Sluggish trend continues on street; Sensex struggles below 31,550 mark

In line with Asian peers, the Indian equity benchmarks continued to show a sluggish trend in early afternoon session, with Sensex and Nifty trading below their psychological levels of 31,550 and 9,850, respectively. The sentiments were under pressure after North Korea fired a missile over northern Japan, escalating worries over geopolitical risks in the world. Some caution also prevailed in the market with a NITI Aayog’s report which found that there is a huge gap between what the state governments have done to improve ease of doing business and what the enterprises know of these improvements. Besides, depreciation in rupee value against the dollar, too affected the market sentiments. Indian rupee was trading lower by 9 paise at 64.00 against the dollar at this point of time due to month-end dollar demand from importers and banks. In scrip specific development, Swan Energy was up by over two and half percent with its arm executing ship building contract with Hyundai Heavy Industries.

On the global front, Asian markets were trading mostly in red, as the region was rattled by North Korea's launch of a midrange ballistic missile that crossed over northern Japan and fell into the Pacific Ocean. Back home, the BSE Sensex is currently trading at 31516.80, down by 234.02 points or 0.74% after trading in a range of 31471.95 and 31739.80. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.07%, while Small cap index was down by 0.10%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.21%, Metal up by 0.12%, Realty up by 0.08% and Basic Materials up by 0.01%, while Telecom down by 1.36%, Power down by 0.78%, TECK down by 0.68%, Capital Goods down by 0.64% and FMCG down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 0.58%, Dr. Reddy’s Lab up by 0.56%, ICICI Bank up by 0.28%, Lupin up by 0.20% and Bajaj Auto up by 0.20%. On the flip side, NTPC down by 3.00%, HDFC down by 2.02%, Axis Bank down by 1.36%, Adani Ports & SEZ down by 1.24% and Tata Motors - DVR down by 1.22% were the top losers.

Meanwhile, in a bid to give a big push to startups in India, the Department of Industrial Policy and Promotion (DIPP), an arm of the Commerce Ministry, in its newly consolidated foreign direct investment (FDI) policy document has included start-ups for the first time and allowed them to raise up to 100 percent of funds from Foreign Venture Capital Investor (FVCI). The document, which incorporates in simplified form all the changes made in FDI policy over the past year, has stated that the start-ups can issue equity or equity linked instruments or debt instruments to FVCI against receipt of foreign remittance. It also said that startups can issue convertible notes to person resident outside India under certain conditions.

According to the updated FDI policy, a person resident outside India (other than citizens/ entities of Pakistan and Bangladesh) will be permitted to purchase convertible notes issued by an Indian startup company for an amount of Rs 25 lakh or more in a single tranche. It also said that Non-resident Indian (NRIs) can also acquire convertible notes on non- repatriation basis. Adding further, it said that a startup company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a non-resident only with approval of the Government. It noted that the startup issuing convertible notes would be required to furnish reports as prescribed by the Reserve Bank of India (RBI).

In order to promote job creation and innovation, the government is focusing on startup companies. The whole exercise is aimed at providing an investor friendly climate to foreign players and, in turn, attract more FDI to boost economic growth and create jobs. The government updates the FDI policy every year. In the past year, the government has liberalized FDI policy in a number of sectors including food retail, construction and development, civil aviation, defence and private security agencies.

The CNX Nifty is currently trading at 9841.70, down by 71.10 points or 0.72% after trading in a range of 9821.80 and 9887.35. There were 14 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.38%, Dr. Reddy’s Lab up by 0.52%, Tata Motors up by 0.41%, GAIL India up by 0.22% and Indian Oil Corp. up by 0.20%. On the flip side, NTPC down by 2.97%, HDFC down by 2.00%, HCL Tech. down by 1.71%, Tata Power down by 1.59% and Adani Ports & SEZ down by 1.37% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 87.35 points or 0.45% to 19,362.55, Hang Seng was down by 56.98 points or 0.2% to 27,806.31, Jakarta Composite dipped 37.35 points or 0.63% to 5,865.99, Taiwan Weighted declined 29.41 points or 0.28% to 10,496.57, FTSE Bursa Malaysia KLCI shed 8.09 points or 0.46% to 1,761.40 and KOSPI Index decreased 5.56 points or 0.23% to 2,364.74.

On the flip side, Shanghai Composite was up by 5.17 points or 0.15% to 3,367.82.