Benchmarks continue lackluster trade in late afternoon session

After trading in negative territory, Indian equity benchmarks continued their lackluster trade hovering near neutral lines in late afternoon session despite positive European markets. Investors failed to get any sense of relief with the Finance Minister Arun Jaitley’s statement that the demonetisation process is almost complete and it has been the smoothest possible replacement of currency anywhere in the world. He said that a predominantly cash economy has now to be substituted with a digital economy, which will bring more money into the banking system and lead to better revenue generation; the integration of the informal economy with the more formal one is now taking place. He also said that the post-demonetisation regime is actually going to generate a far bigger GDP in the long run. Sentiments remained dampened with the report that economic think tank National Council of Applied Economic Research (NCAER) has lowered the country's growth forecast to 6.9% for the current fiscal on account of government’s demonetisation drive to curb black money and corruption.

On the global front, European markets were trading in green tracking another set of record highs for Wall Street’s main equities gauges. However, Asian markets were trading in red as investors preferred to stay on the sidelines as they await more details on U.S. President Donald trump's fiscal stimulus plans. Trump is set to make his first address to a joint session of Congress on Tuesday. Back home, in scrip specific development, Lupin jumped higher after its arm, Kyowa Pharmaceutical Industry Co., entered into an agreement with Astellas Pharma for providing Kyowa the exclusive right to distribute and promote extended-release tablets of quetiapine fumarate in Japan.

The BSE Sensex is currently trading at 28925.50, up by 32.53 points or 0.11% after trading in a range of 28812.88 and 28961.83. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Energy up by 2.01%, Oil & Gas up by 0.90%, IT up by 0.78%, Healthcare up by 0.50% and Consumer Durables up by 0.45%, while Telecom down by 2.13%, Bankex down by 0.84%, Auto down by 0.73%, PSU down by 0.44% and Power down by 0.40% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 4.92%, Infosys up by 1.18%, Wipro up by 1.16%, Hindustan Unilever up by 0.95% and Lupin up by 0.89%. On the flip side, Bharti Airtel down by 2.80%, Axis Bank down by 2.78%, Power Grid down by 2.41%, Mahindra & Mahindra down by 1.04% and Dr. Reddy’s Lab down by 0.94% were the top losers.

Meanwhile, following government’s decision to phase out the Foreign Investment Promotion Board (FIPB), the Reserve Bank of India (RBI) is likely to frame standard operating procedure (SOP) for approval of foreign direct investment (FDI) proposals by ministries.  The government has taken decision to abolish FIPB and form a new mechanism with an aim to improve ease of doing business and to remove an additional layer in the form of FIPB which is no longer required. RBI is the nodal agency for administration of foreign investments and foreign exchange.

Once the FIPB is abolished, the onus of approving FDI proposals would be on the ministries and regulatory authorities concerned, hence in a recent inter-ministerial meeting, the committee discussed on the proposal for setting up norms for FDI approvals in sensitive sectors, which are currently under government approval of the FDI policy. It has also discussed the possibility of approving the FDI proposals along with grant of licences. The committee has pointed that in the sensitive sectors like defence and telecom, companies having licences can only seek foreign investments.

Further, the committee noted that the government may request RBI to prepare the standard operating procedure for every ministry and the Home Ministry could be asked to vet the FDI proposals from Pakistan and Bangladesh. All these issues are under discussions of the committee formed by the government, which includes representatives from the RBI, Finance Ministry, the Department of Industrial Policy and Promotion, and the Home Affairs Ministry. The committee is expected to submit its report within two months which will give guidelines on FDI approval procedures in the sensitive sectors.

The CNX Nifty is currently trading at 8929.40, down by 10.10 points or 0.11% after trading in a range of 8913.65 and 8951.80. There were 18 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 4.92%, Aurobindo Pharma up by 2.77%, Infosys up by 1.14%, Lupin up by 1.08% and Hindustan Unilever up by 1.07%. On the flip side, Zee Entertainment down by 3.27%, Bharti Airtel down by 2.94%, Axis Bank down by 2.91%, Power Grid down by 2.51% and Bharti Infratel down by 2.47% were the top losers.

All Asian markets were trading in red; Nikkei 225 decreased 176.07 points or 0.91% to 19,107.47, Hang Seng decreased 40.65 points or 0.17% to 23,925.05, Shanghai Composite decreased 24.77 points or 0.76% to 3,228.66, KOSPI Index decreased 8.6 points or 0.41% to 2,085.52, Jakarta Composite decreased 5.19 points or 0.1% to 5,380.76 and FTSE Bursa Malaysia KLCI decreased 3.04 points or 0.18% to 1,695.31.

All European markets were trading in green; France’s CAC increased 19.47 points or 0.4% to 4,864.71, UK’s FTSE 100 increased 33.73 points or 0.47% to 7,277.43 and Germany’s DAX increased 45.51 points or 0.39% to 11,849.54.