Benchmarks fall in early deals; Sensex below 37,300 mark

Indian equity benchmarks made gap-down opening and are trading lackluster with cut of over half a percent each in early deals on Thursday. Sentiments remained cautious as traders roll over positions in the F&O segment from the near month August 2019 series to September 2019 series. The August 2019 F&O contracts expire today. Traders were also concerned as India Ratings lowered the country's growth forecast to six-year low of 6.7% for the current fiscal from an earlier estimate of 7.3% on account of slowdown in consumption and moderation in industrial growth among other factors. This would be the third consecutive year of subdued growth. Adding pessimism among market participants a private report stated that the Indian economy likely expanded at its slowest pace in more than five years in the April-June quarter, driven by weak investment growth and sluggish demand. However, down side remained capped on report that the government relaxed foreign direct investment (FDI) rule for foreign single-brand retailers and also permitted foreign investment in contract manufacturing and coal mining to boost the ailing economy. 

On the global front, Asian markets were trading mixed as investors remained cautious as they continued to keep an eye on the US bond market amid a further inversion of the yield curve and on uncertainty regarding US-China trade talks. Meanwhile, Japan will provide July numbers for loans and discounts today, while Australia is scheduled to release second-quarter figures for capital expenditures today. Back home, on the sectoral front, most of the sugar stocks were trading in green as the government approved Rs 6,268 crore export subsidy for 60 lakh tonnes of sugar. A lump sum export subsidy of Rs 10,448 per tonne will be given to sugar mills in the 2019-20 marketing year (October-September), costing the exchequer Rs 6,268 crore as a subsidy.

The BSE Sensex is currently trading at 37230.67, down by 221.17 points or 0.59% after trading in a range of 37191.79 and 37381.80. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.14%, while Small cap index was down by 0.14%.

The top gaining sectoral indices on the BSE were Realty up by 0.40%, Telecom up by 0.38%, Metal up by 0.38%, Healthcare up by 0.25% and Capital Goods was up by 0.15%, while Bankex down by 0.78%, IT down by 0.57%, Energy down by 0.56%, Oil & Gas down by 0.50% and Utilities was down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Industries up by 2.87%, Vedanta up by 2.00%, Tata Motors up by 0.64%, Indusind Bank up by 0.55% and Bharti Airtel up by 0.52%. On the flip side, Yes Bank down by 1.68%, HDFC down by 1.33%, ICICI Bank down by 1.13%, HCL Technologies down by 1.10% and Tech Mahindra down by 1.09% were the top losers.

Meanwhile, in order to boost the ailing economy, the government has liberalized foreign direct investment (FDI) norms in the four sectors. The Union Cabinet has allowed 100% FDI in coal mining and contract manufacturing, eased sourcing norms for single-brand retailers and approved 26% overseas investment in digital media. In single-brand retail trading (SBRT), the definition of 30% local sourcing norm has been relaxed and online sales permitted without prior opening of brick and mortar stores.

Commerce Minister Piyush Goyal has said that the changes in FDI policy will result in making India a more attractive FDI destination, leading to benefits of increased investments, employment, and growth. He said 100% FDI under automatic route in coal mining and sale of coal as also associated infrastructure activity has been allowed to help attract international players to create an efficient and competitive coal market. Also, 100 per cent FDI under automatic route has been allowed in contract manufacturing to give a big boost to domestic manufacturing.

Goyal said decisions of the Cabinet are aimed to liberalize and simplify the FDI policy to provide ease of doing business in the country, leading to larger FDI inflows and thereby contributing to the growth of investment, income and employment. FDI is a major driver of economic growth and a source of non-debt finance for the economic development of the country. The government has put in place an investor-friendly policy on FDI, under which investment up to 100% is permitted on the automatic route in most sectors/ activities. These reforms have led to total FDI into India reaching $286 billion in five years from 2014-15 to 2018-19 as compared to $189 billion in the previous five-years. At $64.37 billion, FDI in 2018-19 is the highest ever investment received for any financial year.

The CNX Nifty is currently trading at 10991.05, down by 55.05 points or 0.50% after trading in a range of 10965.50 and 11007.90. There were 17 stocks advancing against 32 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Sun Pharma Industries up by 2.58%, Vedanta up by 1.89%, Coal India up by 1.65%, Eicher Motors up by 0.80% and Indusind Bank up by 0.66%. On the flip side, Indiabulls Housing Finance down by 4.26%, Yes Bank down by 1.51%, HDFC down by 1.28%, ICICI Bank down by 1.11% and Axis Bank down by 1.08% were the top losers.

Asian markets were trading mixed; Nikkei 225 declined 48.03 points or 0.23% to 20,431.39, Hang Seng slipped 91.22 points or 0.36% to 25,524.26, KOSPI decreased 3.67 points or 0.19% to 1,937.42 and Shanghai Composite tumbled 3.47 points or 0.12% to 2,890.29. On the flip side, Straits Times strengthened 1.39 points or 0.05% to 3,057.86, Taiwan Weighted increased by 2.84 points or 0.03% to 10,437.13 and Jakarta Composite was up by 8.96 points or 0.14% to 6,290.61.