Indian benchmarks continue firm trade in noon session

Indian equity benchmarks continued to trade firm in noon session as investors turned optimistic after the Federal Reserve hinted at a cautious, gradualist approach to future rate increases. Further, sentiments got a boost after Cabinet approved dismantling of the two-decade-old Foreign Investment Promotion Board (FIPB) and defined a new mechanism to approve overseas investment applications and hasten fund flows. The move will avoid the need for multiple clearances. It also approved the much-awaited strategic partnership policy for defence manufacturing and a new government procurement policy that will give preference to local goods. Besides, short covering of bets, today being the last session of May expiry in the derivatives segment, also supported the recovery. However, gains remained capped with industry body Assocham stating that implementing GST from July 1 will be a challenge for the industry and the government should consider relaxing penal provisions for a couple of quarters to help it comply with the new tax regime.

On the global front, Asian markets were trading higher on Thursday, following the positive cues overnight from Wall Street after the release of the latest Federal Reserve minutes. Investors are looking ahead to an OPEC meeting later in the day, which is widely expected to extend output cuts. The FOMC minutes were consistent with another hike in June, but conditional on recent economic softness proving transitory. Japanese market edged higher after the yen weakened in Asian trade, while a surge in index-heavyweights such as SoftBank supported sentiments. In China, stocks are rallying a day after Moody’s Investors Service reduced its rating on the country amid concerns over rising debt and slowing economic growth.

Back home, stocks from Capital Goods, IT and Realty counters were supporting the markets’ uptrend, while those from Healthcare counters were adding to the underlying cautious undertone. In scrip specific development, Dish TV India declined after the company reported a consolidated net loss of Rs 28.33 crore for the quarter ended March 31, 2017 as compared to net profit of Rs 482.77 crore for the same quarter in the previous year. On the other hand, BHEL gained after the company successfully commissioned another 270 MW thermal unit at Rattanlndia Nasik Power's 5x270 MW thermal power project, located at Sinnar in Nasik District of Maharashtra. 

The market breadth remained optimistic, as there were 1574 shares on the gaining side against 768 shares on the losing side, while 139 shares remained unchanged.

The BSE Sensex is currently trading at 30462.51, up by 160.87 points or 0.53% after trading in a range of 30352.26 and 30503.39. 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 0.56%, while Small cap index up by 0.97%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.72%, IT up by 1.58%, Realty up by 1.44%, TECK up by 1.35% and Industrials up by 1.30%, while Healthcare down by 1.65% was the sole losing index on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.32%, TCS up by 1.96%, GAIL India up by 1.74%, Infosys up by 1.74% and Tata Motors up by 1.42%. On the flip side, Lupin down by 6.86%, Dr. Reddy’s Lab down by 2.24%, Sun Pharma down by 2.09%, Cipla down by 2.04% and Power Grid down by 0.90% were the top losers.

Meanwhile, welcoming the government’s approval for a new public procurement policy, Industry body, the Federation of Indian Chambers of Commerce and Industry (Ficci) has said that domestic procurement is a legitimate tool under multilateral commitments and will promote value addition, drive manufacturing and create additional jobs in the country.

The Union Cabinet has approved a policy that would mandate preference to local goods and services. The policy is meant to promote the ‘Make in India’ initiative and is also aimed at stimulating flow of capital and technology. It will also provide a further thrust towards manufacture of parts, components, sub-components etc. of these items, in line with the vision of 'Make in India'.

Under the policy, preference in government procurement will be given to local suppliers. Local suppliers are those whose goods or services meet prescribed minimum thresholds (ordinarily 50%) for local content, which is essentially domestic value addition.  Besides, in procurement of goods up to Rs 50 lakh, and where the Nodal Ministry determines that there is sufficient local capacity and local competition, only local suppliers will be eligible. However, for procurements valued above Rs 50 lakh, if the lowest bid is not from a non-local supplier, the lowest-cost local supplier who is within a margin of 20% of the lowest bid, will be given an opportunity to match the lowest bid.

The industry body pointed that it was the long-standing demand of Indian industry and it had been advocating for a long time for adoption of this policy to provide the requisite push to industrial growth. In 2013, its Manufacturing Agenda had explicitly asked for policies for various sectors where government procurement could be leveraged.

The CNX Nifty is currently trading at 9412.30, up by 51.75 points or 0.55% after trading in a range of 9379.20 and 9425.65. There were 34 stocks advancing against 16 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Tata Motors - DVR up by 2.69%, Larsen & Toubro up by 2.27%, TCS up by 1.98%, Indiabulls Housing up by 1.84% and GAIL India up by 1.66%. On the flip side, Lupin down by 6.81%, Sun Pharma down by 2.20%, Dr. Reddy’s Lab down by 2.14%, Cipla down by 2.11% and Power Grid down by 0.95% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased by 10.74 points or 0.61% to 1,781.75, KOSPI Index gained 24.24 points or 1.05% to 2,341.58, Shanghai Composite added 50.23 points or 1.64% to 3,114.30, Taiwan Weighted increased by 64.07 points or 0.64% to 10,108.49, Nikkei 225 gained 90.45 points or 0.46% to 19,833.43 and Hang Seng was up by 244.68 points or 0.96% to 25,673.18.