Benchmarks extend gains in late morning session

Indian equity benchmarks added strength in late morning session, on account of buying in frontline blue chip counters with Nifty reclaiming 9400-mark. Midcaps were back in the green after a corrective phase over the previous sessions. The rupee opened higher against dollar following fresh bouts of dollar selling by banks and exporters. Traders took some support with report that the Union Cabinet approved a policy providing preference to domestically manufactured goods for government procurements, in a major step to boost the government’s Make in India initiative. It also approved the abolition of the Foreign Investment Promotion Board (FIPB), which has, for 25 years, been the single-point window for clearing foreign direct investment (FDI) proposals requiring government nod. The Cabinet yesterday approved the public procurement policy, opening up a potentially $600 billion-plus market for Indian manufacturing and services companies. Investors took note of foreign brokerage report that the GST rollout will add 40 bps to GDP, lower than earlier estimates as multiple tax rates and exemptions announced under it are far from an ideal structure and could blunt the growth impact of the reform process. It also said that the Goods and Services Tax will not have an upward impact on inflation.

Traders were seen piling up position in Realty, IT and Capital Goods stocks, while selling was witnessed in HealthCare stocks. Buying was witnessed in sugar stocks after the Cabinet Committee on Economic Affairs (CCEA) agreed to fix the Fair and Remunerative Price (FRP) for sugarcane at Rs 255 per quintal for the new sugar season (October-September). In scrip specific development, Jain Irrigation Systems was trading in green on posting 24% jump in consolidated net profit at Rs 77.63 crore during the fourth quarter of 2016-17 on strong sales in high-tech agri input business. The company’s net profit stood at Rs 62.58 crore in the same quarter last year. Garware-Wall Ropes was trading in green on reporting 13.6% growth in net profit after tax (PAT) at Rs 19.64 crore in the fourth of 2016-17. The company’s PAT stood at Rs 17.28 crore in the corresponding period of FY16. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. May 2017 series to next month i.e. June 2017 series. The near month May 2017 derivatives contracts will expire today i.e. May 25, 2017.

On the global front, Asian shares were trading in green, while the dollar and US bond yields slipped after the US Federal Reserve signaled a cautious approach to future rate hikes and the reduction of its $4.5 trillion of bond holdings. Mainland Chinese shares which were briefly unsettled by Moody’s downgrade of its rating on China on Wednesday, bounced back in today’s trade. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,400 and 30,400 levels respectively. The market breadth on BSE was positive in the ratio of 1477:697, while 121 scrips remained unchanged.

The BSE Sensex is currently trading at 30455.55, up by 153.91 points or 0.51% after trading in a range of 30352.26 and 30480.31. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.71%, while Small cap index was up by 1.07%.

The top gaining sectoral indices on the BSE were Realty up by 1.75%, IT up by 1.47%, Capital Goods up by 1.46%, Telecom up by 1.33% and TECK up by 1.29%, while Healthcare down by 1.40% was the only loser on BSE.

The top gainers on the Sensex were GAIL India up by 1.85%, Infosys up by 1.84%, Larsen & Toubro up by 1.54%, TCS up by 1.45% and ICICI Bank up by 1.43%.

On the flip side, Lupin down by 6.43%, Dr. Reddy’s Lab down by 2.24%, Sun Pharma down by 2.21%, Adani Ports & Special Economic Zone down by 1.60% and Cipla down by 0.93% were the top losers.

Meanwhile, in a move to facilitate ease of doing business and easing the flow of foreign capital into the country, the Union Cabinet led by Prime Minister Narendra Modi has approved the abolition of the 25-year-old Foreign Investment Promotion Board (FIPB). The FIPB, which was earlier vetting FDI proposals and requiring Government approvals, will now be replaced by a new mechanism under which the proposals will be approved by the concerned ministries.

Finance Minister Arun Jaitley has said that the decision to abolish the FIPB meant that around 90% of foreign direct investment (FDI) would be automatically approved. However, he noted that there are still 11 sectors including defence and retail trading where government approval for FDI is required. Therefore, he explained that in the case of the 11 sectors that need prior approval for FDI, these would now be given by the ministries concerned and added that wherever there are security considerations, the Home Minister’s approval would also be taken.

In Budget 2017-18, Jaitley had announced scrapping of the FIPB - an inter-ministerial body under the finance ministry’s Department of Economic Affairs that processes FDI proposals and makes recommendations for government approval. The FDI proposals above Rs 5,000 crore would continue to be cleared by the Cabinet Committee on Economic Affairs. Inflow of foreign direct investment into India has been increased by 9 per cent to $43.48 billion in 2016-17.

The CNX Nifty is currently trading at 9410.40, up by 49.85 points or 0.53% after trading in a range of 9379.20 and 9417.35. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Tata Motors - DVR up by 2.64%, Indiabulls Housing Finance up by 1.89%, GAIL India up by 1.75%, Infosys up by 1.73% and Ambuja Cement up by 1.68%.

On the flip side, Lupin down by 6.35%, Sun Pharma down by 2.34%, Dr. Reddy’s Lab down by 2.21%, Adani Ports & Special Economic Zone down by 1.56% and Power Grid down by 0.88% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 10.74 points or 0.61% to 1,781.75, KOSPI Index increased 19.76 points or 0.85% to 2,337.10, Shanghai Composite increased 21.93 points or 0.72% to 3,086.00, Taiwan Weighted increased 56.58 points or 0.56% to 10,101.00, Nikkei 225 increased 77.21 points or 0.39% to 19,820.19 and Hang Seng increased 171.95 points or 0.68% to 25,600.45.

Jakarta Stock Exchange was closed on account of national holiday.