Domestic equity markets were closed on Thursday on account of Ganesh Chaturthi. On Wednesday, the BSE Sensex and NSE Nifty gained 1 per cent and 0.89 per cent at 25963.97 and 7899.15.

The BSE Sensex and NSE Nifty are likely to open in green on Friday tracking SGX Nifty coupled with the US Federal Reserve decision to leave interest rates unchanged.

At 8.11 am, SGX Nifty was trading 35 points, or 0.44 per cent, up at 7,975.50.

Hang Seng and Shanghai were trading 0.40 per cent and 0.16 per cent up at 21,942 and 3091, respectively while Nikkei was down 1.30 per cent at 18,192.

Wall Street’s top banks now expect the US central bank to begin hiking rates in December, according to a Reuters poll conducted on Thursday.

Fed Chair Janet Yellen said the outlook abroad has appeared to become less certain, adding that recent falls in US stock prices and a rise in the value of the dollar already were tightening US financial market conditions. The Dow Jones Industrial Average closed 0.39 per cent down at 16,674.74.

Domestic equity markets were closed on Thursday on account of Ganesh Chaturthi. On Wednesday, the BSE Sensex and NSE Nifty gained 1 per cent and 0.89 per cent at 25963.97 and 7899.15.

For Friday’s opening session, Rohit Gadia, founder and chief executive officer, CapitalVia Global Research, said, “If markets open gap up on Friday then investors should wait for the market to settle down for at least one hour and start buying strong counters whose trend is up or it would be better to wait for first half and buy in latter half of trading session.”

The Delhi High Court on Thursday dismissed a plea seeking a probe into finance minister Arun Jaitley’s July press statement that assured the investors that the government will not take any “knee-jerk” reaction (on circulation of Participatory Notes) that will adversely impact country’s investment climate.

The finance minister had issued the statement after the Supreme Court-appointed special investigation team (SIT) on black money had suggested that market regulator Sebi should take stronger measures to identify the owners of P-notes and offshore derivative instruments, and also take steps to curb black money and tax evasion through the stock market route.

Terming such a statement by the finance minister as “illegal and unconstitutional,” the petition filed by one ML Sharma, a lawyer, contended that the press statement was contrary to various laws like money laundering, and therefore a CBI probe should be initiated into it. He also sought setting aside of the press release, a demand that additional solicitor general Sanjay Jain rejected outrightly.

A bench headed by Justice BD Ahmed while dismissing Sharma’s plea observed that a recommendation by the SIT on the issue of P-Notes was not the Supreme Court’s direction and, therefore, a stand contrary to this was not against the laws, as argued by Sharma.

The judges said that the entire case relied heavily on the assumption that P-Notes are illegal, which government has convincingly proved to be false. Jain had argued that P-Notes investment through FPIs in India are well regulated and Sebi guidelines cover offshore Derivative Instruments such as P-Notes, equity-linked notes, etc.

The bench also directed Sharma to withdraw parts of his plea that had cast aspersions on Jaitley in the form of “innuendo” and warned that any non-compliance would attract fine. The court, however, rejected the government’s demand to impose “exemplary cost” on the petitioner for initiating such a case.

Government today favoured an increase in pension fund EPFO’s equity market investment to 15 per cent, from 5 per cent currently, saying it will help contain volatility in the domestic capital markets. (PTI)

Government today favoured an increase in pension fund EPFO’s equity market investment to 15 per cent, from 5 per cent currently, saying it will help contain volatility in the domestic capital markets.

“We are now saying Employees Provident Fund Organisation (EPFO) which always had the ability to put up to 15 per cent of its assets in equity markets but never did so, has to now do at least 5 per cent. And hopefully over a period of time they bring it up to 15 per cent,” Sinha said at the India Economic Convention here.

He said pension funds investing in domestic equity markets would help lower volatility in equity markets and as that comes down the cost of capital on equity side for businesses would come down.

“We are trying to ensure that we stabilise and smoothen out our equity market,” Sinha added.

The EPFO, which started investing in equity markets last month, has been investing primarily in state and central government securities.

Sinha said that the BJP-led NDA government is focusing on building productive capacity to sustain 8-10 per cent growth over a longer period of time.

“We want to build in India’s productive capacity so that we can sustain 8-10 per cent non-inflationary GDP growth rate not just for few year, but to be able to achieve that 8-10 per cent growth steadily through boom and bust cycles,” he said.

Indian’s GDP grew at 7 per cent in the first quarter of current fiscal and government expects it to grow 8-8.5 per cent this year.

Sinha said the macro economic indicators — inflation, GDP growth, current account deficit and fiscal deficit — have improved considerably since May 2014, when the BJP government came into power.

As regards cost of capital, Sinha said after factoring in the cost of hedging dollar against rupee, large companies are able to borrow at reasonable rates.

“The financial markets in India work well for a certain group of players. And I think largely for large players in India, the markets are working relatively well. Risk is being priced appropriately,” Sinha added.

He further said that bluechip companies in India borrow at around 5-5.5 per cent over a 30 year horizon in global markets, whereas in rupee terms the cost of borrowing would be 10-12 per cent.

“If you look at large companies in India they are able to borrow at fairly reasonable rates once you factor in the cost of hedging dollar against rupee,” he said.

As regards funding stressed infrastructure projects, Sinha said the National Investment and Infrastructure Fund (NIIF) would act as a special situation fund anchored by the government and could include other investors like pension funds.

Volatility in the equity market has not deterred companies from raising funds from the primary market. Since the beginning of August, four companies have filed their draft prospectus with Securities and Exchange Board of India (Sebi). Participants expect more activity on the primary market front in the months to come as they believe that the India growth story has not derailed.

Matrimonial.com, Teamlease Services, Alkem Labs and Dr Lal Path Labs have filed draft prospectus and plan to raise over Rs 1,000 crore via IPOs.

“These filings signify the positive view among investors about the long-term prospects of our markets despite the recent turbulence. The filings will stop as and when investors take a bearish view of the Indian markets. Filing draft documents doesn’t essentially mean the IPO is happening immediately. I am sure the companies will wait for the secondary markets to stabilise before actually going for the public issue,” said Prithvi Haldea, chairman, Prime database.

As per Sebi regulations, companies can go for the initial public offering (IPO) anytime within a year from the date of approval for the issue.

“When the markets were bullish, retail investors subscribed to primary issues, which were priced as high as 10-12 times the earnings of the respective companies. But during volatile times, retail investors become cautious. Given that they are crucial for the success of any public issue, companies would be forced to bring some sanity to the pricing. This was already evident in the issues that happened during the last week of August,” said B Madhuprasad, chairman, Keynote Corporate Services.

The impact of the stock market slump in the last week of August was felt on the public issue of Prabhat Dairy — the last company to tap the primary market — as it failed to get fully subscribed in the first three days of the issue. The company had to lower its price band and extend the issue by three days.

During the current calender year, companies have raised nearly Rs 6,000 crore from the primary markets — a three-year high.