Benchmarks gyrate around neutral line in late morning session

Indian equity benchmarks continued its lackluster trade hovering near the neutral line in the late morning session in absence of any positive upside trigger. The sentiments got some minor support from stock exchange report that Foreign Institutional Investors were net buyers in equities worth Rs 413 crore (provisional) on Wednesday. Investors took note of media report that the government is working out a plan to optimally utilize land banks of state run companies as part of its bigger ambition to monetize the assets of public sector enterprises. The government will look at all central public sector companies (CPSEs), including profit making firms, to assess if their existing resources can be utilized for spurring the economic growth. Market sentiment was also influenced by investors treading cautiously ahead of June IIP and retail inflation data for July scheduled to be released on Friday. Traders were seen piling position in FMCG, Oil & Gas and IT stock while selling was witnessed in Metal, Capital Goods and Auto sector stocks. In scrip specific development, Dilip Buildcon was trading in green after making a decent debut on the exchanges with a premium over its issue price of Rs 219 apiece. The Rs 654 crore IPO, which ran between August 1 to August 3 had received 21 times subscription.  Indian Overseas Bank (IOB) was trading under pressure on reports that the Central Bureau of Investigation has registered a case against three then Assistant Managers of the IOB and others, including a retired Brigadier, for allegedly causing a loss of Rs 321 crore to the exchequer.

On the global front, Asian markets were trading mostly in green on caution tone, as a rise in crude oil inventory and expanding production in Saudi Arabia sent oil prices lower. China’s banking regulator cut the ratio of bad loans at commercial banks in the second quarter from preliminary data it released last month. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,600 and 28,000 levels respectively. The market breadth on BSE was negative in the ratio of 1031:1043, while 116 scrips remained unchanged.

The BSE Sensex is currently trading at 27790.21, up by 15.33 points or 0.06% after trading in a range of 27697.33 and 27828.42. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.16%, while Small cap index was up by 0.08%.

The gaining sectoral indices on the BSE were FMCG up by 0.73%, Oil & Gas up by 0.56%, IT up by 0.55%, TECK up by 0.34% and Power up by 0.14%, while Metal down by 0.63%, Capital Goods down by 0.51%, Auto down by 0.48%, PSU down by 0.46% and Bankex down by 0.26% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 1.71%, Reliance Industries up by 1.37%, ITC up by 1.11%, ICICI Bank up by 1.09% and TCS up by 1.05%.
On the flip side, Sun Pharma down by 3.19%, Mahindra & Mahindra down by 1.62%, SBI down by 1.32%, Tata Motors down by 1.10% and Larsen & Toubro down by 0.94% were the top losers.

Meanwhile, in another major relaxation in FDI norms since November 2015, the cabinet has given its approval for amendments to the Foreign Exchange Management (Transfer or Issue of Security by the Person Resident outside India) regulations on NBFCs to this effect. The cabinet has approved the list of non-banking financial companies (NBFCs), which can attract foreign direct investment. The government also gave a green signal to foreign investment through the automatic route in other financial services regulated by any of the financial sector regulators such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi) and Pension Fund Regulatory and Development Authority (PFRDA).

Under the current regulations, 100 per cent FDI would be allowed on automatic route for only 18 specified NBFC activities including merchant banking, under writing, portfolio management services, financial consultancy and stock broking after fulfilling prescribed minimum capitalisation norms mentioned therein. This is the third major relaxation in FDI norms since November 2015. In June this year, the government had announced liberalisation in eight sectors, including defense and civil aviation sectors.

The amendment in the Foreign Exchange Management (Transfer or Issue of Security by the Person Resident outside India) regulations on NBFCs will enable inflow of foreign investment in other Financial Services on automatic route provided such services are regulated by any financial sector regulators or government agencies. Foreign investment can be made through approval route in other financial services, which are not regulated.

Further, minimum capitalisation norms as mandated under FDI policy have been eliminated as most of the regulators have already fixed minimum capitalisation norms. This will induce FDI and spurt economic activities. It will cover whole India and is not limited to any State/Districts. India’s FDI inflows in 2015-16 increased to record $55.46 billion as against $45.15 billion in 2014-15 and $36.04 billion during 2013-14.

The CNX Nifty is currently trading at 8568.95, down by 6.35 points or 0.07% after trading in a range of 8547.45 and 8586.55. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Lupin up by 1.78%, Reliance Industries up by 1.37%, Idea Cellular up by 1.34%, ITC up by 1.24% and TCS up by 1.18%.

On the flip side, Bank of Baroda down by 8.67%, Grasim Industries down by 3.83%, Sun Pharma down by 3.33%, Yes Bank down by 2.07% and Hindalco down by 2.02% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.6 points or 0.1% to 1,674.63, Shanghai Composite increased 2.69 points or 0.09% to 3,021.44, Jakarta Composite increased 27.32 points or 0.5% to 5,451.27 and Hang Seng increased 60.46 points or 0.27% to 22,552.89.

On the other hand, Taiwan Weighted decreased 87.99 points or 0.96% to 9,112.43 and KOSPI Index decreased 2.9 points or 0.14% to 2,041.74.