Post Session: Quick Review

India equity benchmarks traded on lackluster note and ended the session with minor loss. Weakness in global stocks weighed on sentiment of the domestic bourses. The benchmarks made a weak start and traded in red in early deals after rupee dropped against the dollar at the Interbank Foreign Exchange market on increased demand for the American currency from importers. The rupee is headed for a third weekly decline, the longest stretch of losses since May, amid signs demand for the nation’s assets are waning. Some cautiousness prevailed as US Trade Representative Michael Froman underlining the need to improve the business environment in India in order to ensure greater investment inflow, has said that certain areas in the Indian economy like retail and financial services needed further opening up. A private report stated that industrial production in the country is expected to remain subdued and this can act as a restrain to the overall growth momentum in the current fiscal. Weak private sector investment and fragile external sector demand are likely to pull down industrial production in the coming months. Further, business sentiment, as reflected in the Optimism Index, remained a tad cautious for the October-December 2016 quarter. Market participants remained cautious with the Moody’s report that there has been a large-scale decline in private investment in PPP projects in recent years because of delays in project approvals and land purchases by the government, complicated dispute resolution mechanisms in the concession agreements and lower than expected revenues due to aggressive assumptions. Separately, a report highlighted that manufacturing growth is likely to remain flat and factory output may even continue to remain in negative territory in the coming months. The yearly SBI Composite Index for October remained stationary at 50.2, compared to September. The monthly index declined marginally to 52.1 in October from 52.6 in September. The SBI Composite Index, a leading indicator for manufacturing activity in the Indian economy, aims to foresee the periods of contraction and expansion.

On the global front, Asian markets ended mostly in red, while China markets managed to end the session slightly up, as strength in infrastructure shares offset concerns rooted in continuing yuan weakness. European markets were trading in green supported by a weaker euro and strong results. ECB left its ultra-loose monetary policy unchanged but kept the door open to more stimulus in December, with ECB President Mario Draghi dousing recent market speculation that the central bank may begin tapering its 1.7 trillion euro asset-buying programme.

Back home, mixed reactions were displayed in telecom counter after Fitch Ratings enlightened that, credit profiles of Indian telecom operators will weaken amid intense competition and high capex requirements in 2017. The ratings agency said pricing power could be eroded as incumbents retaliate against new entrant Reliance Jio's cheaper data tariffs and free voice and text. It, however, said that Reliance Jio is expected to gain less than a 2% revenue market share in 2017 but will act a major price-disruptor to the sector.

The BSE Sensex ended at 28083.23, down by 46.61 points or 0.17% after trading in a range of 27957.92 and 28163.41. There were 16 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.18%, while Small cap index was up by 0.04%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 0.68%, IT up by 0.67%, TECK up by 0.59%, FMCG up by 0.36% and Capital Goods up by 0.25%, while Consumer Durables down by 1.67%, Metal down by 0.73% and Oil & Gas down by 0.04% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddy’s Lab up by 1.32%, TCS up by 1.29%, HDFC Bank up by 1.27%, Hindustan Unilever up by 1.24% and GAIL India up by 0.75%. (Provisional)

On the flip side, Axis Bank down by 2.52%, Reliance Industries down by 2.20%, Cipla down by 1.83%, HDFC down by 1.56% and Asian Paints down by 1.26% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India, opening the gates for more foreign investments in the country has allowed foreign direct investment (FDI) up to 100% under automatic route in ‘Other Financial Services’ carried out by NBFCs. The apex bank also simplified rules for easier entry of venture capital funds to startup ventures and also eased external commercial borrowing regulations.

RBI in its notification said that in financial services activities which are not regulated or partly regulated or where there is lack of clarity regarding regulatory oversight, foreign investment will be allowed up to 100% under the government approval route. However, it did not specify the sectors which have been opened up for automatic route. The present regulations on Non-Banking Finance Companies (NBFCs) stipulate that FDI would be allowed on automatic route for only 18 specified NBFC activities after fulfilling prescribed minimum capitalization norms mentioned therein.

The other salient features of the revised regulatory framework are, in financial services activities which are not regulated or partly regulated by any financial sector regulator or where there is lack of clarity regarding regulatory oversight, foreign investment will be allowed up to 100% under the Government approval route. Further, downstream investment by any entity engaged in other financial services will be subject to extant sectoral regulations and provisions of Principal Regulations. Other Financial Services will include activities which are regulated by any financial sector regulator viz. Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority, National Housing Bank or any other financial sector regulator as may be notified by the Government of India in this regard. Such foreign investment shall be subject to conditionality’s, including minimum capitalization norms, as specified by the concerned Regulator/ Government Agency.

In order to attract foreign investment in startups, the central bank has also said foreign venture capital investors registered with Sebi will not henceforth require any approval from RBI for investment in sectors such as biotechnology, IT, seed research and development, dairy and poultry, and production of bio-fuels.

The CNX Nifty ended at 8691.15, down by 8.25 points or 0.09% after trading in a range of 8652.05 and 8709.10. There were 27 stocks advancing against 24 stocks declining on the index. (Provisional)

The top gainers on Nifty were Idea Cellular up by 2.30%, Tech Mahindra up by 2.18%, Tata Power up by 1.89%, HCL Tech up by 1.83% and Dr. Reddy’s Lab up by 1.40%. (Provisional)

On the flip side, Axis Bank down by 2.69%, Hindalco down by 2.45%, Ambuja Cement down by 2.39%, ACC down by 2.20% and Cipla down by 2.10% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 16.62 points or 0.24% to 7,043.52, Germany’s DAX increased 18.52 points or 0.17% to 10,719.91 and France’s CAC increased 3.09 points or 0.07% to 4,543.21.

Asian stocks ended mostly in red on Friday, as oil extended overnight losses and the dollar stood tall on expectations of a US rate rise in the wake of disappointment from the ECB meeting. The European Central Bank on Thursday left its ultra-loose monetary policy unchanged and left the door open for more stimulus, but didn't discuss an extension of its monthly €80 billion ($88 billion) bond-buying program. Japanese shares ended lower as the dollar held flat against the yen and investors waited for major corporate earnings next week. Meanwhile, Chinese shares eked out modest gains, led by gains in infrastructure-related stocks, after China's finance ministry issued rules for the management of government funds used in private-public partnership projects. The yuan hit a fresh six-year low after ECB President Mario Draghi signaled that quantitative easing won't come to an ‘abrupt’ end. Hong Kong stock markets were shut for the day due to a typhoon warning.