The Indian markets soared on hopes the cabinet will come out with the next set of reforms in insurance and pension sectors.
The Sensex closed at 19058.15, up 188 points or 1 percent gain and the NIfty at 5787.60, up 56.35 points. The Cabinet meeting today is expected to pass a number of reforms, including Insurance Amendment Bill, Pensions Bill, Companies Bill and Competition Amendment Bill.
While the Insurance Bill seeks to raise the FDI cap in the sector to 49 percent, the Pension Bill will open up the sector to foreign investment.
“Hereon the trajectory will be up. Near-term the market may look overbought, but six months down the line it will be higher,” said Anand Tandon, CEO JRG Securities.
There are two reasons for the rupee’s appreciation, Saurabh Mukherjea, Head of Equities, Ambit Capital to CNBC TV18.
One is the FII inflows into equity and the second is the likely increasing of foreign direct investment in the insurance sector, which would result in a flow of around $10 billion into the country over next few years.
He sees the rupee touching 50 against the dollar in such an eventuality.
Additionally, India’s services sector expanded at its fastest pace in seven months as a spurt in new business encouraged firms to hire more staff, a survey showed on Thursday, suggesting the worst of the economic slump may be over.
The government also relaxed norms for the setting up of subsidiaries by foreign owned non-banking financial companies (NBFCs).
NBFCs with foreign holding of more than 75 percent and up to 100 percent, with the minimum paid-up capital of $ 50 million, are now allowed to open any number of subsidiaries, an official release said.
A steep fall in merchandise trade has widened the current account deficit (CAD) and the country needs capital inflows of up to $70 billion a year for the next few years to bring it down to 2.3 percent of GDP, Prime Minister’s Economic Advisory Council Chairman C Rangarajan said.
Stocks in news
Tata Steel was up 1.49 percent after the company said it will invest 400 million pounds in its European subsidiary.
Indian Oil Corporation was up 2.90 percent with price of crude falling