Benchmarks trade higher with marginal gains in early deals

Indian equity benchmarks made an optimistic start on Wednesday but pared gains to trade slightly higher in early deals. Sensex and Nifty reclaimed their crucial 39,800 and 11,800 levels, respectively. Buying in Telecom, Oil & Gas and Capital Goods stocks supported the markets, while selling in Auto, Metal and Bankex kept upside in check. Better-than-expected corporate earnings from some frontline companies and expectations of tax realignment on equities have lifted the sentiment in markets. The finance ministry and regulators are reviewing the possibility of scrapping the dividend distribution tax (DDT) in a bid to regain investor confidence in the equity markets. It is also considering rationalisation of the long-term capital gains (LTCG) taxation structure by classifying three asset classes against six at present. Some support also came in with report that the Department for Promotion of Industry and Internal Trade (DPIIT) has kickstarted an exercise to relax India’s foreign direct investment (FDI) norms. The department held an inter-ministerial meeting to discuss further opening up in sectors, especially where 100% FDI is not allowed on the automatic route.

Though, weakness in global markets weighted on sentiments, as most of the Asian markets were trading in red following the negative lead overnight from Wall Street amid caution ahead of the US Federal Reserve's highly anticipated monetary policy decision later today. The Fed is widely expected to cut interest rates by another quarter point. Meanwhile, a report said that suggested a phase one trade deal between the US and China may not be signed by a summit in Chile next month dampened sentiment. Besides, the Ministry of Economy, Trade and Industry said that retail sales in Japan climbed 9.1% on year in September, exceeding expectations for an increase of 6.0% following the 1.8% gain in August.

Back home, telecom stocks were in focus amid report that the Centre has set up a Committee of Secretaries under the cabinet secretary to suggest measures to alleviate financial stress in the telecom sector. The committee will look at ways of creating a favourable investment environment for the sector. Oil & gas stocks were buzzing with Prime Minister Narendra Modi’s statement that India will invest $100 billion in oil and gas infrastructure to meet energy needs of an economy that is being targeted to nearly double in five years, as he sought investment from oil kingpin Saudi Arabia and other nations to boost supplies. In scrip specific development, Wipro gained on launching next generation engineering and innovation center in Virginia.

The BSE Sensex is currently trading at 39878.38, up by 46.54 points or 0.12% after trading in a range of 39805.11 and 40100.26. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.12%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Telecom up by 2.39%, Oil & Gas up by 1.43%, Capital Goods up by 1.13%, TECK up by 0.81% and Industrials was up by 0.61%, while Auto down by 0.76%, Metal down by 0.34%, Bankex down by 0.22%, Consumer Discretionary down by 0.21% and Consumer Durables was down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.38%, Larsen & Toubro up by 1.40%, Infosys up by 1.39%, Tech Mahindra up by 0.98% and ITC up by 0.75%. On the flip side, Tata Motors down by 2.78%, Tata Motors - DVR down by 2.40%, Indusind Bank down by 2.09%, Yes Bank down by 1.89% and ICICI Bank down by 1.10% were the top losers.

Meanwhile, with a view to attract overseas investors, the government is looking at the possibility of relaxing further foreign direct investment (FDI) norms in different sectors. An inter-ministerial group has held discussions on the possibility of further easing FDI norms in different sectors. The meeting was chaired by Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Guruprasad Mohapatra. Officials from different ministries, including defence, Home affairs, information and broadcasting, electronics and IT, and finance, attended the meeting.

The department is looking at relaxing norms in those sectors where currently 100% FDI is not permitted through automatic route. Foreign investment is allowed through automatic route in most of the sectors, but in certain areas such as defence, telecom, media, pharmaceuticals and insurance, government approval is required. In some sectors like telecom, insurance, banking, and media, there is cap on FDI limit. Under government route, foreign investor has to take prior approval of respective ministry/department. Through automatic approval route, the investor just has to inform the RBI after the investment is made.

There are nine sectors where FDI is prohibited and that includes lottery business, gambling and betting, chit funds, Nidhi Company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco. Recently, the government relaxed FDI norms in several sectors like single brand retail trading, contract manufacturing and coal mining. Currently, a standard operating procedure is laid out by the DPIIT through which foreign direct investment proposals are processed within a fixed time period of 8-10 weeks. During the April-June period of FY20, FDI into India increased by 28% to $16.33 billion.

The CNX Nifty is currently trading at 11809.10, up by 22.25 points or 0.19% after trading in a range of 11784.45 and 11883.95. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 3.42%, Bharti Infratel up by 2.46%, Bharti Airtel up by 2.22%, Wipro up by 1.96% and Infosys up by 1.94%. On the flip side, Tata Motors down by 2.81%, Yes Bank down by 2.67%, Indusind Bank down by 2.17%, Eicher Motors down by 1.87% and Coal India down by 1.31% were the top losers.

Asian markets were trading mostly lower; Nikkei 225 slipped 94.40 points or 0.41% to 22,879.73, Hang Seng decreased 69.58 points or 0.26% to 26,717.18, KOSPI fell 14.46 points or 0.69% to 2,078.23 and Shanghai Composite declined 12.93 points or 0.44% to 2,941.25. On the flip side, Jakarta Composite soared 7.81 points or 0.12% to 6,288.95, Straits Times advanced 10.49 points or 0.33% to 3,207.53 and Taiwan Weighted strengthened 15.11 points or 0.13% to 11,348.98.