Markets end on a weak note

After witnessing volatility for the entire day, Indian stock markets ended the day in the red. BSE Sensex closed down by 317 points (1.2%), while NSE-Nifty closed lower by about 90 points (1.1%). BSE Mid Cap closed lower by 0.8%, while BSE Small Cap index ended marginally higher. Among sectoral indices engineering stocks were leading the gains, while auto and telecom stocks were leading the losses.

Automobile stocks have ended the day on a mixed note with Force Motors and Hero Motocorp leading the losers. As per a leading financial daily, Mahindra & Mahindra (M&M) has earmarked Rs 7 bn of fresh investment in its fledgling truck and bus business. This is to expand the company's footprint and become a full range player in the Indian market. Further, the company is also planning to expand its network to 80 3S dealership, 173 authorized service centers and retail spares network of 2000 outlets. In the first quarter of the current year, the company's bus and truck portfolio has managed to outpace the market with a growth of 32.3% by selling over 1,000 units. Stock of the company ended the day on a negative note (down by 3%) on the BSE.

Engineering stocks also closed mixed with Jindal Drilling leading the gainers and TRF Ltd leading the losers. As per an article in Economic Times, Larsen & Toubro's (L&T) power transmission and distribution business has bagged orders worth Rs 8.6 bn from Qatar General Electricity and Water Corporation. The order is for the ongoing network expansion plan-phase XII. It encompasses the engineering, procurement and construction of two substation packages. Scrip of L&T has ended the day lower by 1.6%.

Indices trade on a choppy note
01:30 pm

After opening the day on a weak note and gaining some momentum later on, the Indian benchmark indices are currently trading on a negative note. Sectoral indices are trading mixed with stocks from the telecom, banking and auto sectors leading the losses.

The BSE-Sensex is trading lower by 87 points (0.3%) and the NSE-Nifty is trading down by 13 points (0.2%). The BSE Mid Cap index is trading marginally up by 0.2% while the BSE Small Cap is trading up by 0.5%. Gold prices, per 10 grams, are trading at Rs 26,763 levels. Silver price, per kilogram, is trading at Rs 34,366 levels. Crude oil has gained around 1% and is trading at Rs 2,632 per barrel. The rupee is trading at 66.25 to the US dollar.

Mining stocks are trading on a mixed note with Vedanta Ltd and Ashapura Minechem witnessing maximum buying interest. As per a leading financial daily, the government is planning to auction about 20 major iron ore mines in this fiscal. The same is planned in order to revive mining industry. With this, it is anticipated that India will be closer to its target of tripling the steel capacity to 300 million tonnes by 2025. However, the same will unlikely lead to an immediate boost in iron ore output at a time when there is a global glut. Most of the iron ore mines being sold are in the southern state of Karnataka, known for its high-quality ore. This will greatly benefit local steelmakers like JSW Steel.

Stocks in the energy sector are also trading mixed with Gujarat Gas leading the losses and Cairn India leading the gainers. ONGC Videsh Ltd (OVL), the overseas arm of state explorer Oil and Natural Gas Corporation (ONGC), has sought a one year extension of exploration license for a Vietnam Oil block. This is recorded as the third extension application for exploration license of Block 128 situated in the waters of the South China Sea. The move is carried out in order to maintain India's strategic interest in the South China Sea over which China claims sovereignty. At present, OVL continues to own 45% of Vietnam's offshore block. Stock of ONGC is currently trading positively; up by 1.4%.

Indian markets trade flat
11:30 am

After opening on a weak note, the Indian Indices have bounced back and are presently trading flat. Apart from banking, most sectoral indices are trading positively with stocks from the energy and IT sectors leading the gains.

The BSE-Sensex is trading up 12 points (up 0.05%) and the NSE-Nifty is trading up 5 points (up 0.05%). The S&P BSE Midcap index is trading up by 0.6% while the S&P BSE Smallcap index is trading up 1%. The rupee is trading at 66.16 to the US dollar.

Stocks in the pharma sector are trading mixed with Divis Laboratories and Torrent Pharma leading the gains. As per an article in Business Standard, Glenmark Pharmaceuticals is expecting approvals for four to six new products from the US Food and Drug Administration (USFDA) during the current fiscal. The company has already got approvals for eight products from the USFDA this year. Further, the company has also launched a new third generation oral anti-diabetic agent which is used for the management for Type 2 Diabetes. This is launched under two brands Ziten and Zita Plus at Rs 19.90 per tablet. The company's diabetes segment is valued at Rs 1 bn. The stock of Glenmark Pharmaceuticals is trading up by around 0.5%.

Telecom stocks are also trading mixed with AGC Networks and Reliance Communications witnessing maximum buying interest. As per a leading financial daily, leading telecommunications company Bharti Airtel has introduced its high speed 4G services in the border district of Tawang in Arunachal Pradesh. The service will be available to customers across a range of smart devices including mobile phones, dongles, 4G hotspots and Wi-Fi dongles. With this launch, customers can experience high speed wireless broadband on Airtel 4G. Scrip of company is trading down by 3%.

Indian markets open weak
09:30 am

The major Asian stock markets have opened the day on a mixed note. Stock markets in Japan and China are up 1% and 0.8% respectively. However stock markets in Singapore are down 0.7%. The European stock market ended their previous session on an encouraging note. However the stock market in US ended their previous session down by 0.4%.The rupee is trading at 66.27 per US dollar.

Back home, Indian stock markets have opened the day on a quite disappointing note. BSE Sensex is trading down by 270 points (down 1%) and NSE-Nifty is trading down by 82 points (down 1.04%). Both mid cap and small cap stocks are witnessing selling pressure with BSE Mid Cap and BSE Small Cap are trading down by 0.9%. The sectoral indices have too opened the day in red with stocks from automobile and capital goods sector being the top losers.

Major stocks in the automobile sector have opened their day on a weak note. As per an article in a leading financial daily, Eicher Motors is planning to expand its business in the Indonesian market. Reportedly, the company is likely to commence its retail operations in the coming months. The company has set up an exclusive dealership in partnership with PT Distributor Motor Indonesia which will sell the 'Royal Enfield' bikes. Indonesia is the third largest two-wheeler market in the world. The head of International Business of the company stated that they will build their presence from Jakarta and will expand to other cities depending on the response from the same. In 2014, Royal Enfield sold more than 3,00,000 motorcycles globally. Stock of Eicher Motors is trading marginally down by 0.05%

Stocks in the FMCG sector have opened their day on a negative note. As per an article in Business Standard, Nestle India has released new 'miss-you Maggi' ads on social media. Since the ban of Maggi by the Food Safety and Standards Authority of India (FSSAI) this is the first time that the company has released an ad pertaining to the brand. The under-one-minute films titled 'Menu Cards, Mom and Neighbours' speak of how much Maggi is missed and how it acted as a crucial snack at any time of the day or night. According to a Nestle India spokesperson, the company is making efforts to get Maggi noodles back on the shelves.

Crucial labour reforms could be near

The 'ease of doing business' ranking, is a global economic ranking that ranks economies based on various parameters of business friendliness. A high ranking means that the regulatory environment is conductive to business operation. Currently India is ranked at the 142nd place out of 189 countries. The government has set a target to move to the top 50 ranking from the current position within a period of two years. Will this ambitious target be achieved?

In a significant move, the government has moved to overhaul the 67 year old Factories Act. It has proposed to change the definition of a factory. In simple terms, the word 'factory' would mean any premise wherein 40 or more workers are working. All companies employing fewer than 40 people will be kept out of the purview of this law. This will provide relief to the owners from the social security and other obligations towards the employees.

The proposal also allows two separate departments of the same factory to be counted as two separate companies. The move will encourage factory owners to list different branches or departments as separate entities in order to avail of exemptions. Thus, a factory with 80 workers for instance could be shown as two factories, which would mean both entities would be kept out of the purview of the Factories Act and enjoy several relaxations.

The government also proposes to keep non-manufacturing units of a company out of the purview of the law. To give an example if unprocessed milk is simply packed into different volumes or weight without changing the character of the milk, the same shall not be considered as manufacturing as the process did not result into alteration to the original character i.e. milk.

The draft bill also proposes to introduce modern regulatory practices by creating necessary infrastructure to facilitate electronic processing of various regulatory procedures. The process will be largely web based. The web based services will help in easing regulatory hurdles and will enable the work flow system to function smoothly.

We believe the proposed amendments will attract negative backlash from the workers unions. However, the draft bill has capability to remove some regulatory hurdles. The proposed bill will certainly give India's ease of doing business ranking a boost. If India is to attract foreign money, it needs to create a congenial environment for investors. A higher rank will go a long way in that regard. However, this should be seen only as a start. Even assuming the bill is passed, a lot more reforms will be needed to make India an attractive place to do business.