Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade in late morning session, on account of buying in frontline blue chip counters. The trade was on optimistic note tracking regional counterparts and continued slide in oil prices. Extending its fall for the third straight session, the rupee opened almost flat with negative bias against dollar against the previous close of 64.52 per dollar. Foreign portfolio investors stood net sellers in domestic equity markets on Wednesday and sold shares worth Rs 294.71 crore with gross purchases and gross sales of Rs 4,312.19 crore and Rs 4,606.90 crore, respectively. Traders took support after economic think-tank NCAER revised up its projection for the country’s economic growth to 7.6 per cent for the current fiscal, compared with the earlier prediction of 7.3 per cent on forecast of normal monsoon. In its quarterly review of the economy, NCAER said prospects for the agricultural sector in 2017-18 remain optimistic on forecast of good rains. The agency has also revised upward its forecast of GVA (Gross Value Added at Basic Prices) growth at 7.3 per cent for 2017-18 from its February estimate of 7 per cent.

Meanwhile, minutes from Reserve Bank of India’s last meeting showed that its monetary policy committee welcomed data showing inflation easing below its target, but wanted more assurance the trend would continue before deciding whether to lower interest rates. The RBI voted 5-1 to keep the repo rate at 6.25 per cent earlier this month but issued a slightly less hawkish statement after consumer inflation eased to 2.99 per cent in April, below its 4 per cent target. Investors took note of Federation of Indian Export Organisations (FIEO) statement that while India is showing a positive trend on exports since the last nine months, there is a bit of anxiety in the business with regard to the Goods and Services Tax (GST). It expects that the country’s merchandise shipments would reach $325 billion this fiscal.

Traders were seen piling up position in Telecom, Auto and Healthcare stocks, while selling was witnessed in FMCG, Oil & Gas and PSU stocks. In scrip specific development, Premier was trading firm as the company has received Rs 83.51 crore (net) as a part payment towards compensation from the DFCC (a subsidiary of the Indian Railways) for compulsorily acquiring a part of the company’s land. Bhushan Steel and Electrosteel Steels were buzzing as Banks led by State Bank of India will decide the fate of three large defaulters -Essar Steel, Bhushan Steel and Electrosteel Steels which constitute nearly half the loans of the top 12 defaulters identified by the Reserve Bank of India, thus marking a significant phase in the effort of lenders to clean up bad loans. Stocks like Parag Milk Foods and Umang Dairies were trading in green on report that the government has banned milk, milk products confectionary from China for 1 year.

On the global front, Asian shares were trading mostly in green, picking up some momentum on prospects of a weaker dollar as the Fed debates the pace of US economic growth and inflation. Bank of Japan Deputy Governor Kikuo Iwata dismissed the need to raise interest rates any time soon, stressing that the economy still needs support from powerful monetary easing with inflation distant from the central bank’s 2 percent target. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,650 and 31,400 levels respectively. The market breadth on BSE was positive in the ratio of 1391:782, while 98 scrips remained unchanged.

The BSE Sensex is currently trading at 31452.86, up by 169.22 points or 0.54% after trading in a range of 31336.96 and 31453.97. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.52%, while Small cap index was up by 0.64%.

The top gaining sectoral indices on the BSE were Telecom up by 0.78%, Auto up by 0.74%, Healthcare up by 0.74%, Consumer Disc up by 0.73% and TECK up by 0.66%, while FMCG down by 0.45%, Oil & Gas down by 0.42% and PSU down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.64%, Reliance Industries up by 1.37%, Infosys up by 1.28%, HDFC up by 1.24% and Maruti Suzuki up by 1.10%.

On the flip side, Hindustan Unilever down by 1.75%, Lupin down by 1.56%, ONGC down by 1.42%, Coal India down by 0.78% and Wipro down by 0.53% were the top losers.

Meanwhile, in an attempt to check any misuse for channelising black money, the Securities and Exchange Board of India (SEBI) has tightened Participatory Notes (P-Notes) norms by levying a regulatory fee of $1,000 on each instrument issued by foreign investors and barred their issuance for non-hedging or speculative purposes. On the other hand, markets regulator SEBI also decided to ease the entry rules for foreign portfolio investors (FPI) willing to invest directly in Indian markets rather than via P-Notes or offshore derivative instruments (ODIs).

Sebi chairman Ajay Tyagi has said that the regulator approved a proposal to tighten the rules for P-Notes through imposition of a regulatory fee on issuers of such instruments. However, he said that there is no proposal to completely ban these instruments as some new foreign investors tend to use them to test the Indian markets first before registering. He also noted that regulator would want foreign investors to come directly but P-Notes also have their usefulness. He added that board has taken decisions to facilitate the resolution of distressed assets, thereby contributing to the efforts made by the RBI and the Insolvency and Bankruptcy Board of India.

The new measures, which follow a slew of other steps taken by SEBI in the recent past, come at a time when the value of foreign investments through P-Notes or ODIs had already fallen to a four-month low of about Rs 1.68 lakh crore by April-end. While such investments used to account for more than half of overall foreign portfolio investments at one point of time, their share has now fallen to just 6 percent. Still, concerns remain that P-Notes are misused by some to channelise black money from abroad into the country through the stock market.

The CNX Nifty is currently trading at 9679.35, up by 45.75 points or 0.47% after trading in a range of 9642.35 and 9679.85. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.40%, Sun Pharma up by 1.61%, Yes Bank up by 1.55%, Infosys up by 1.39% and HDFC up by 1.27%.

On the flip side, GAIL India down by 2.17%, Hindustan Unilever down by 1.82%, Lupin down by 1.60%, BPCL down by 1.53% and ONGC down by 1.24% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.17 points or 0.07% to 1,776.74, KOSPI Index increased 7.34 points or 0.31% to 2,364.87, Nikkei 225 increased 8.14 points or 0.04% to 20,146.93, Shanghai Composite increased 24.78 points or 0.78% to 3,180.99, Taiwan Weighted increased 44.64 points or 0.43% to 10,394.36 and Hang Seng increased 134.59 points or 0.52% to 25,829.17.

On the other hand, Jakarta Composite decreased 6.96 points or 0.12% to 5,811.59.