Benchmarks trade choppy in morning deals

Indian equity benchmarks made a cautious start and are trading choppy in early deals, tracking sluggish global cues. Traders also remained on sidelines ahead of the official start of the third quarter earnings season with quarterly earnings from TCS and IndusInd Bank due later in the day. However, losses remained capped with traders taking some solace from global rating agency Moody's latest report, which has said India and China remain the fastest growth economies in Asia Pacific region. Besides, the cabinet's decision to allow foreign airlines to invest up to 49% in ailing Air India, and ease foreign direct investment (FDI) policies in some critical areas, including single-brand retail, broking services in construction, pharmaceuticals and power exchanges, too providing some relief to the markets.
On the global front, Asian markets are trading mostly in red at this point of time as rally mood showed signs of waning as the yen remained near a six-week high and traders dialed back their appetite for risky assets, there was jump in bond yields as the news broke that senior officials in Beijing have recommended slowing or halting purchases of US bonds. The US markets despite coming off their lows ended marginally in red in the last session.

Back home, agri related stocks remained in focus, as the economists during an interactive session with Prime Minister Narendra Modi, organised by NITI Aayog suggested need to shift focus to increasing farmers’ income rather than increasing just production. In scrip specific development, Tata Chemicals gained on receiving shareholders' approval for sale of Haldia unit, while Welspun Enterprises rose with arm entering into Concession Agreement with MPSIDC.

The BSE Sensex is currently trading at 34414.06, down by 19.01 points or 0.06% after trading in a range of 34407.37 and 34484.85. There were 15 stocks advancing against 15 stocks declining on the index, while 1 stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index gained 0.23%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Realty up by 1.21%, Consumer Durables up by 0.30%, IT up by 0.30%, Basic Materials up by 0.23% and Utilities was up by 0.21%, while Energy down by 0.29%, Oil & Gas down by 0.20%, Capital Goods down by 0.14%, Bankex down by 0.13% and PSU was down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 0.88%, Tata Motors up by 0.81%, ONGC up by 0.51%, Tata Motors - DVR up by 0.33% and Tata Steel up by 0.31%. On the flip side, Coal India down by 1.05%, Wipro down by 1.03%, Yes Bank down by 0.81%, Axis Bank down by 0.52% and ICICI Bank down by 0.51% were the top losers.

Meanwhile, removing all hurdles for investment and opening the economy further for global players, the Union Cabinet, headed by Prime Minister Narendra Modi, has made a slew of amendments in India’s Foreign Direct Investment (FDI) policy for key sectors. In some sectors, it allowed 100% foreign investment, while in others the cabinet raised the existing foreign investment limit. The move is intended to liberalise and simplify the FDI policy so as to provide ease of doing business in the country. The sectors involve single brand retail trading, construction, power exchanges and aviation. The government also said that in turn, it will lead to larger FDI inflows contributing to growth of investment, income and employment.

The government has permitted 100% FDI under automatic route for single brand retail trading (SBRT). Under the existing policy, this limit was 49% and for 100% FDI the government approval was required. After the amendments, no government approval is required for 100% investment. It was also decided to permit SBRT entity to set off its incremental sourcing of goods from India for global operations during initial 5 years, beginning 1st April of the year of the opening of first store against the mandatory sourcing requirement of 30% of purchases from India. After completion of this 5 year period, the SBRT entity shall be required to meet the 30% sourcing norms directly towards its India’s operation, on an annual basis.

In the civil aviation sector, the government for the first time allowed foreign investors to put money in Air India. So far, foreign airlines were allowed to invest in Indian companies operating scheduled and non-scheduled air transport services up to the limit of 49%. However, this provision was not applicable to Air India, thereby implying that foreign airlines could not invest in the state-run airline. It was decided to do away with this restriction and allow foreign airlines to invest up to 49% under approval route in Air India subject to the conditions that foreign investment(s) in Air India including that of foreign Airline(s) shall not exceed 49% either directly or indirectly. Substantial ownership and effective control of Air India shall continue to be vested in Indian National.

Overseas investment policy has also been liberalised in case of power exchanges. Currently, the policy provides for 49% FDI under automatic route in power exchanges. However, FII/FPI purchases were restricted to secondary market only. It has now been decided to do away with this provision, thereby allowing FIIs/FPIs to invest in Power Exchanges through primary market as well. Regarding the liberalisation in the construction development segment, the government has clarify that real-estate broking service does not amount to real estate business and is therefore, eligible for 100% FDI under automatic route. The government also relaxed FDI policy for medical devices and audit firms associated with companies receiving overseas funds.

The CNX Nifty is currently trading at 10623.45, down by 8.75 points or 0.08% after trading in a range of 10612.35 and 10641.25. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 2.40%, Tech Mahindra up by 1.21%, Infosys up by 0.84%, Hindalco up by 0.78% and Tata Motors up by 0.70%. On the flip side, Cipla down by 1.36%, HPCL down by 1.28%, Wipro down by 1.19%, Coal India down by 1.09% and Yes Bank down by 0.85% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 declined 121.66 points or 0.51% to 23,666.54, Hang Seng slipped 63.22 points or 0.2% to 31,010.50, Taiwan Weighted shed 43.98 points or 0.41% to 10,787.11, KOSPI Index slipped 9.57 points or 0.38% to 2,490.18, FTSE Bursa Malaysia KLCI dipped 6.98 points or 0.38% to 1,815.94 and Shanghai Composite was down by 5.18 points or 0.15% to 3,416.65. 

On the flip side, Jakarta Composite was up by 4.23 points or 0.07% to 6,375.41.