Markets make soft to cautious start ahead of Fed’s policy outcome

Indian equity benchmarks have made a cautious start and are trading slightly in red in early deals on Wednesday, breaching their crucial 31,100 (Sensex) and 9,600 (Nifty) levels, as traders remained on the sidelines ahead of the US Federal Reserve's monetary policy decision due later in the day. Traders also remained concerned with a private report stating that  Indian employers expect steady hiring outlook for next three months, but their confidence have dipped to the least optimistic level since 2005 amid uncertainties in global markets. However, losses remained capped with reports that the government is working on a new industrial policy with a view to promoting and developing frontier technologies, innovation and enhancing competitiveness of domestic products.

On the global front, Asian markets turned mixed, as investors everywhere awaited clarity on Fed's future path for US policy after a likely rate rise later in the day. The US markets bounced back and the Dow and the S&P 500 both climbed to new record closing highs.

Back home, banking space remained buzzing, as the Reserve Bank of India (RBI) has said it had identified 12 of the largest loan defaulters and would order lenders to start bankruptcy proceedings against them to start unclogging the $150 billion in bad debt. Also, the RBI is looking into request for extending the NPA classification period from the current 90-day window to help small and medium enterprises. Meanwhile, the market breadth indicating the overall health of the market was weak, with 857 shares gaining and 1051 shares declining, while a total of 89 shares were unchanged.

The BSE Sensex is currently trading at 31093.58, down by 9.91 points or 0.03% after trading in a range of 31072.74 and 31183.11. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.64%, while Small cap index was down by 0.13%.

The few gaining sectoral indices on the BSE were Energy up by 0.97%, Oil & Gas up by 0.43% and Capital Goods up by 0.12%, while Metal down by 1.29%, Basic Materials down by 0.85%, FMCG down by 0.41%, Consumer Durables down by 0.30% and Healthcare down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.15%, Dr. Reddy’s Lab up by 0.99%, Power Grid up by 0.95%, Hero MotoCorp up by 0.65% and ICICI Bank up by 0.59%. On the flip side, Wipro down by 1.79%, Tata Steel down by 1.34%, Asian Paints down by 1.25%, HDFC down by 0.85% and Cipla down by 0.77% were the top losers.

Meanwhile, in order to promote and develop frontier technologies, innovation and enhance competitiveness of domestic products, the government is working on a new industrial policy. The Department of Industrial Policy and Promotion (DIPP), under the commerce and industry ministry, is working on this proposal. To bring a new industrial policy, the government will make comprehensive changes in the 1991 policy. It will be designed according to the current time of artificial intelligence and automation.

According to the government, the new industrial policy is necessary for promotion of manufacturing scenario, new technology, research and development and artificial intelligence and automation. The new policy will focus on simplifying innovation and taxation system. Apart from this, the new challenges of the manufacturing sector will also be found in the new policy. The new policy will also be linked with government schemes like Make in India, Skill India, Startup India and Foreign Direct Investment Policy. Besides, the draft of the new policy should be ready by September 2017.

As per the DIPP website, industrial policy since 1991 has been more for facilitating the industrial development rather than anchoring it through permits and controls. Industrial licensing was abolished for most of the industries and there are only four industries, including defence and explosives, where licence is currently required. It said that a number of initiatives have been taken for ease of doing business for industrial licensing, increasing initial validity period of those licences and simplification of application forms.

The CNX Nifty is currently trading at 9594.90, down by 12.00 points or 0.12% after trading in a range of 9585.15 and 9627.40. There were 15 stocks advancing against 35 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Reliance Industries up by 2.07%, Dr. Reddy’s Lab up by 1.00%, Power Grid up by 0.83%, TCS up by 0.71% and Hero MotoCorp up by 0.70%. On the flip side, Hindalco down by 1.89%, Vedanta down by 1.64%, Wipro down by 1.60%, Yes Bank down by 1.19% and Tata Steel down by 1.16% were the top losers.

Asian markets were trading mixed; Hang Seng decreased 66.1 points or 0.26% to 25,786.00, Taiwan Weighted declined 62.37 points or 0.62% to 10,065.78, Shanghai Composite shed 18.43 points or 0.58% to 3,135.32 and KOSPI Index was down by 5.44 points or 0.23% to 2,369.26.

On the flip side, FTSE Bursa Malaysia KLCI increased 5.68 points or 0.32% to 1,790.12, Nikkei 225 gained 18.16 points or 0.09% to 19,916.91 and Jakarta Composite was up by 24.29 points or 0.43% to 5,731.94.