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Indian share markets finished a volatile day on a dull note as the dollar rose sharply after the Federal Reserve's first interest rate rise this year and its hawkish rate outlook for 2017. The Fed's 25 basis points rate hike was widely anticipated by the market, but it was the projected trajectory of three rate hikes for 2017 that raised concerns.
At the closing bell, the BSE Sensex stood lower by 84 points, while the NSE Nifty finished down by 29 points. The S&P BSE Mid Cap finished flat, while the S&P BSE Small Cap finished up by 0.2%. Losses were largely seen in pharma and FMCG stocks.
Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.10%, while the Hang Seng & the Shanghai Composite fell 1.77% and 0.73% respectively. European markets are mixed today. The CAC 40 is up 0.57% while the DAX gains 0.55%. The FTSE 100 is off 0.12%.
The rupee was trading at 67.80 against the US$ in the afternoon session. Oil prices were trading at US$ 51.28 at the time of writing.
According to a leading financial daily, Infosys has made an investment from its Innovation Fund in ideaForge, an Indian startup focused on Unmanned Aerial Vehicle (UAV) solutions. IdeaForge has built a world-class UAV solution featuring fully autonomous operation, cutting edge fail-safe technology, high endurance, image intelligence with live feed and support for complex payloads such as thermal and high-resolution imagery.
IdeaForge's UAVs have been widely deployed by the Indian Armed Forces for surveillance, crowd monitoring and rescue operations, and offer a compelling solution for commercial applications in verticals such as energy, utilities, telecom and agriculture.
Infosys has made the investment from its US$500-million Innovation Fund launched in 2015. The fund operates like a venture capital firm and backs startups working in domains relevant to Infosys's core business. The fund would also in companies that develop innovative technologies on automation, Internet of Things (IoT) and artificial intelligence (AI).
Infosys's share price finished the day down by 0.6% on the BSE.
Meanwhile, in another development, Wipro Ltd has split its India and Middle East business into two separate divisions under new heads and merged one of the divisions focused on automation platforms with the larger technology unit. The Middle East business accounts for 10% of its revenue.
Wipro decided to decentralize decision making as it is in the midst of its biggest push to embrace automation. Wipro's business in India and the Middle East geographies has declined since the beginning of the current financial year. Hyper-automation is one of the central pillars of the chief executive's vision of making Wipro a US$15 billion firm by 2020 with an operating margin of 23%.
Wipro's share price finished the trading day up by 0.3%.
In another development, according to a leading financial daily, foreign funds pulled money from Indian stocks at the fastest pace since 2008 last month. Surprisingly, it is the debt instruments that are taking the biggest hit, after remaining a preferred investment avenue for foreign funds in recent years, even as equities continue to attract net inflows. But, this is still not enough to compensate the huge outflows from the bond market during the year gone by.
The net outflow by (foreign portfolio investment) FPIs in the debt market is already more than US$ 6.2 billion (nearly Rs 43,000 crore) this year with a few days of trading left, which far exceeds the net inflow of less than Rs 30,000 crore (US$ 4.3 billion) into the equity market.
The inflationary tendencies on the back of rising bond yields in the developed world bond market coupled with a resilient recovery in crude have led to profit booking.
Dollar strength and expectations of rate hike by the US Federal Reserve, the surprising US presidential outcome and the demonetisation drive, which created domestic cash crunch, sparked intense selling pressure in the capital markets.
With regard to the debt market, FPIs had started the year on a positive note, but for most part of the year, they have pulled out funds. From October onwards, overseas investors have been withdrawing money from the debt market and the trend continued till December.
As per the experts, the first half of 2017 will remain subdued in terms of foreign capital flow. The uncertainties are expected to settle down and reforms will start counting in for the economy in the second half of 2017, accelerating the growth momentum.
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