Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade in late morning session on account of buying in front line blue chip counters. The rupee opened lower against the US dollar ahead of the outcome of the RBI’s bi-monthly monetary policy review meet later in the day. The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, has begun its 2-day meeting amid experts saying that the central bank is likely to hold key rates even as the government is making a case for a lower interest regime citing low inflation. Foreign portfolio investors stood net sellers in domestic equity markets on Tuesday and sold shares worth Rs 111.74 crore with gross purchases and gross sales of Rs 4,280.24 crore and Rs 4,371.98 crore, respectively. Traders were taking support from NITI Aayog CEO Amitabh Kant’s statement that the Goods and Services Tax (GST), to be rolled out next month as the biggest tax reform since independence, will help India achieve 9% growth rate. He said GST will simplify India’s taxation system and help deal with tax evasion. Some support also came after IMD upgraded its monsoon forecast from 96% forecast to 98%. It has also forecast normal rainfall during July (96%) and August (99%), key months for the crucial kharif season. The updated forecast of 98% of normal rainfall will cheer farmers and policy makers and help to control food inflation, which is a key input in the Reserve Bank of India’s stance towards interest rates.

Meanwhile, as per a private report, with large residential and non- residential projects in the pipeline, the Indian infrastructure market is forecast to overtake Japan’s in next five years. The report enlightened that although demonetization had a negative impact on construction activity in 2016 as most construction workers’ wages were paid in cash, it believes that robust growth will return in 2017 as work resumes on the large pipeline of infrastructure, residential and non-residential projects in the country. Traders were seen piling up position in Healthcare, Telecom and FMCG stocks, while selling was witnessed in IT and TECK stocks. In scrip specific development, Reliance Communications was trading in red after rating agencies Fitch and Moody’s downgraded credit rating of the company on account of its fragile liquidity position and limited ability to pay back debt.

On the global front, Asian shares were trading mostly in green, as investors remained noticeably risk averse. The street cautiously awaited a trio of potential major risk events on Thursday, including the UK election, a European Central bank review and former FBI director James Comey’s testimony to the Senate stateside. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,650 and 31,300 levels respectively. The market breadth on BSE was positive in the ratio of 1417:746, while 108 scrips remained unchanged.

The BSE Sensex is currently trading at 31326.41, up by 135.85 points or 0.44% after trading in a range of 31229.25 and 31346.99. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.46%, while Small cap index was up by 0.87%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.29%, Telecom up by 1.00%, FMCG up by 0.98%, Metal up by 0.82% and Consumer Disc up by 0.64%, while IT down by 0.18% and TECK down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.25%, GAIL India up by 1.90%, ICICI Bank up by 1.71%, Bharti Airtel up by 1.63% and Hindustan Unilever up by 1.57%.

On the flip side, TCS down by 0.94%, Wipro down by 0.87%, Tata Motors down by 0.54%, HDFC down by 0.47% and NTPC down by 0.19% were the top losers.

Meanwhile, following the abolition of the Foreign Investment Promotion Board (FIPB), the finance ministry has said that concerned administrative ministries and departments will have to decide on foreign direct investment (FDI) proposals in specific sectors within 60 days of the application. It also said that any rejection will need the department of industrial policy and promotion’s (DIPP) concurrence. Last month, Union Cabinet had scrapped the 25-year-old FIPB to attract more FDI by providing quick approvals under a single-window clearance system.

The ministry has said that the Industry Ministry, in consultation with the administrative ministry, would come out with a detailed guideline for processing of the FDI proposals and ensure a consistency of treatment and uniformity of approach. For the examination of FDI proposals, it also said that the Standard Operating Procedure (SOP) shall involve the process of inter-ministerial consultation, wherever required. It added that the SOP will also recognize that ordinarily FDI applications, including those related to non resident Indian (NRI)/ Export Oriented Unit (EOU), food processing, single brand retail trading and multi brand retail trading proposals, should be decided in 60 days.

It further said that all pending applications with the FIPB would be transferred to the administrative ministry and oversight of the FIPB portal shall be transferred to the DIPP from the Department of Economic Affairs (DEA) within four weeks. It noted that while FDI approvals in most sectors have been relegated to the ministries concerned, those relating to private security agencies would be decided by the home ministry. It also explained that the DEA would clear proposals of financial services not under a regulator, or where there is more than one regulator or there is a doubt about the regulator.

The CNX Nifty is currently trading at 9671.50, up by 34.35 points or 0.36% after trading in a range of 9648.00 and 9678.55. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 2.30%, Vedanta up by 2.05%, ICICI Bank up by 1.63%, Hindustan Unilever up by 1.62% and GAIL India up by 1.62%.

On the flip side, BPCL down by 1.18%, TCS down by 0.98%, Yes Bank down by 0.92%, Wipro down by 0.89% and Indiabulls Housing Finance down by 0.70% were the top losers.

The Asian markets were trading mostly in green; Hang Seng increased 1.28 points or 0% to 25,998.42, Nikkei 225 increased 14.59 points or 0.07% to 19,994.49, Jakarta Composite increased 18.17 points or 0.32% to 5,726.01 and Shanghai Composite increased 34.42 points or 1.11% to 3,136.55.

On the other hand, Taiwan Weighted decreased 5.62 points or 0.06% to 10,200.56, KOSPI Index decreased 2.96 points or 0.12% to 2,365.66 and FTSE Bursa Malaysia KLCI decreased 1.52 points or 0.08% to 1,789.49.