Markets recover after setback; Nifty below 6,000

Following a firm start and subsequent retreat, Indian equity markets regained some strength in the late morning session on Friday. The Sensex was trading marginally up by 37.08 points, while Nifty gained by 15.75 points. Investors’ sentiments were improved as data released on May 23 showed that the number of Americans filing new claims for unemployment benefits fell last week, while new single family home sales rose. In currency markets, rupee continued southward journey against greenback amid increasing month end dollar demand from importers and banks. On the sectoral front, select capital goods, metal, power and oil stocks were attracting buyers. Information technology, automobile and healthcare stocks were trading weak.

On the global front, Asian shares bounced back after sharp losses in previous session. The Tokyo's Nikkei steadying from its biggest one-day drop in two years as investors breathed as the yen drifted lower against the dollar and euro. Back home, the market breadth was favoring positive trend; there were 938 shares on the gaining side against 896 shares on the losing side, while 110 shares remain unchanged.

The BSE Sensex is currently trading at 19,711.41, up by 37.08 points or 0.19% after trading in a range of 19,833.14 and 19,568.49. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19% and Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.75%, Realty up by 1.31%, Power up by 1.01%, Metal up by 1.00% and Bankex up by 0.67%, while IT down by 0.80%, HealthCare down by 0.78% and TECk down by 0.73% were the top losers on the BSE.

The top gainers on the Sensex were Tata Steel up by 4.11%, L&T up by 2.57%, Tata Power up by 2.10%, ICICI Bank up by 2.00% and Coal India up by 1.87%.

On the flip side, Sun Pharma was down by 2.30%, Hindalco Inds was down by 2.11%, TCS was down by 1.82%, Cipla was down by 1.61% and BHEL was down by 1.53% were the top losers on the Sensex.

Meanwhile, amid rising demand by foreign investors seeking clarifications on various aspects of the foreign direct investment (FDI) policy, the Government is likely to come out with a new set of clarifications on the FDI policy. Presently, there are two committees, one under Department of Economic Affairs, Secretary Arvind Mayaram and the other constituted by the Reserve Bank of India (RBI) are examining different aspects of the FDI regime.

After meeting with the Finance Minister, Commerce and Industry Minister, Anand Sharma said that the Government has proposed to issue prospective clarifications on FDI policy. Both the ministers are believed to have discussed the issue of redefining FDI and foreign institutional investment (FII) to remove ambiguities. Further, they have also discussed about the committee formed by the Finance Ministry to re-look into the various aspects of the FDI policy and also review the FDI caps in various sectors.

As per the government FDI retail policy, 50 per cent of first tranche of the mandatory minimum $100 million FDI would only have to be invested in the back-end infrastructure and not in buying land, existing building or rent. Further a foreign retailer must source 30 per cent of the items that it sells in India from small industries. However, the global retailers have raised issues regarding these provisions. Meanwhile, the Department of Industry Policy and Promotion (DIPP) would soon issue clarifications on issues raised by the retailers. The government has permitted 51 per cent FDI in multi-brand retail. 

The CNX Nifty is currently trading at 5,982.80 up by 15.75 points or 0.26% after trading in a range of 6,015.30 and 5,936.80. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were Tata Steel up by 3.97%, Lupin up by 2.97%, Reliance Infra up by 2.73%, BPCL up by 2.62% and L&T up by 2.59%.

On the flip side, Sun Pharmaceuticals down by 2.34%, Hindalco down by 1.93%, TCS down by 1.82%, Cipla down by 1.59% and BHEL down by 1.41% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite up by 0.49%, Jakarta Composite strengthened 0.57% and KOSPI Composite was up by 0.22%.

On the flip side, Hang Seng was down by 0.11%, Taiwan was down by 0.34% and Nikkei 225 up by 0.89%.

Stock markets in Malaysia, Singapore remained closed for a public holiday.