Post Session: Quick Review

Indian markets remained in consolidation mood on Tuesday, waiting for the FOMC decision on stimulus tapering after its two days meeting. The markets across the globe looked cautious ahead of the Fed’s meet and traders opted a wait and watch stance before going for any major decisions. The Indian markets that underperformed the regional peers in last session on disappointing WPI inflation numbers, remained in somber mood since beginning as the global cues were not that supportive and there was not much on domestic front that could support the markets, rather the weakness in rupee came as an additional pressure.

On the global front, though the US markets ended mostly in green overnight, the major Asian markets made a weak start, coming off their four months high ahead of the Fed’s two days policy meeting and barring few most of them ended in red. Further the European markets made a soft and cautious start weighing on the sentiments of the domestic markets, there was selling in the Lloyds Banking Group companies, as the UK government sold 3.2 billion pound stake in the lender, five years after its rescue.

Back home, markets showed a choppy trade despite trading in a tight range, moving in and out of the red zone throughout the trading session. Traders were cautious not only because of the Fed meet, but also with the RBI’s monetary policy meet, following it on September 20. Meanwhile, chairman of the PMEAC, C Rangarajan said that he expects the central bank to take into account inflation and the situation with regard to rupee while it takes a view on the monetary policy.  Rupee however recovered from the lows of the day as foreign banks sold dollars. Gold finance companies were a bit under weather after the Reserve Bank of India (RBI) tightened rules for finance companies which lend against gold, in line with the recommendations of an internal panel. As per the new norm, gold loan financing companies should have appropriate infrastructure for storage of gold ornaments and made mandatory for NBFC to obtain prior approval of the Reserve Bank to open branches exceeding 1000. Companies like Manappuram and Muthoot Finance lost 4-9% for the day. Infra stocks too turned lower despite a positive start, ahead of a CCI meeting to consider seven stalled mega infrastructure projects, envisaging investment of around Rs 1.6 lakh crore. Markets spiked up in late trade supported by gains in the IT and technology pack after the rupee turned lower, though power, banking and realty counters remained on sellers’ radar. The real estate sector kept reeling in red on a report of increasing inventory in major cities amid plummeting sales. Finally the markets managed a close in green, though the broader markets snapped the low volume of trade in red.       

The market breadth on the BSE remained negative; advances and declining stocks were in a ratio of 1120:1235, while 129 scrips remained unchanged. (Provisional)

The BSE Sensex gained 50.52 points or 0.26% to settle at 19792.99.The index touched a high and a low of 19819.10 and 19635.44 respectively. Among the 30-share Sensex pack, 19 stocks gained, while 11 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended lower by 0.44% and 0.10% respectively. (Provisional)

On the BSE Sectoral front, IT up by 2.14%, Teck up by 1.68%, Metal up by 0.93%, FMCG up by 0.80% and Auto up by 0.61% were the top gainers, while Realty down by 1.02%, Consumer Durables down by 0.86%, Power down by 0.85%, Bankex down by 0.82% and PSU down by 0.65% were the top losers. (Provisional)

The top gainers on the Sensex were Wipro up by 4.89%,  Dr Reddys Lab up by 3.64%, TCS up by 2.45%, Jindal Steel up by 2.06% and Coal India up by 1.83%, while, Sun Pharma down by 3.37%,  ONGC down by 2.28%, NTPC down by 1.78%, Hero MotoCorp down by 1.30% and Tata Steel down by 1.13% were the top losers in the index. (Provisional)

Meanwhile, the Department of Industrial Policy & Promotion (DIPP), the nodal ministry for the foreign direct investment (FDI) policy, has circulated a draft Cabinet note for relaxing foreign direct investment (FDI) norms for the housing sector with an objective to attract more foreign investment into the sector and provide houses at affordable prices to the people.

The draft note proposed easing the three-year lock-in period for FDI in housing and townships, and also sought reduction in the minimum capitalization to $5 million from the present $10 million for wholly-owned subsidiaries. Under the present FDI policy, the lock-in period of three years applies to every tranche of investment brought in by a foreign player from the date of receipt or from the date of 'completion' of minimum capitalization whichever is later. Further, the note has also suggested a cut in the minimum built-up area to 20,000 sq mts from 50,000 sq mts in case of construction development projects of carpet area for FDI. Meanwhile, despite allowing 100 percent foreign direct investment in townships, housing and built-up infrastructure and construction developments, the government has also imposed conditions on it.

Now, the DIPP has sought views on this proposal from various ministries including finance, home affairs ministries and the planning commission. During the period from April 2000 to June 2013, construction development sector including townships, housing and built-up infrastructure, has received FDI worth $22.24 billion, which was 11 per cent of the total FDI attracted by India during the period. Meanwhile, in April-June period of this fiscal, overall FDI in the country stood at $5.39 billion.   India VIX, a gauge for markets short term expectation of volatility lost 3.08 % at 27.93 from its previous close of 28.82 on Monday. (Provisional)

The CNX Nifty gained 10.40 points or 0.18% to settle at 5,850.95. The index touched high and low of 5,857.80 and 5,804.90 respectively. 29 stocks advanced against 21 declining on the index. (Provisional)

The top gainers on the Nifty were HCL Tech up by 4.20%, Dr. Reddy's Laboratories up by 3.37%, Ranbaxy Laboratories up by 3.28%, UltraTech Cement up by 2.93% and Jindal Steel & Power up by 2.42%.

On the other hand, Sun Pharmaceuticals down by 3.71%, Bank of Baroda down by 3.66%, Axis Bank down by 3.20%, IndusInd Bank down by 3.00% and ONGC down by 2.61%.

The European markets were trading in red; France’s CAC 40 down by 0.38%, Germany’s DAX down by 0.19% and the United Kingdom’s FTSE 100 down by 0.29%. 

Most of the Asian markets, barring KLSE Composite and Straits Times concluded Tuesday’s trade in red ahead of the US Federal Reserve’s policy meeting, with Japanese market weighed down by a stronger yen. The Fed meeting is important as regional markets were subject to a number of selloffs in the summer, especially in Southeast Asia, as investors became worried that the Fed could change direction on stimulus. Shanghai’s industrial production grew faster in August, while fixed-asset investment and inflation growth both quickened a little. Industrial production grew 4.7 percent from a year earlier to 270 billion yuan ($43.5 billion) last month, accelerating from the pace of 2.5 percent in July and 0.9 percent in June.

Besides, sales of new homes rose to an 11-week high in Shanghai last week amid robust buying in the mid to low-end segments. The purchases of new homes, excluding government-funded affordable housing, jumped over 10 percent from the previous week to 285,600 square meters during the seven-day period ended on Sunday. Foreign direct investment (FDI) into China rose 6.37 percent year-on-year in the first eight months of 2013, adding it was a sign of investor confidence in the world’s second-biggest economy. Incoming FDI, which excludes financial sectors, reached $79.77 billion for the January-August period.