Benchmarks trade with caution in early deals

Indian equity benchmarks are trading with caution in early deals on account of mixed economic data. Sentiments remain dampened after India’s economic growth rate slipped to 6-quarter low of 7.1 percent in April-June, as compared to 7.9 percent in the previous quarter, mainly due to subdued performance of mining, construction and farm sectors. The economy had expanded at 7.5 percent in the April-June quarter of last financial year, 2015-16. Sentiments also weighed down with the Core Sector growth slowing to 3.2 percent in July, compared to 5.2 percent recorded in June. However, the cumulative growth of the sector during April-July period of the fiscal was 4.9 percent. Meanwhile, fiscal deficit in the first four months of the current financial year stood at Rs 3.93 lakh crore, or 73.3 percent of the Budget estimates for 2016-17.

Global cues too remain dampened with most of the Asian counters trading in red terrain at this point of time, tracking overnight losses on Wall Street amid weak crude oil prices. Back home, shares of selected companies trading lower after the Competition Commission of India (CCI) imposed more than Rs 6,700 crore penalties on 11 cement companies for cartelisation. However, stocks related to infra space remained on buyers’ radar, as the government has announced a package of measures to revive the construction sector, putting in place a mechanism to release funds stuck in arbitration awards to revive stalled projects.

The BSE Sensex is currently trading at 28456.80, up by 4.63 points or 0.02% after trading in a range of 28416.54 and 28542.72. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.25%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.87%, Auto up by 0.65%, Metal up by 0.38%, Bankex up by 0.36% and Telecom up by 0.30%, while Realty down by 0.72%, Capital Goods down by 0.31%, Basic Materials down by 0.19%, IT down by 0.05% and TECK down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 1.65%, ICICI Bank up by 1.22%, Mahindra & Mahindra up by 0.97%, Tata Motors up by 0.89% and SBI up by 0.77%. On the flip side, HDFC Bank down by 1.05%, Wipro down by 0.98%, Larsen & Toubro down by 0.65%, Asian Paints down by 0.63% and Power Grid down by 0.60% were the top losers.

Meanwhile, the Union Cabinet has given its ex-post-facto approval to the radical changes in the Foreign Direct Investment (FDI) policy amendments announced by government on June 20, 2016. As per the liberalised norms, foreign investment in defence sector is now permitted up to 100 percent. The changes introduced in the policy include increase in sectoral caps, bringing more activities under automatic route and easing of conditionality’s for foreign investment. The FDI policy amendments are meant for liberalising and simplifying the FDI policy so as to provide ease of doing business in the country, leading to larger FDI inflows contributing to growth of investment, incomes and employment.

Earlier, policy in defence sector permitted 49 percent FDI participation in the equity of a company under automatic route. FDI above 49 percent was permitted through approval on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country. With a view to aid modernisation of the existing airports to establish a high standard and help ease pressure on the existing airports, 100 percent FDI under automatic route was allowed in Brownfield airport projects. Further, in case of single brand retail trading, the government has relaxed local sourcing norms for up to three years, with prior government approval, for entities undertaking trading of products having ‘state-of-art’ and ‘cutting edge’ technology.

For private security agencies, FDI up to 49 percent is now permitted under automatic route and beyond that and up to 74 percent, government approval is required. FDI ceiling in sectors like teleports, Direct to Home (DTH), Cable Networks, mobile TV and Headend-in-the Sky Broadcasting Service (HITS) has been increased to 100 percent. Norms for foreign invesment in pharmaceutical sector too have been liberalised. Also, 100 percent FDI under automatic route for trading, including through e-commerce has been permitted in respect of food products manufactured and/or produced in India.

The CNX Nifty is currently trading at 8786.15, down by 0.05 points or 0.00% after trading in a range of 8776.10 and 8811.75. There were 29 stocks advancing against 20 stocks declining on the index, while 2 stocks remained unchanged.

The top gainers on Nifty were GAIL India up by 1.59%, Tata Power up by 1.46%, Bharti Infratel up by 1.31%, ICICI Bank up by 1.16% and Mahindra & Mahindra up by 1.00%. On the flip side, BPCL down by 1.72%, ACC down by 1.57%, Ambuja Cement down by 1.51%, Wipro down by 1.26% and Aurobindo Pharma down by 1.10% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted decreased 57.87 points or 0.64% to 9,010.98, Jakarta Composite declined 45.63 points or 0.85% to 5,340.45, KOSPI Index slipped 7.76 points or 0.38% to 2,026.89, FTSE Bursa Malaysia KLCI shed 5.17 points or 0.31% to 1,672.89 and Shanghai Composite was down by 4.62 points or 0.15% to 3,080.87. On the flip side, Nikkei 225 increased 42.97 points or 0.25% to 16,930.37 and Hang Seng was up by 117.64 points or 0.51% to 23,094.52.