Markets trade flat with positive bias ahead of RBI’s monetary policy review

After a mildly negative close in previous session, Indian equity markets have made flat but positive start and are now trading with marginal gains in morning deals, as investors were adopting wait and watch stance ahead of the Reserve Bank of India (RBI) monetary policy review later today. Traders were getting some encouragement with Core sector output returning to positive territory in December 2015 by registering a 0.9 per cent growth after shrinking (-)1.3 per cent in November last year. Further, foreign portfolio investors (FPIs) bought shares worth a net Rs 253.88 crore on February 1, 2016, as per provisional data released by the stock exchanges that kept supporting sentiment. Meanwhile, Commerce and Industry Minister Nirmala Sitharaman has said that the Trans Pacific Partnership (TPP) will certainly have an impact on India's exports and it is most likely to affect sector like leather goods, plastics, chemicals, textiles and clothing. On the sectoral front,  traders were seen piling up position in TECK, IT, Power, Auto and Realty, while selling was witnessed in Metal, Oil & Gas, PSU, Capital Goods and FMCG.

In the scrip specific development, Nitta Gelatin India was locked in upper circuit of 20% on the BSE after the company reported a net profit of Rs 7.51 crore in December 2015 quarter (Q3FY16) on back of strong operational performance and lower finance cost.

On the global front, the US markets ended mostly lower as investors looked past another steep drop in oil prices and renewed concerns about economic growth in China and the US. Asian markets were trading mostly in red, with the lackluster cues from Wall Street overnight and the 6 percent tumble in crude oil prices denting investor sentiment. Disappointing U.S. and Chinese manufacturing data released on Monday has added to worries about the global economy.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,550 and 24,850 levels respectively The market breadth on BSE was positive in the ratio of 927: 548 while 55 scrips remained unchanged.

The BSE Sensex is currently trading at 24856.31, up by 31.48 points or 0.13% after trading in a range of 24837.84 and 24892.53. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index gained 0.42%.

The top gaining sectoral indices on the BSE were TECK up by 0.81%, IT up by 0.77%, Power up by 0.55%, Auto up by 0.43% and Realty up by 0.38%, while Metal down by 1.25%, Oil & Gas down by 0.99%, PSU down by 0.47%, Capital Goods down by 0.12% and FMCG down by 0.05% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.79%, Bajaj Auto up by 1.20%, Infosys up by 1.12%, Adani Ports & SEZ up by 1.04% and Dr. Reddys Lab up by 1.03%. On the flip side, Tata Steel down by 2.97%, ONGC down by 2.27%, Coal India down by 1.19%, BHEL down by 0.75% and GAIL India down by 0.63% were the top losers.

Meanwhile, suggesting sweeping changes to the Companies Act, 2013 and making it easier for companies to raise funds and reward senior management and ensuring that steps to enhance shareholder democracy don't cripple the functioning of firms and the businesses they run, a committee set up by the government to review issues arising out of implementation of the Companies Act has suggested changes to improve ease of doing business, encourage startups and harmonise various laws.

The committee, chaired by the corporate affairs secretary Tapan Ray held extensive consultations with stakeholders before making its recommendations and  proposed easing regulations for shareholders’ approval to the managerial remuneration and removal of the restriction on layers of subsidiaries and investment companies, moves that could address concerns raised by corporate groups after the 2013 overhaul of the Act.

Among the major recommendations of the panel are a change in the definition of associate company and subsidiary company to ensure that only “equity share capital” is the basis for deciding holding-subsidiary relationship, instead of “both equity and preference share capital”. It also proposed simplification of the private placement process and doing away with separate offer letter and pitched for easing of the process of incorporation and reducing the number of filings to the Registrar of Companies (RoC).

For managerial remuneration shareholders' approval should suffice and no government nod should be needed. Further, only ordinary resolution, nod from 50 per cent of shareholders, would be enough. At present, approval from 75 per cent shareholders is required. The committee in its report has suggested that the government may also allow issuance of ESOPs to promoters working as employees or whole time directors of startups, which would help promoters to gain from increase in future valuation.  In order to bring the Companies Act in harmony with the Sebi regulations, the panel said that independent director should not have any kind of pecuniary relationship with the company.

The CNX Nifty is currently trading at 7562.10, up by 6.15 points or 0.08% after trading in a range of 7554.70 and 7568.55. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Power Grid Corpn. up by 2.18%, Bharti Airtel up by 1.82%, Idea Cellular up by 1.43%, Dr. Reddys Lab up by 1.32% and Bajaj Auto up by 1.19%. On the flip side, Tata Steel down by 2.85%, ONGC down by 2.51%, Vedanta down by 1.85%, Cairn India down by 1.85% and BPCL down by 1.58% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 81.56 points or 0.42% to 19,513.94, Taiwan Weighted decreased 23.75 points or 0.29% to 8,133.21, Jakarta Composite decreased 20.72 points or 0.45% to 4,603.91, KOSPI Index decreased 13.1 points or 0.68% to 1,911.72, FTSE Bursa Malaysia KLCI decreased 9.17 points or 0.55% to 1,658.63 andNikkei 225 decreased 0.53 points or 0% to 17,864.70.

On the flip side, Shanghai Composite increased 63.36 points or 2.36% to 2,752.22.