Markets wipe-out opening losses; trade higher in early deals

Indian equity benchmarks made gap-down opening on Tuesday tracking free-fall in global markets. Though, soon domestic markets wiped out all the losses and are trading higher with notable gains in early deals. Buying in Metal, Auto and Basic Materials counters aided the domestic sentiments. Broader indices were outperforming their larger peers with gains around 0.75%. Initially, traders were concerned as foreign institutional investors sold Rs 453.77 crore in the Indian markets on August 22. Some cautiousness also came in as a recent study by the Reserve Bank of India (RBI) shows project loan demand by Indian companies for capex in 2021-22 (FY22) did not pick up like it did in the preceding years. However, some support came as in a bid to promote ease of doing business, the finance ministry notified the consolidated rules for overseas investment by Indian entities. Traders took note of a private report stating that the Centre may release about Rs 30,000 crore soon as GST (goods and services tax) compensation for June 2022, the last month of the five-year guaranteed compensation pledged by the Union government.

Most of the Asian markets are trading lower following the broadly negative cues from global markets overnight, amid a sell-off on continuing concerns over the outlook for interest rates and potential recession as traders look ahead to the annual Jackson Hole economic symposium on Friday in Wyoming, where US Fed Chair Jerome Powell is expected to sound a more hawkish tone in his comments. Back home, auto components industry stocks were in focus as industry body ACMA said Indian auto components industry clocked its highest-ever turnover of Rs 4.2 trillion in 2021-22, registering a growth of 23 per cent on the back of strong performance in exports and aftermarket. In stock specific development, Infosys dropped after the IT major slashed average variable payout for the June quarter. On the other hand, RBL Bank gained after the board approved fund raise of Rs 3,000 crore.

The BSE Sensex is currently trading at 58978.66, up by 204.79 points or 0.35% after trading in a range of 58172.48 and 58978.66. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.80%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Metal up by 1.92%, Auto up by 1.52%, Basic Materials up by 1.36%, Capital Goods up by 1.09%, PSU up by 1.01%, while IT down by 0.83%, TECK down by 0.76%, Power down by 0.34%, Utilities down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 3.08%, Mahindra & Mahindra up by 2.49%, Tata Steel up by 2.28%, Sun Pharma up by 1.67% and Bajaj Finance up by 1.41%. On the flip side, Tech Mahindra down by 1.49%, Infosys down by 1.36%, HCL Technologies down by 1.14%, Wipro down by 0.64% and TCS down by 0.50% were the top losers.

Meanwhile, the finance ministry has notified the consolidated rules for overseas investment by Indian entities to promote ease of doing business. The Foreign Exchange Management (Overseas Investment) Rules, 2022 will subsume extant regulations pertaining to Overseas Investments and Acquisition and Transfer of Immovable Property Outside India Regulations, 2015. The finance ministry said ‘In view of the evolving needs of businesses in India, in an increasingly integrated global market, there is need of Indian corporates to be part of global value chain. The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics’.

It said clarity on Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI) has been brought in and various overseas investment related transactions that were earlier under approval route are now under automatic route, significantly enhancing ‘ease of doing business’. The new rules have included overseas investment in International Financial Services Centre (IFSC) by person resident in India. It said a person resident in India may make overseas investment in an IFSC in India within the limits. A person resident in India can make contribution to an investment fund or vehicle set up in an IFSC as OPI. It further said that a resident individual may make ODI in a foreign entity, including an entity engaged in financial services activity, (except in banking and insurance), in IFSC, if such entity does not have subsidiary or step down subsidiary outside IFSC where the resident individual has control in the foreign entity.

The ministry said that an authorised dealer bank including its overseas branch may acquire or transfer foreign securities in accordance with the terms of the host country or host jurisdiction, as the case may be, in the normal course of its banking business. Any resident individual can make ODI by way of investment in equity capital or OPI subject to the overall ceiling under the Liberalised Remittance Scheme of the Reserve Bank. Currently, the LRS permits $2,50,000 outward investment by an individual in a year. With regard to corporate, it said an Indian entity can make OPI not exceeding 50 per cent of its net worth as on the date of its last audited balance sheet. It also said corporates can make ODI by way of investment in equity capital for the purpose of undertaking bonafide business activity.

The CNX Nifty is currently trading at 17568.55, up by 77.85 points or 0.45% after trading in a range of 17345.20 and 17571.95. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 3.27%, Bajaj Finserv up by 3.23%, Tata Steel up by 2.86%, Mahindra & Mahindra up by 2.66% and Grasim Industries up by 2.38%. On the flip side, Tech Mahindra down by 1.73%, Infosys down by 1.48%, HCL Technologies down by 1.35%, Wipro down by 0.74% and TCS down by 0.58% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 343.14 points or 1.19% to 28,451.36, Straits Times fell 19.74 points or 0.61% to 3,242.83, Hang Seng lost 96.43 points or 0.49% to 19,560.55, Taiwan Weighted declined 134.73 points or 0.88% to 15,110.41 and KOSPI was down by 19.50 points or 0.79% to 2,443.00. On the other hand, Jakarta Composite rose 50.98 points or 0.72% to 7,158.96 and Shanghai Composite was up by 5.86 points or 0.18% to 3,283.65.