Benchmarks trim some gains; continue to trade in green territory

Indian equity benchmarks trimmed their gains but continued to trade in green in the morning session. The rupee opened higher against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors stood net sellers in domestic equity markets on Thursday and sold shares worth Rs 1288.14 crore with gross purchases and gross sales of Rs 3059.67 crore and Rs 4347.81 crore, respectively. Traders took some support with report that the government is planning to make it mandatory for unlisted companies to dematerialize their shares as part of the broader crack down on black money. The Ministry of Corporate Affairs (MCA) is in talks with the Securities and Exchange Board of India (SEBI) and depositories on the matter. Some support also came on private report that emerging as a significant source of investments into capital markets, Employees Provident Fund Organisation (EPFO) is likely to pump in Rs 25,000-30,000 crore in equities in 2017-18 with Rs 5,700 crore already invested this year so far. The report added that National Pension Scheme (NPS) is also among the sources for driving the domestic flow surge, which has been positive for the past 17 months. Automakers are expecting strong double-digit sales growth this festive season, driven by a positive sentiment brought to the rural markets by good monsoon rains and benign interest rates, though the prospects of an increase in cess pose a threat to manufacturers of large vehicles.

Investors took note of former RBI Governor Raghuram Rajan’s statement that India needs to focus on three areas -- infrastructure, power and exports -- to stimulate GDP growth, which has been hit by factors like demonetization. Reserve Bank of India deputy governor Viral Acharya suggested that deposit franchise of state run banks which are in the intensive care unit be sold off to private sector banks as the time may be running out for state-run banks to clean-up their balance sheets and recapitalize. Confirming that a new list of stressed accounts has been sent to banks for resolution by the RBI, Acharya said that insolvency code has changed rules of the game and asked lenders to use it extensively for resolving the stress. Separately, as per a foreign brokerage report the country’s current account deficit is likely to widen to 3 per cent in the second quarter of 2017 due to sharp deterioration in trade deficit. The report said despite the wider current account deficit, financing is not a concern.

Traders were seen piling up position in Capital Goods, Industrials and Metal stocks, while selling was witnessed in Healthcare, Realty and Power sector stocks. In scrip specific development, CCL Products (India) was trading in green after the company announced that Reserve Bank of India has withdrawn the restrictions placed on the purchase of shares by FIIs/FPIs on the company with immediate effect and now FIIs/FPIs investment limit under Portfolio Investment Scheme in the company is allowed up to 40%.

On the global front, Asian markets were trading mostly in green, supported by solid Chinese trade data. China’s trade balance data came in at a surplus of $41.99 billion, narrower than the $48.6 billion expected for August. Imports jumped 13.3%, better than the 10% gain seen, while exports rose 5.5%, compared to a gain of 6.0% expected. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,600 and 9,900 levels respectively. The market breadth on BSE was positive in the ratio of 1250:907, while 101 scrips remained unchanged.

The BSE Sensex is currently trading at 31687.67, up by 24.93 points or 0.08% after trading in a range of 31684.88 and 31763.70. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.12%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.07%, Industrials up by 1.07%, Metal up by 1.01%, FMCG up by 0.68% and Basic Materials up by 0.61%, while Healthcare down by 1.06%, Realty down by 0.29%, Power down by 0.24%, Energy down by 0.10% and PSU down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.60%, Tata Steel up by 1.12%, Kotak Mahindra Bank up by 0.56%, ITC up by 0.50% and Hindustan Unilever up by 0.50%.

On the flip side, Dr. Reddy’s Lab down by 5.35%, Sun Pharma down by 2.09%, Lupin down by 1.41%, Mahindra & Mahindra down by 0.99% and Tata Motors - DVR down by 0.78% were the top losers.

Meanwhile, based on petitions filed by the Coalition of American Flange Producers and its individual members, Core Pipe Products and Maass Flange Corporation, the US government has initiated new anti-dumping and countervailing duty probe to determine whether imports of stainless steel flanges from India and China are being dumped in the US.

According to the US Commerce Department, it will act swiftly, while assuring a full and fair assessment of the facts, to ensure that everyone trades on a level playing field. In the anti-dumping investigation, the Commerce Department will determine whether imports of stainless steel flanges from China and India are being dumped in the US market at less than fair value. The department will determine whether Chinese and Indian producers of stainless steel flanges are receiving unfair government subsidies.

If the investigation by the Commerce Department determines that stainless steel flanges from China and India are being dumped into the US market and/or receiving unfair government subsidies, and if the US International Trade Commission (ITC) determines that dumped and/or unfairly subsidised US imports of stainless steel flanges from China and India are causing injury to the US industry, it will impose duties on those imports in the amount of dumping and/or unfair subsidisation found to exist. If the ITC’s determinations are negative, the investigations will be terminated.

The products covered by these investigations are certain forged stainless steel flanges, whether unfinished, semi-finished, or finished (certain forged stainless steel flanges). In 2016, imports of stainless steel flanges from China and India were valued at an estimated $16.3 million and $32.1 million, respectively.

The CNX Nifty is currently trading at 9947.30, up by 17.40 points or 0.18% after trading in a range of 9945.70 and 9963.60. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 3.40%, Vedanta up by 1.87%, Hindalco up by 1.46%, Tata Steel up by 1.41% and Indian Oil up by 1.25%.

On the flip side, Dr. Reddy’s Lab down by 4.62%, Sun Pharma down by 2.03%, Lupin down by 1.33%, Mahindra & Mahindra down by 0.95% and Bosch down by 0.94% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 1.07 points or 0.02% to 5,833.39, Shanghai Composite increased 7.47 points or 0.22% to 3,372.97, Taiwan Weighted increased 51.17 points or 0.49% to 10,589.68 and Hang Seng increased 175.92 points or 0.64% to 27,698.84.

On the other hand, Nikkei 225 decreased 107.98 points or 0.56% to 19,288.54, FTSE Bursa Malaysia KLCI decreased 7.06 points or 0.4% to 1,775.92 and KOSPI Index decreased 4.5 points or 0.19% to 2,341.69.