However, a large move is coming soon
We had mentioned in Tuesday’s closing report that Nifty, Sensex were on the cusp of a sharp move and that Nifty will decline sharply if it closes below 7,750. The major indices in the Indian stock markets were range-bound during Thursday’s trading and closed with small gains of upto 0.71%.The trends of the major indices during the day’s trading are given in the table below:
Heightened chances of key economic legislations getting passed during Parliament's winter session coupled with hopes of a stimulus package in European Union buoyed the Indian equity markets on Thursday. Initially, both the bellwether indices of the Indian equity markets opened on a weak footing but gained strength in line with their Asian and European peers. Furthermore, better-than-expected outcome of the derivatives expiry cheered investors.
The government on Thursday announced indirect tax incentives for India's stressed shipbuilding industry in a bid to give a push to the sector. The finance ministry notified it had exempted all raw material parts used in the manufacture of ships, vessels, tugs and pusher crafts and the like from customs and central excise duties. The export oriented units (EOUs) too will be eligible for this incentive. These benefits were earlier available if the manufacture was in a customs bonded warehouse, which condition is being withdrawn, the statement said. "Instead, these exemptions will now be subject to actual user conditions," the ministry said. The shipping ministry told parliament late last year that it had asked the Reserve Bank of India and the finance ministry to relax some of the financial regulations on banks engaged in corporate debt restructuring (CDR) of shipyards. Shipping is highly capital intensive and depends largely on the debt market to finance its acquisitions.
South Korean Hyundai Motor Company's Indian subsidiary on Thursday said it has achieved the milestone of selling four million cars in the country. "Hyundai today is a 10-product strong brand with class leading products ranging from Eon to Santa Fe. Hyundai has since inception focussed on 'Make in India' products, made for the world," Y.K. Koo, managing director, was quoted as saying in the statement issued by Hyundai Motor India. "Hyundai is the largest exporter and largest premium car manufacturer in India, catering to the growing needs and demands of the aspirational Indian customer. Hyundai has witnessed success as the fastest growing sales milestone and we assure our commitment to the Indian car market," he added. Nineteen years ago when most multinational car companies were focussing on the mid-segment car market, Hyundai took on market leader Maruti Suzuki with its small car Santro. Santro was India's first "tall boy" design car that rode into the new car buyers' market. The South Korean company also made India its major car sourcing point for its global market.
The benchmark DAX index at the Frankfurt Stock Exchange on Wednesday rebounded and closed up by more than 200 points. The European Central Bank (ECB) will have its monetary policy meeting at the beginning of December and the central bank has signalled that it stands ready to extend the asset purchase program, Xinhua news agency reported. The blue-chip DAX index went up by 235.55 points and closed at 11,169.54 points.
Wednesday was a market holiday for the Indian stock markets. Moody's Investors Service on Wednesday said the failure to implement reforms by passing the GST and land bills in parliament could potentially hurt investments amid weak global growth and prove to be a "downside factor" for Indian companies. "It seems highly unlikely that the major reforms will get enacted by the upper house of the Indian parliament where the ruling coalition is in minority. A failure to implement these reforms could hamper investment amid weak global growth," Moody's vice president Vikas Halan said in a report. "The government is unlikely to win a majority in the upper house if it keeps losing state elections like it did recently in Delhi and Bihar. Opposition parties are unlikely to allow key reforms to go through," he added. The constitution amendment bill for Goods and Services Tax (GST) has been passed by Lok Sabha, and is pending in the Rajya Sabha, where the ruling NDA does not have majority. Minister of State for Finance Jayant Sinha told reporters on Monday that the government is making efforts to convince the opposition about the GST bill.
According to Moody’s, on Wednesday, among the upside factors include further government measures that could sustain the GDP growth at 8% plus, leading to a broad-based improvement in corporate credit metrics. Also, improvement in the global macroeconomic environment leading to stabilising commodity prices and credit markets would be positive, it said. Sector-wise, Moody's expects upstream oil and gas companies to benefit from lower fuel subsidy burdens, although low crude and domestic natural gas prices will continue to hurt profitability. However, refining and marketing companies should benefit from healthy margins as demand growth outpaces expected capacity additions, Moody's said. Moody's negative outlook for the steel industry reflects elevated leverage and an extended period of low prices owing to continuing steel imports, while the negative outlook for metals and mining companies reflects bleak global commodity prices. In real estate, Moody's expects demand to improve in 2016 on the back of lower interest rates, although approval delays could postpone project launches for property developers. In the auto sector, Moody's said that retail sales volume will grow 6% in 2016 on sustained growth in passenger vehicles sales and recovery in commercial vehicle sales.
The move by stock markets regulator SEBI to introduce an abridged prospectus with a new IPO application form does not solve either the purpose of transparency or the retail investor interest as it raises several questions than simplifying the procedures, say market analysts. The SEBI has issued a notification introducing a ten-page format -- five sheets, printed on both sides -- replacing the 100-page version of the prospectus, to be issued with IPO application forms. The new format will be effective December 1, 2015. It provides for increasing the font size of the application form, but at the same time abridges the material information that ought to be given to the investor about the company and its business. For instance, as a legal expert says, the all-important risk factors section which normally runs into 35 to 40 pages is supposed to be condensed to 500 words. Even the section on the company’s business is supposed to be not more than 500 words. Market analyst Arun Kejriwal, director of KRIS research, says “the increase in font size on page One which has to be filled by applicant is welcome because one can read the columns without using a magnifying glass.”
But, he says, the guidelines on inside pages leave much to be desired. For instance, the selection of risk factors becomes subjective. “There is a lot of ambiguity as to which factor is important and which is not. This could result in playing with fire,” he says. Appreciating SEBI’s consistent efforts to make stricter compliance norms and increase the number of disclosures to the investor community, a top corporate lawyer said the latest move defeats the very purpose for which SEBI has been working.
Market experts, on Wednesday, opine that the retail investor will be unable to take his decision on investing in IPOs on the basis of limited information given in the ten-page booklet. This could lead to increased retail apathy to IPOs, they aver. A close watch of the retail participation in primary markets recently shows that the segment’s participation has been quite discouraging and, as per media reports, SEBI itself has taken a serious view of this.
Withdrawal of tax exemption for research and development is likely to negatively impact India's innovation efforts, pharma major Dr Reddy's Laboratories said on Wednesday. While welcoming the move to simplify taxation laws, Reddy's said withdrawal of R&D weighted deduction is potentially counter-productive and likely to negatively impact India's innovation efforts. The Central Board of Direct Taxes (CBDT) has proposed to reduce the tax exemption offered on investments made for scientific research from the current 200% to 100%. Meanwhile, the stock of Dr Reddy’s fell sharply on Thursday after the CBDT proposal, by 8.21% to close at Rs3,110.35 on the BSE.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: