trusts as Indian-owned and controlled or otherwise. Though, these developments are positive, the government may still have to determine certain tax delays to ensure large investments into these trusts.

AIFs, Infrastructure Investment Trusts and REITs are all investment vehicles regulated by capital markets regulator Security exchange Board of India (SEBI). Formed as a trust for the purpose of pooling in capital, any foreign investment into them required an approval from the Foreign Investment Promotion Board (FIPB) which was time consuming.

The CNX Nifty is currently trading at 7835.95, down by 20.60 points or 0.26% after trading in a range of 7827.50 and 7877.50. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 3.64%, Zee Entertainment up by 2.93%, Adani Ports &Special up by 2.48%, Idea Cellular up by 2.17% and Bajaj Auto up by 1.94%.

On the flip side, Hindalco down by 3.89%, Vedanta down by 3.76%, Tata Steel down by 2.35%, ITC down by 2.16% and Bank of Baroda down by 1.75% were the top losers.

The Asian markets were trading mixed; Hang Seng decreased 88.82 points or 0.39% to 22,665.90, Shanghai Composite decreased 20.19 points or 0.56% to 3,610.31 and Jakarta Composite decreased 3.02 points or 0.07% to 4,558.31.

On the other hand, FTSE Bursa Malaysia KLCI increased 10.32 points or 0.62% to 1,672.21, KOSPI Index increased 13.84 points or 0.7% to 2,003.70 and Taiwan Weighted increased 20.28 points or 0.24% to 8,485.73. Japan’s stock exchange was closed on account of ‘Labour Thanksgiving Day’ holiday.

The European markets were trading in red; UK’s FTSE 100 decreased 63.71 points or 1.01% to 6,270.92, Germany’s DAX decreased 66.2 points or 0.6% to 11,053.63 and France’s CAC decreased 44.7 points or 0.91% to 4,866.27.