Local benchmark erase some losses to trade flat

Local benchmarks erased most of the losses to trade flat in morning deals, on account of some buying in front line counters. Traders were seen piling positions in Energy, Oil & Gas and Healthcare sector, while selling was witnessed in Telecom, IT and TECK sector stocks. Some support came in with a report that China has promised to address India’s growing concerns over the ballooning trade deficit and suggested expanding cooperation in areas like industrial production, tourism and border trade to achieve ‘overall balance’ in bilateral commercial relations. The markets drew some solace with a report that the government is working on a set of measures to remove friction points in the economy with a view to ensuring easy availability of funds to productive sectors and stimulate overall growth. Some support also came with Trade Promotion Council of India’s (TPCI) report that exports of Indian goods, which were enjoying benefits under the preferential tariff system GSP, to the US registered a growth of 32 per cent in June. However, traders remain cautious with government data showing that India's factory output growth, measured by the Index of Industrial Production (IIP), slowed down for second straight month to 2.0% in June 2019 as compared to 7% in June 2018 and it is also lower than 3.1% in May 2019. The slowdown was mainly due to poor performance of the manufacturing and mining sectors and a contraction in the capital goods and consumer durables sectors.

On the global front, Asian markets were trading lower, as Hong Kong attempted to return to normalcy following protests in the last few days. Back home, a report stated that foreign portfolio investors (FPIs) withdrew a net amount of Rs 11,134.60 from equities while pumping in Rs 1,937.54 into the debt segment during August 1-9, taking the total net withdrawal to Rs 9,197.06 crore.

The BSE Sensex is currently trading at 37537.20, down by 44.71 points or 0.12% after trading in a range of 37321.28 and 37755.16. There were 10 stocks advancing against 20 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.55%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Energy up by 7.80%, Oil & Gas up by 2.75%, Healthcare up by 0.40% and Consumer Durables was up by 0.18%, while Telecom down by 4.45%, TECK down by 1.71%, IT down by 1.41%, Power down by 1.40% and Auto was down by 1.19% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 11.31%, Sun Pharma up by 3.90%, Tata Motors - DVR up by 2.92%, Tata Motors up by 2.83% and Axis Bank was up by 0.92%. On the flip side, Bharti Airtel down by 6.18%, NTPC down by 4.60%, Mahindra & Mahindra down by 3.36%, Tech Mahindra down by 2.80% and Maruti Suzuki was down by 2.59% were the top losers.

Meanwhile, with a view to attract overseas investments, the government is working on a proposal to allow 100% foreign direct investment (FDI) in contract manufacturing. The commerce and industry ministry is working on a proposal that would be finalised soon and sent for Union Cabinet's approval.

As per the current foreign investment policy, 100% FDI is permitted in the manufacturing sector under the automatic route. A manufacturer is also allowed to sell products manufactured in India through wholesale and retail channels, including through e-commerce, without government's approval. The current policy does not talk about contract manufacturing and it is not clearly defined in the policy. Big technology companies across the world are going for this, so there is a need for a clarification on the matter which government is considering positively.

Finance Minister Nirmala Sitharaman in Budget 2019 had proposed relaxation in the FDI norms for certain sectors such as aviation, AVGC (animation, visual effects, gaming and comics), insurance, and single brand retail with a view to attract more overseas investment. Last year, the government had relaxed FDI rules for several sectors, including single brand retail, non- banking financial companies and construction. In financial year 2019 (FY19), FDI in India dropped 1% to $44.36 billion.

The CNX Nifty is currently trading at 11114.45, up by 4.80 points or 0.04% after trading in a range of 11041.40 and 11145.90. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 11.69%, Indiabulls Housing Finance up by 11.56%, Sun Pharma up by 4.02%, Tata Motors up by 3.20% and Zee Entertainment was up by 2.16%. On the flip side, Bharti Airtel down by 6.44%, NTPC down by 4.72%, Mahindra & Mahindra down by 3.18%, Britannia Industries down by 2.64% and Maruti Suzuki was down by 2.45% were the top losers.

Asian markets were trading lower, Hang Seng decreased 438.59 points or 1.7% to 25,386.13, Nikkei 225 slipped 245.33 points or 1.19% to 20,439.49, Taiwan Weighted dropped 82.10 points or 0.78% to 10,390.26, Jakarta Composite lost 29.40 points or 0.47% to 6,221.20, Straits Times trembled 25.54 points or 0.81% to 3,143.40, Shanghai Composite declined 22.61 points or 0.8% to 2,792.38 and KOSPI fell 13.48 points or 0.69% to 1,928.81.