Benchmarks continue firm trade in morning session

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline counters backed by positive global cues and a bit of short covering in beaten down stocks. The rupee opened up against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors stood net buyers in domestic equity markets on Wednesday and bought shares worth Rs 678.80 crore with gross purchases and gross sales of Rs 5,652.99 crore and Rs 4,974.19 crore, respectively. The street took note that a year after demonetization, India is getting ready to give digital payments yet another push. It could consider providing incentives in the goods and services tax (GST) regime for payments that are settled electronically. The GST Council meeting on Friday is likely to consider a proposal in this regard along with steps to cut GST on some items from the top 28% rate besides easing the compliance burden for businesses.

Investors took note that in a move that could unlock defence contracts of more than Rs 25,000 crore, the government is amending its defence procurement manual (DPM), which will enable the armed forces to procure the latest tech in a speedy manner. Market participants shrugged off Grant Thornton’s latest International Business Report (IBR) that India slipped to the 7th position in the September quarter from the 2nd spot in the previous three months in its ‘business optimism index’, showing clear signs of lag in the economy. According to the survey report, Indonesia is at the top, followed by Finland (2nd), the Netherlands (3rd), Philippines (4th), Austria (5th) and Nigeria (6th).

Traders were seen piling up position in Energy, Consumer Durables and Telecom sector stocks. In scrip specific development, Narayana Hrudayalaya was trading in green after a foreign brokerage report maintained buy rating on the stock and revised target price upwards. The brokerage expects the company’s growth and margins to improve from the second half led by a ramp-up in key hospitals and lower stent price impact. Select textile related stocks were buzzing on report that India’s textiles sector is likely to touch $250 billion in the next two years from the current level of $150 billion. The joint study by ASSOCHAM and Resurgent pointed out that the textile sector in India accounts for 10% of the country’s manufacturing production, 5% of its GDP, and 13% of exports earnings.

On the global front, Asian markets were trading mostly in red. China’s consumer inflation rate accelerated to 1.9% in October from a year earlier, beating market expectations. The consumer price index (CPI) had been expected to increase 1.8% on-year compared with an increase of 1.6% in September. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,300 and 10,300 levels respectively. The market breadth on BSE was positive in the ratio of 1547:748, while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 33341.27, up by 122.46 points or 0.37% after trading in a range of 33298.86 and 33463.80. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.93%, while Small cap index was up by 0.92%.

The top gaining sectoral indices on the BSE were Energy up by 1.47%, Consumer Durables up by 1.41%, Telecom up by 1.08%, Oil & Gas up by 0.93% and Basic Materials up by 0.81%, while there were no losing induces on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.33%, Asian Paints up by 1.88%, Tata Steel up by 1.47%, SBI up by 1.42% and Hindustan Unilever up by 1.33%.

On the flip side, HDFC down by 1.85%, Power Grid down by 1.36%, Coal India down by 0.99%, ITC down by 0.47% and Mahindra & Mahindra down by 0.38% were the top losers.

Meanwhile, opposing the idea of raising the individual cap on foreign investment in power exchanges to 15% from the current 5% by treating them on a par with stock and commodity exchanges, the finance ministry has said that raising the individual limit of foreign investment up to 15% in power exchanges would be unwise unless a clear business case is established and a strong and adequate regulatory mechanism exists.

The department of economic affairs (DEA) has argued that power exchanges, which primarily deal with spot electricity contracts, can’t be compared with stock or commodity bourses where futures and other derivative products are also traded and are adequately regulated by the Securities and Exchange Board of India.
Earlier there were some demand that any move to raise the ceiling would encourage large global exchanges or institutional investors, who were earlier shy of investing in India due to the low cap for a single foreign entity in power exchanges, to explore the possibilities more seriously now.

Recently the Indian Energy Exchange (IEX), the power trading exchange regulated by Central Electricity Regulatory Commission was listed on the bourses. At present, foreign corporate bodies together hold 22.9% in Indian Energy Exchange, which accounts for over 95% of the exchange-traded electricity market in the country.

The CNX Nifty is currently trading at 10343.40, up by 40.25 points or 0.39% after trading in a range of 10331.45 and 10368.45. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.43%, Reliance Industries up by 2.39%, Indiabulls Housing Finance up by 2.26%, Hindustan Unilever up by 2.04% and HPCL up by 1.85%.

On the flip side, HDFC down by 1.83%, Zee Entertainment down by 1.60%, GAIL India down by 1.12%, Power Grid down by 1.08% and Coal India down by 0.99% were the top losers.

The Asian markets were trading mostly in red; Taiwan Weighted decreased 76.08 points or 0.7% to 10,742.91, Nikkei 225 decreased 32.27 points or 0.14% to 22,881.55, KOSPI Index decreased 11.42 points or 0.45% to 2,540.98, Jakarta Composite decreased 6.69 points or 0.11% to 6,042.69 and Shanghai Composite decreased 2.93 points or 0.09% to 3,412.53.

On the other hand, FTSE Bursa Malaysia KLCI increased 3.16 points or 0.18% to 1,747.36 and Hang Seng increased 149.15 points or 0.52% to 29,056.75.