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Local equities hold positive momentum on D-street
Oct-17-2018

Local equity benchmarks continue to hold positive momentum on the streets, as Q2 earnings seem to have encouraged traders’ sentiment amid continued recovery in global markets. ITC, Hero MotoCorp and Coal India were the prime gainers among heavy-weights, pushing Sensex 0.65% higher. Market participants took encouragement with Reserve Bank of India’s (RBI) report that the share of investments in gross domestic product (GDP) will rise to 33% by FY23 from 31.4% recorded in the last fiscal, suggesting that the upturn in the current investment cycle that started in FY17 could last for five more years. Besides, a private report also stated that the extra US tariffs on its imports from China have opened a window of opportunity for India to push for higher exports in 171 items with additional outbound shipment potential of up to $8.7 billion a year. Investors ignored Commerce and Industry Minister Suresh Prabhu warning that the decline in world trade and slowing global economy will have an impact worldwide. Meanwhile, US-India Business Council (USIBC) also reported that with the RBI standing firm on its data localisation stance, it has cautioned that policies restricting flow of data can act as ‘barriers’ to expansion of services in India.

On the global front, Asian markets were trading in green, after upbeat US earnings reports drove a rebound on Wall Street and helped restore a little confidence in emerging market stocks and currencies. Back home, in scrip specific development, CRISIL gained on reporting 30% rise in Q3 consolidated net profit. Beside, Adani Green Energy surges on incorporating wholly-owned subsidiary company.

The BSE Sensex is currently trading at 35391.66, up by 229.18 points or 0.65% after trading in a range of 35326.99 and 35605.43. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.38%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were FMCG up by 1.22%, IT up by 1.03%, TECK up by 0.93%, Bankex up by 0.43% and Capital Goods was up by 0.43%, while Realty down by 1.05%, Oil & Gas down by 0.58%, Consumer Durables down by 0.38%, Basic Materials down by 0.18% and Healthcare was down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.60%, Hero MotoCorp up by 2.43%, Coal India up by 1.92%, Infosys up by 1.87% and ICICI Bank was up by 1.60%. On the flip side, Yes Bank down by 4.78%, ONGC down by 1.21%, Adani Ports down by 0.95%, Mahindra & Mahindra down by 0.94% and Tata Motors was down by 0.73% were the top losers.

Meanwhile, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) hit a nearly nine-and-a-half year low of Rs 79,548 crore in September 2018. According to Securities and Exchange Board of India (SEBI) data, total value of P-note investments in Indian markets including equity, debt and derivatives, at September end declined to Rs 79,548 crore from Rs 84,647 crore clocked by August-end, which was the first rise in such fund infusion in 10 months. Prior to that, the figure was Rs 80,341 crore in July. The fund inflow through P-notes in September was the lowest since April 2009, when the cumulative value of such investments stood at Rs 72,314 crore.

Of the total, P-note holdings in equities at August-end were at Rs 60,164 crore, while in debts and derivatives were at Rs 15,477 crore and Rs 3,907 crore respectively. Besides, the quantum of FPI investments via P-notes remained unchanged at 2.5% during the period under review from the preceding month. The decline in investment could be attributed to several measures taken by the market watchdog to stop the misuse of the controversy-ridden participatory notes. P-notes are issued by registered foreign portfolio investors (FPIs) to overseas players who wish to be part of the Indian stock market without registering themselves directly. However, they need to go through due diligence.

SEBI, in July 2017, had notified stricter norms stipulating a fee of $1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes. Meanwhile, in September, market regulator SEBI issued revised KYC norms for FPIs, wherein resident as well as non-resident Indians have been permitted to hold non-controlling stake in such entities. These norms have been put in place weeks after a panel suggested various changes to the guidelines proposed earlier, amid concerns in certain quarters that overseas funds might face difficulties in ensuring compliance.

The CNX Nifty is currently trading at 10636.15, up by 51.40 points or 0.49% after trading in a range of 10613.70 and 10710.15. There were 29 stocks advancing against 20 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.55%, ITC up by 2.55%, HCL Tech. up by 2.15%, Infosys up by 2.11% and Coal India was up by 2.03%. On the flip side, Indiabulls Housing Finance down by 8.89%, Yes Bank down by 4.64%, BPCL down by 3.06%, HPCL down by 2.12% and Adani Ports was down by 1.59% were the top losers.

All Asian markets were trading in green; KOSPI gained 19.23 points or 0.89% to 2,164.35, Taiwan Weighted increased 32.23 points or 0.32% to 10,013.33, Nikkei 225 soared 271.78 points or 1.19% to 22,821.02, Jakarta Composite strengthened 29.71 points or 0.51% to 5,830.53, Straits Times surged 51.87 points or 1.68% to 3,086.18 and Shanghai Composite was up by 2.55 points or 0.1% to 2,548.88.
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