Shares of defence companies were in focus in the intraday trade after the government said it would relax foreign direct investment norms in defence manufacturing by allowing 74 per cent FDI under the automatic route. Even though the stock market traded muted, defence stocks bucked the overall trend and hit the intraday high of as much as 10 per cent from previous close in early trade Monday. However, the shares gave up the gains later with most ending in the red.
The shares of Hindustan Aeronautics jumped 10 per cent, Bharat Electronics rose 5.53 per cent, BEML advanced 5.31 per cent, Astra Microwave Products surged 4.93 per cent, and Bharat Dynamics traded up 4.71 per cent in the early hours on the BSE. Barring Hindustan Aeronautics closing up 4 per cent, others ended in the negative territory amid weak market sentiment.
According to the current FDI policy, 100 per cent overseas investments are permitted in the defence industry -- 49 per cent under the automatic route, while beyond that government approval is required. Finance Minister Nirmala Sitharaman said the FDI limit for the sector under automatic route would be raised from 49 per cent to 74 per cent.
Meanwhile, benchmark equity indices - Sensex and Nifty - ended sharply down on Monday, as investors fretted over the announcement of extension of the nationwide coronavirus lockdown till May 31. The government's fiscal stimulus package also couldn't revive confidence in investors. Sensex closed 1,068 points lower at 30,028 and Nifty declined 313 points to 8,823.
"Indian indices ended lower (contrary to the trend in Asian and European markets) for the third consecutive day on May 18 as details of Rs 20 lakh crore stimulus package announced by the Finance Minister over Wed-Sun disappointed listed corporates and market participants. Extension of lockdown and large additions of Covid-19 cases also dampened spirits. At close Nifty was down 313.60 points or 3.43% at 8823.25," Deepak Jasani, Head Retail Research, HDFC Securities, said.
"Index has given a closing below 21&50 DMA which further points out weakness in the counter. Moreover, The Index has formed a bearish marubozu candle which suggests selling pressure in the index. At present level index is having good resistance level at 9150 level while support comes at 8,740 levels," Sumeet Bagadia, Executive Director, Choice Broking, said.