Post Session: Quick Review

Indian equity benchmarks traded firmly for most part of the day and finished Wednesday’s session with a gain of over half a percent, on the back of better-than-expected corporate earnings from some frontline companies. This was the second consecutive regular day of rise for the domestic markets, surpassing their crucial 40,000 (Sensex) and 11,850 (Nifty) bastions. Markets started off with huge gains, as traders took some support with report that the Department for Promotion of Industry and Internal Trade (DPIIT) has kick-started 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.

Markets extended northward moment in afternoon deals, as local investors cheered with a report that the finance ministry and regulators are reviewing the possibility of scrapping the dividend distribution tax (DDT). It is also considering rationalisation of the long-term capital gains (LTCG) taxation structure by classifying three asset classes against six at present. However, key indices gave up some of their initial gains in last leg of trade, as market-men got anxious with private report stating that following the surprise move to cut corporate taxes last month, speculation is high that a reduction in personal income taxes is on the cards next in India. With the all-in corporate tax rate at 25 per cent, it is likely that personal income tax rates, which are at 30 per cent plus levels, will also be lowered, surcharges notwithstanding.

On the global front, Asian markets ended mixed on Wednesday, while European markets were trading mostly in red, amid reports of a possible delay in the US-China trade deal. Traders also play a wait-and-see game ahead of the Federal Reserve's latest policy decision, with expectations for another interest rate cut but focus also on its plans for the future. Back home, Oil marketing firms such as Indian Oil Corporation and Bharat Petroleum Corporation edged higher after Prime Minister Narendra Modi said 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. Besides, 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.

The BSE Sensex ended at 40080.83, up by 248.99 points or 0.63% after trading in a range of 39805.11 and 40178.12. There were 20 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.65%, while Small cap index was up by 0.35%. (Provisional)

The top gaining sectoral indices on the BSE were PSU up by 1.64%, IT up by 1.55%, TECK up by 1.42%, Oil & Gas up by 1.39% and Capital Goods up by 1.26%, while Consumer Durables down by 1.02%, Realty down by 0.99%, Metal down by 0.27%, Auto down by 0.15% and Consumer Discretionary Goods & Services down by 0.04% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 3.39%, TCS up by 2.82%, Bharti Airtel up by 2.61%, ITC up by 2.23% and Sun Pharma up by 2.17%. (Provisional)

On the flip side, Yes Bank down by 2.23%, Maruti Suzuki down by 2.07%, Indusind Bank down by 1.71%, Bajaj Finance down by 1.35% and ICICI Bank down by 1.24% were the top losers. (Provisional)

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 ended at 11854.00, up by 67.15 points or 0.57% after trading in a range of 11784.45 and 11883.95. There were 28 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 6.24%, SBI up by 3.55%, TCS up by 2.87%, Grasim Industries up by 2.76% and Bharti Airtel up by 2.47%. (Provisional)

On the flip side, Bharti Infratel down by 5.15%, Yes Bank down by 2.75%, Maruti Suzuki down by 2.06%, Britannia Industries down by 1.91% and Cipla down by 1.88% were the top losers. (Provisional)

European markets were trading mostly in red; UK’s FTSE 100 decreased 13.41 points or 0.18% to 7,292.85 and Germany’s DAX fell 29.46 points or 0.23% to 12,910.16, while France’s CAC was up by 8.40 points or 0.15% to 5,748.54.

Asian markets ended mixed on Wednesday as investors were cautious about a possible delay in Sino-US trade deal. Investors are looking ahead to an interest rate decision from the US Federal Reserve. The Federal Open Markets Committee (FOMC) meets later today and is widely expected to cut rates by 25 basis points for the third time this year. Investors will also watch the Bank of Japan’s policy decision on Thursday, which is expected to be a close call on whether to unleash more stimulus or hold fire for now. Japanese shares ended lower as the yen rose slightly after the release of robust retails sales data showing that retail sales in Japan climbed an annual 9.1 percent in September following the 1.8 percent gain in August.