Markets trade cautiously in early deals ahead of FOMC release

Continuing their consolidation mood, Indian equity markets were trading slightly in the green. Investors opted the wait and watch policy ahead of outcome of the US Federal Reserve meeting and Reserve Bank of India’s (RBI) monetary policy review. Meanwhile, some strength to the bourses came in from strengthening rupee against dollar. The rupee was trading at Rs 63.25 compared with previous close of Rs 63.37 per dollar. Sentiments also got some support from report that Foreign Direct Investment (FDI) into India grew by 12 percent year-on-year to $1.65 billion in July from $1.47 billion in July 2012, highest since April.

On the global front, the US stocks advanced overnight on expectations the Federal Reserve will make only moderate changes to its stimulus that has been highly supportive of stocks and other assets at the conclusion of its two-day meeting. While, most of the Asian equity benchmarks were trading in the red at this point of time with Chinese Shanghai were trading lower after official data showed that home prices were higher in August, which may constrain Beijing from further easing monetary policy.

Back home, shares of jewellery companies like Titan Industries, Tribhovandas Bhimji Zaveri (TBZ), PC Jeweller, Gitanjali Gems, Shree Ganesh Jewellery House (India) and Goenka Diamond & Jewels edged higher in morning trade after the government increased the customs duty on gold and silver jewellery by five percentage points to 15% to protect the domestic industry. On the sectoral front, realty witnessed the maximum gain in trade followed by consumer durables and fast moving consumer goods, while software, power and auto remained the top losers on the BSE sectoral space. The broader indices too were trading in the green with traction, while the market breadth on the BSE was positive; there were 658 shares on the gaining side against 457 shares on the losing side while 49 shares remain unchanged.

The BSE Sensex opened at 19865.99; about 61 points higher compared to its previous closing of 19804.03, and has touched a high and a low of 19900.68 and 19775.29 respectively. The index is currently trading at 19815.90, up by 11.87 points or 0.06 %. There were 22 stocks advancing against 8 declines on the index.

The overall market breadth has made a strong start with 56.53% stocks advancing against 39.26% declines. The broader indices were trading in green; the BSE Mid cap up by 0.30% and Small cap indices up by 0.27%. 

The top gaining sectoral indices on the BSE were, Realty up by 1.63%, Consumer Durables up by 1.07%, FMCG up by 0.82%, Metal up by 0.54% and Capital Goods up by 0.34%, while IT down by 0.11%, Power down by 0.07%, Auto down by 0.02% and Bankex down by 0.02% were the top losers on the sectoral index.

The top gainers on the Sensex were Cipla up by 1.56%, Hindustan Unilever up by 1.40%, Coal India up by 1.31%, Dr Reddys Lab up by 1.25% and SBI up by 1.20%.  On the flip side, HDFC was down by 2.41%, Mahindra & Mahindra was down by 1.17%, HDFC Bank was down by 0.97%, Sun Pharma was down by 0.92% and GAIL was down by 0.60% were the top losers on the Sensex.

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.  

The CNX Nifty opened at 5,872.75; about 22 points higher as compared to its previous closing of 5,850.20, and has touched a high and a low of 5,877.90 and 5,840.20 respectively.

The index is currently trading at 5,853.30, up by 3.10 points or 0.05%. There were 32 stocks advancing against 17 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were DLF up by 3.12%, Cipla up by 1.71%, Coal India up by 1.57%, SBI up by 1.49% and Hindustan Unilever up by 1.34%. On the flip side, Cairn down by 2.37%, HDFC down by 2.27%, Ambuja Cements down by 1.56%, Kotak Mahindra Bank down by 1.18% and Sun Pharmaceuticals down by 1.00% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dipped 4.51 points or 0.21% to 2,181.05, Hang Seng dropped 74.68 points or 0.32% to 23,105.84, Jakarta Composite declined 30.56 points or 0.68% to 4,487.06, KLSE Composite slipped 4.24 points or 0.24% to 1,770.70, Seoul Composite shed 7.79 points or 0.39% to 2,005.58 and Taiwan Weighted was down by 20.21 points or 0.24% to 8,229.57.

On the flip side, Nikkei 225 surged 280.72 points or 1.96% to 14,592.39 and Straits Times was up by 18.03 points or 0.57% to 3,198.95.