Markets trade near day's high; Metal takes the lead

Indian equity benchmarks extended early gains to continue firm trade in noon session, hovering near intra-day high level, as investors welcomed the Cabinet’s decision to give ‘in-principle’ nod to disinvestment of Air India, a sign the government is not shying away from bold reforms. A firm trend in Asia brought risk appetite back. Besides, speculators went about covering their short positions in anticipation of more reforms and today being the expiry of June futures & options derivative contracts. Sentiments got some support that India’s GDP growth witnessed a trough in January-March quarter, but going forward the economy is expected to see gradual improvement in growth numbers primarily driven by consumption. The report added that consumption has recovered from the demonetization shock and while external demand may be down, it remains supportive of growth. Adding optimism among investors, Niti Aayog CEO Amitabh Kant said that the government is set to give private investment in infrastructure a big boost as steps such as a dedicated financial institution for big-ticket projects, fast-track dispute resolution and flexible structuring of public-private-partnership (PPP) projects are on the horizon. Meanwhile, India has made a strong pitch to the World Bank seeking improvement in the country’s ranking on the ease of doing business from a poor 185 to among top 25. The Centre on Wednesday made its first presentation before a World Bank team and showcased how its procedures, cost of construction and time taken in approvals have improved manifold.

On the global front, Asian markets were trading in green on Thursday, taking cues from a stronger finish in US markets, with traders expected to digest comments from top central bankers overnight. However, gains were however capped after hawkish comments from major central banks signaled rate hikes and that the era of stimulus might be coming to an end. In Britain, Bank of England Governor Mark Carney surprised many by conceding a hike was likely to be needed as the economy came closer to running at full capacity. Mario Draghi had earlier said that stimulus might need to be toned down so it does not become more accommodative as the economy recovers. Investors are awaiting the release of China's official monthly indexes on factory and service sector activity Friday. The numbers are widely watched early indicators of the health of the world's No. 2 economy and investors will be watching fresh insight into China's recovery.

Back home, all BSE sectoral indices were trading in the green. Among them, Metal index gained the most, followed by Telecom, TECK and Basic Materials. In scrip specific development, Crisil gained after the company acquired 26,22,430 equity shares or 8.90% of CARE Ratings. Furthermore, JSW Steel jumped after the company received its board’s approval to set up a Slurry Pipeline to transport iron ore from coastal Karnataka to the Vijayanagar works.

The market breadth remained optimistic, as there were 1702 shares on the gaining side against 548 shares on the losing side, while 101 shares remained unchanged.

The BSE Sensex is currently trading at 31062.51, up by 228.19 points or 0.74% after trading in a range of 30905.86 and 31069.35. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.82%, while Small cap index up by 1.30%.

The top gaining sectoral indices on the BSE were Metal up by 1.64%, Telecom up by 1.49%, TECK up by 1.19%, Basic Materials up by 1.15% and Oil & Gas up by 1.14%, while there were no losers on BSE sectoral space.

The top gainers on the Sensex were Axis Bank up by 3.31%, Infosys up by 2.23%, Tata Steel up by 2.00%, Bharti Airtel up by 1.93% and Mahindra & Mahindra up by 1.60%. On the flip side, Sun Pharma down by 1.35%, Kotak Mahindra Bank down by 0.92%, Wipro down by 0.48%, Dr. Reddys Lab down by 0.07% and Cipla down by 0.06% were the top losers.

Meanwhile, with an aim to encourage Foreign Portfolio Investors (FPIs) to invest directly in Indian markets without taking recourse to the so-called participatory notes (P-Notes), the market regulator Securities and Exchange Board of India (SEBI) has proposed relaxed entry norms for FPIs. It has suggested to ease some rules, including expanding the eligible jurisdictions for registration by including countries with diplomatic tie-ups with India. The regulator has also recommended for rationalising fit and proper criteria for FPIs as well as simplifying broad based requirements for such investors.

The regulator has proposed that Category I and II FPIs, which are essentially government and regulated entities, should not need any additional documentation and procedural requirements. However, Category III FPIs should continue to be subject to such requirements. It has also proposed that rationale of broad based criteria should be extended in other cases wherein the applicant funds have other institutional investors - sovereign wealth fund, insurance/reinsurance companies, pension funds, Exchange Traded Funds (ETFs) as their underlying investors.

Currently, an FPI is considered to be broad based in case such overseas investor has a bank as an underlying investor. Broad based fund means a fund, established outside India, which has at least 20 investors, with no investor holding more than 49 percent of the shares or units of the fund. SEBI has clarified on broad based requirements and said that in case such fund loses its status due to exit of some offshore global investors then it may not result in immediate loss of Category II status and added that three months time should be given to such funds to regain such status. Besides, the move would also avoid duplicate efforts and incremental documentation by the FPIs as well as the designated depository participants (DDPs).

The move comes after the SEBI board approved proposals to float a discussion paper on easing registration of FPIs. SEBI said “It is proposed that the list of eligible jurisdictions in terms of FPI Regulations for grant of registration to Category I FPIs, may be expanded by also considering those jurisdictions, wherein Government of India has diplomatic tie-up and FEMA compliant jurisdiction.” Consequently, more jurisdictions such as other provinces in Canada would be able to access the market due to change in FPI Regulations. The SEBI has sought comments from public till July 27 and a final regulation will be out in place after taking into views of all the stakeholders.

The CNX Nifty is currently trading at 9565.25, up by 74.00 points or 0.78% after trading in a range of 9522.45 and 9566.15. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.80%, Indiabulls Housing up by 2.54%, Vedanta up by 2.21%, Infosys up by 2.18% and GAIL India up by 2.01%. On the flip side, Sun Pharma down by 1.40%, Kotak Mahindra Bank down by 0.70%, Wipro down by 0.33%, Ultratech Cement down by 0.23% and NTPC down by 0.09% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI rose 0.02%, Shanghai Composite increased 0.26%, KOSPI Index surged 0.6%, Taiwan Weighted gained 0.3%, Nikkei 225 added 0.43% and Hang Seng was up by 0.9%.