Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade in the late morning session on account of buying in frontline blue chip counters ahead of RBI monetary policy later in the week. The Reserve Bank of India (RBI) will meet on Wednesday for its bi-month policy, whereby according to polls it is likely to cut the policy rate by a quarter percentage point. A conservative fiscal policy, easing inflation trajectory and short-term risks to growth will keep the door open for further easing. The Indian rupee strengthened against the US dollar tracking the gains in the local equity and Asian currencies markets. The rupee gained for the ninth consecutive session, its longest winning streak since June 2011. After four months of selling frenzy, overseas investors turned net buyers in February and pumped in over Rs 2,300 crore in the capital market over the last three sessions, enthused by clarity on FPI taxation. The latest inflow followed a net pullout of Rs 80,310 crore from equity and debt together in the past four months (October-January). According to depository data, Foreign Portfolio Investors (FPIs) infused a net sum of Rs 1,246 crore in equities during February 1-3 and another Rs 1,098 crore in the debt segment, translating into a total inflow of Rs 2,344 crore. Traders took some encouragement with Economic Affairs Secretary Shaktikanta Das’ statement expressing confidence that the economy will grow upwards of 7 per cent next fiscal. He reiterated that there will be transient impact of demonetisation on the economy, but it will not spill over to the next fiscal. Taking a dig at global rating agencies for failing to upgrade India's sovereign rating despite significant improvement in macroeconomic parameters, Das said that agencies are several steps behind from reality and are missing out on something which only they can best explain. Traders were seen piling position in Realty, Bankex and Capital Goods stocks, while selling was witnessed in IT and TECK sector stocks.  In scrip specific development, ABG Shipyard was trading in green on reports that Cochin Shipyard has started preliminary discussions to buy a controlling stake in debt-ridden ABG Shipyard.

On the global front, Asian shares were trading in green, with regional data sets and the policies of US President Donald Trump in focus. A private survey out of China showed activity in the services sector remained strong in January as companies reported a solid increase in orders. Dealers are still absorbing Friday’s surprise move by China’s central bank to raise short-term interest rates and whether its attempts to reduce leverage in the system this year will dampen growth. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,750 and 28,400 levels respectively. The market breadth on BSE was positive in the ratio of 1703:673, while 134 scrips remained unchanged.

The BSE Sensex is currently trading at 28454.56, up by 214.04 points or 0.76% after trading in a range of 28340.39 and 28477.30. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.83%, while Small cap index was up by 0.93%.

The top gaining sectoral indices on the BSE were Realty up by 3.17%, Bankex up by 1.29%, Capital Goods up by 1.28%, Power up by 1.08% and Oil & Gas up by 0.99%, while IT down by 0.07% and TECK down by 0.05% were the only losers on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.81%, Lupin up by 1.57%, Asian Paints up by 1.54%, Hero MotoCorp up by 1.43% and Axis Bank up by 1.41%.

On the flip side, Dr. Reddy’s Lab down by 1.99%, Coal India down by 0.81%, TCS down by 0.33%, Bajaj Auto down by 0.14% and Mahindra & Mahindra down by 0.12% were the top losers.

Meanwhile, in a step forward to improve ease of doing business, Economic Affairs Secretary Shaktikanta Das has said that the government hopes to put in place a new mechanism which will replace the existing Foreign Investment Promotion Board (FIPB) within couple of months. Das also said that they will come out with a revised mechanism and the powers will be delegated to the regulators or to the individual ministries or department for dealing with remaining 10% FDI proposal which requires government approval. Das added the government is working on the modality of how the power of approval will be delegated.

Finance Minister Arun Jaitley in the budget speech announced the abolition of the FIPB and said that over 90% of the foreign investment approvals are coming through the automatic route and only 10% go to the Board. Jaitley also said that FIPB has successfully implemented e-filing and online processing of FDI applications. They have now reached a stage where FIPB can be phased out and therefore decided to abolish the FIPB in 2017-18. He added that roadmap for abolishing FIPB will be announced in the next few months.

At present, FIPB offers single-window clearance for applications on FDI in India that are under the approval route. The sectors under automatic route do not require any prior approval and are subject to only sectoral laws. During April-September of the current financial year, FDI into the country increased by 30% to $21.62 billion. Last year, the government relaxed FDI policy for several sectors including defence, civil aviation and stock exchanges.

The CNX Nifty is currently trading at 8799.05, up by 58.10 points or 0.66% after trading in a range of 8779.85 and 8809.10. There were 38 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 5.28%, ACC up by 3.82%, ICICI Bank up by 2.77%, Bharti Infratel up by 1.73% and Lupin up by 1.54%.

On the flip side, Dr. Reddy’s Lab down by 2.08%, Idea Cellular down by 2.06%, Aurobindo Pharma down by 1.34%, Coal India down by 0.97% and HCL Tech down by 0.73% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 1.9 points or 0.11% to 1,686.91, KOSPI Index increased 3.87 points or 0.19% to 2,077.03, Shanghai Composite increased 12.4 points or 0.39% to 3,152.57, Jakarta Composite increased 19.9 points or 0.37% to 5,380.66, Nikkei 225 increased 29.43 points or 0.16% to 18,947.63, Taiwan Weighted increased 77.61 points or 0.82% to 9,533.17 and Hang Seng increased 144.97 points or 0.63% to 23,274.18.