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Sensex Finishes Firm; SAIL Surges 2.8%
Thu, 5 Jan Closing

Indian share markets continued to trade well above the dotted line in the afternoon session amid strong international markets. At the closing bell, the BSE Sensex stood higher by 245 points, while the NSE Nifty finished up by 83 points. The S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 1.3% and 1% respectively. Gains were largely seen in energy, metal and auto stocks.

Most Asian markets finished higher tracking the overnight gains on Wall Street and as the U.S. dollar retreated from 14-year highs. The Hang Seng gained 1.46% and the Shanghai Composite rose 0.21%. The Nikkei 225 lost 0.37%. European markets are lower today with shares in France off the most. The CAC 40 is down 0.14% while Germany's DAX is off 0.05% and London's FTSE 100 is lower by 0.04%.

The rupee was trading at 67.79 against the US$ in the afternoon session. Oil prices were trading at US$ 53.22 at the time of writing.

According to a leading financial daily, Foreign Direct Investment (FDI) in India increased by 27% at US$27.82 billion during the April-October period of the current fiscal as against US$21.87 billion in the same period last fiscal. The FDI numbers indicates that the government has been able to create a suitable climate in which the foreign investors feel confident that interest is protected.

According to Department of Industrial Policy and Promotion (DIPP), manufacturing constituted around 41.5% of the equity inflows, while non-manufacturing were around 58.5% during April 2014 to Sept 2016. Total FDI in the country in the last financial year was US$55.6 billion, up by 23% over previous year. DIPP also stated that trademarks filing has increased by 10% and its examination grew by 250% so far this fiscal till November and added that trademark pendency has come down to 3 months and is expected to be 1 month by March 2017.

The main sectors including services, telecom, trading, computer hardware and software and automobile were the major areas which attracted FDI inflows. The country receives maximum FDI from Singapore, Mauritius, the Netherlands and Japan. FDI is considered crucial for country, which needs around US$1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth. Growth in foreign investments will also help improving the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US$.

Moving on to news from stocks in steel sector. Steel Authority of India's (SAIL) share price surged 2.8% in today's trade after the company reported a 16% sales growth during the April-December 2016 period over the corresponding period last year. The improved sales numbers was led by higher domestic sales as well as expanding exports, with the latter recording a remarkable rise of around more than double during this period. The company's exports rise is in keeping pace with a focus to expand its global foot prints.

On the production front, the company produced 10.18 Million Tonnes (MT) of saleable steel during Apr-Dec 16 period, of which 1.18 MT alone came in December 16, registering a 15% growth in saleable steel production over Apr-Dec 15. With enhanced performance from the modernized units, the techno-economic parameters also exhibited improvement during the first nine months of FY 16-17.

In another development, SAIL was reportedly in talks with Japan's Nippon Steel & Sumitomo Metal Corp and Kobe Steel Ltd for potential technical agreements to help the firm expand its global footprint. Separately, the company is in talks with two European steelmakers for similar partnerships.

SAIL is also ironing out details with the world's biggest steel producer, ArcelorMittal, for a proposed Rs 60 billion (US$884.36 million) joint venture.

SAIL reportedly plans to raise output of saleable steel in the year starting April 2017 by about 10% to 16.5 million tonnes. It is aiming for a 10% jump in 2017/18 exports, versus an estimated 700,000 tonnes shipped this year.

Steel Demand has Outpaced Supply Over the Last 5 Years

This comes at a time when the steel sector remains in the woods, accounting for 28% of the banking sector's stressed loans.

While government steps such as duties and quality controls on cheap imports from top producer China have helped Indian steelmakers raise prices.

Steel Stocks finished the trading day on a strong note with JSW Steel and Jindal Steel Ltd leading the gains.

And here's an update from our friends at Daily Profit Hunter...

The Nifty Auto index corrected sharply around 17% from its September 2016 high of 10,459 level. It found support near 8,680 level in November 2016. After that the index showed immense strength. In last week of December it rallied strongly towards 9,300 levels, which was its recent high. On Monday the index closed above this recent high. In the next two sessions it traded around the 9300 levels. Today the index opened with an upside gap and closed with a 2% gain. It seems that the index is aiming higher in coming sessions.

Nifty Auto Index Sustained Above its Recent High

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