Benchmarks trade flat with negative bias

Indian equity benchmarks continued their lackluster trade with negative bias in late morning session on account of selling in front line blue chip counters. The rupee opened on a flat note against dollar ahead of the US Fed policy rate decision, which is scheduled to come out later in the day. The US Federal Reserve’s two-day meet will end on Wednesday and investors expect the central bank to raise interest rates for the third time since December. Foreign Portfolio Investors stood net sellers in domestic equity markets on Tuesday and sold shares worth Rs 4.66 crore with gross purchases and gross sales of Rs 3517.45 crore and Rs 3522.11 crore, respectively. The sentiments were dampen after a foreign brokerage firm raised concern that it estimates that over 65% of the total Rs 9.50 lakh crore of agri debt may potentially get written-off. A debt waiver in the near term leads to relief in agri NPAs for banks in that state, but sets the wrong precedent for future servicing, and impacts on credit behaviour in other states. A private report highlighted 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. The survey indicated that the hiring activity is expected to slow for the sixth consecutive quarter. The downside was however, capped on reports that the government is working on a new industrial policy in order to promote and develop frontier technologies, innovation and enhance competitiveness of domestic products. The Department of Industrial Policy and Promotion (DIPP), under the commerce and industry ministry, is working on this proposal.

Traders were seen piling up position in Energy, Oil & Gas and Realty stocks, while selling was witnessed in Metal, FMCG and Basic Materials stocks. In scrip specific development, Multi Commodity Exchange of India (MCX) was trading in green as market regulator SEBI on Tuesday allowed options trading in commodities for deepening the market but permitted each exchange to launch these contracts for only one product initially, while asking bourses to follow robust risk management measures. Emkay Global Financial Services was trading in green as the company has entered into an exclusive pact with DBS Bank arm DBS Vickers Securities (Singapore) for co-branding and distribution of equity research to the latter’s global clients.

On the global front, Asian shares were trading mostly in red. The Bank of Japan is set to keep monetary settings unchanged on Friday and reassure markets it will lag way behind the Federal Reserve in dialing back its massive stimulus program, with inflation stubbornly low despite a strengthening economy. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,600 and 31,200 levels respectively.

The BSE Sensex is currently trading at 31102.24, down by 1.25 points 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 was down by 0.43%, while Small cap index was down by 0.05%.

The top gaining sectoral indices on the BSE were Energy up by 1.35%, Oil & Gas up by 0.67%, Realty up by 0.29%, Capital Goods up by 0.17% and Auto up by 0.05%, while Metal down by 0.93%, FMCG down by 0.69%, Basic Materials down by 0.64%, Consumer Durables down by 0.33% and Telecom down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.83%, Dr. Reddy’s Lab up by 2.30%, Power Grid up by 1.05%, Hero MotoCorp up by 0.86% and ICICI Bank up by 0.73%.

On the flip side, Asian Paints down by 1.88%, Wipro down by 1.79%, Tata Steel down by 1.07%, ITC down by 1.05% and Cipla down by 0.88% 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 9590.90, down by 16.00 points or 0.17% after trading in a range of 9585.15 and 9627.40. There were 16 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 2.50%, Dr. Reddy’s Lab up by 2.33%, Tech Mahindra up by 1.23%, Power Grid up by 1.09% and TCS up by 0.77%.

On the flip side, Asian Paints down by 1.94%, Wipro down by 1.89%, Yes Bank down by 1.60%, Vedanta down by 1.47% and ACC down by 1.41% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 80.74 points or 0.8% to 10,047.41, Hang Seng decreased 79.32 points or 0.31% to 25,772.78, Shanghai Composite decreased 22.5 points or 0.71% to 3,131.24 and KOSPI Index decreased 7.78 points or 0.33% to 2,366.92.

On the other hand, FTSE Bursa Malaysia KLCI increased 5.85 points or 0.33% to 1,790.29, Nikkei 225 increased 23.52 points or 0.12% to 19,922.27 and Jakarta Composite increased 27.53 points or 0.48% to 5,735.18.