Benchmarks trade with negative bias in late morning session

Indian equity benchmarks continued their flat trade with negative bias in the late morning session tracking global markets which took a breather as the Trump rally wanes. The Indian rupee opened higher against the US dollar on account of fresh selling of American currency by banks and exporters. Foreign Portfolio Investors (FPIs) stood net sellers in domestic equity markets on Wednesday as they sold shares worth of Rs 2325.70 crore. Gross purchases and gross sales of FPIs stood at 9013.48 crore and 11339.18 crore, respectively. Investors will be keeping an eye on Parliament winter session where the government is unlikely to bring three bills related to GST in the coming days, but it is hopeful of pushing them in the latter half of the winter session. Parliament would meet for 22 sittings between November 16 and December 16. Both Lok Sabha and Rajya Sabha will see discussions on de-monetisation and the opposition will seek to corner the government on the hardship faced by the Aam Admi in withdrawing their hard earned cash from banks. The downside was arrested after Moody’s Investors Service assigned a positive outlook to India’s Baa3 rating in April 2015 to reflect views that India’s policymakers were establishing a framework that would likely allow the country’s growth to continue to outperform that of its peers over the medium term, and improve its macro-economic, infrastructure and institutional profile to levels commensurate with a higher rating. Traders were seen piling up positions in Bankex, Oil & Gas and PSU stocks, while selling was witnessed in Consumer Durables, Realty and Capital Goods sector stocks.

On the global front, Asian shares were trading mostly in red, on Wall Street’s overnight dip and the dollar edged away from a 13-year peak. All eyes will be on Janet Yellen as she speaks before congress today. Investors will be looking for signals on an expected December interest-rate hike, as well as the fed chief's thoughts on trump’s fiscal policies. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,150 and 26,300 levels respectively. The market breadth on BSE was negative in the ratio of 890:1255, while 111 scrips remained unchanged.

The BSE Sensex is currently trading at 26292.47, down by 6.22 points or 0.02% after trading in a range of 26249.30 and 26449.87. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.18%, while Small cap index was down by 0.38%.

The top gaining sectoral indices on the BSE were Bankex up by 0.55%, Oil & Gas up by 0.36%, PSU up by 0.24% and FMCG up by 0.04%, while Consumer Durables down by 1.00%, Realty down by 0.93%, Capital Goods down by 0.51%, Power down by 0.47% and Auto down by 0.33% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.42%, Axis Bank up by 1.51%, ONGC up by 1.32%, Cipla up by 1.18% and GAIL India up by 0.92%.

On the flip side, Bajaj Auto down by 2.46%, Hero MotoCorp down by 2.13%, Power Grid down by 1.70%, Wipro down by 1.62% and Asian Paints down by 1.27% were the top losers.

Meanwhile, the government is mulling on a proposal to completely ban foreign direct investment (FDI) in the tobacco sector. Currently FDI is allowed in various forms of technology collaboration including licensing for franchise, trademark, brand name and management contracts in the sector and is not permitted in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes, but now the government will consider closing this route as well for FDI.

There were reports that the Commerce and Industry Ministry is proposing to even ban FDI in licensing for franchise, trademark, brand name and management contract in the sector and inter-ministerial discussions were held in this regard and the proposal may be taken up by the cabinet soon. The ministry has already circulated a draft Cabinet note to seek views of different departments including health, finance, commerce and Niti Aayog.

The ban would eliminate the possibility of indirect flow of overseas funds to the tobacco sector and the major cigarettes manufactures have raised serious concerns over this move. But even if the proposal is okayed, existing collaborations will not be affected as it would be applicable only prospectively.

India is signatory to the Framework Convention on Tobbaco Control, under which it has the responsibility of reducing consumption of tobacco products and had recently made it mandatory to carry larger pictorial warnings on cigarette packets.
 
The CNX Nifty is currently trading at 8102.05, down by 9.55 points or 0.12% after trading in a range of 8091.65 and 8151.25. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.32%, Bank of Baroda up by 1.67%, Hindalco up by 1.57%, Tata Motors - DVR up by 1.52% and Axis Bank up by 1.43%.

On the flip side, Bajaj Auto down by 2.28%, Wipro down by 2.09%, Power Grid down by 2.04%, Hero MotoCorp down by 1.97% and Eicher Motors down by 1.87% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 14.27 points or 0.08% to 17,847.94, Shanghai Composite decreased 8.75 points or 0.27% to 3,196.30, Hang Seng decreased 3.88 points or 0.02% to 22,276.65, FTSE Bursa Malaysia KLCI decreased 2.48 points or 0.15% to 1,625.15 and Jakarta Composite decreased 1.82 points or 0.04% to 5,183.65.

On the other hand, KOSPI Index increased 1.77 points or 0.09% to 1,981.42 and Taiwan Weighted increased 25.25 points or 0.28% to 8,987.47.