Benchmarks extend early gains; trade near intra-day high level

Indian bourses added gains to continue firm trend in afternoon session, hovering near the intra-day high level driven by positive global cues and buying witnessing in front line blue chip stocks such as Tata Motors, ICICI Bank and Hindalco Inds among others. Buying was broad based and all the sectoral indices were trading in green on BSE. Sentiments also got some support as Commerce Secretary Rajeev Kher has asserted that Indian exports will cross $325 billion in the current fiscal year on the back of recovery witnessed in the global economy. IT stocks were on buying radar as better-than-expected fourth quarter earnings from Tata Consultancy Services (TCS) and HCL Tech’s Q3 stellar performance boosted sentiment. Sector wise, realty was the top gainer on BSE up by over 1.71% followed by auto and metal indices both up by over 1.20%. 

Shares of Cimmco were locked in 5% upper circuit on the BSE at Rs 18.50 following an open offer from Titagarh Wagons to acquire over 25% stake in Cimmco. Bank of Maharashtra was trading up by around 2% to nearly Rs 38 after upping the base rate by 15 bps to 10.40% effective April 21. On the other hand, the share of Radico Khaitan was locked in lower circuit for the third straight session at Rs 116.50 amid reports that the Japanese brewer and distiller Suntory is likely to call off deal with Radico Khaitan. On global front, Asian equity indices were trading in green with Nikkei 225 up by 0.24% and  Taiwan Weighted up by 0.23% as sentiments got a boost after the US Federal Reserve Chief Janet Yellen’s remarks that full employment and price stability was possible by 2016. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,700 and 22,400 levels respectively. The market breadth on BSE was positive, out of 2,322 stocks traded, 1,396 stocks advanced, while 790 stocks declined on the BSE.

The BSE Sensex is currently trading at 22,467.56 up by 190.33 points or 0.85% after trading in a range of 22,496.50 and 22,312.19. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.85%, while Small cap index up by 1.14%.

The gaining sectoral indices on the BSE were Realty up by 1.71%, Auto up by 1.63%, Metal up by 1.20%, Capital Goods up by 1.00% and IT up by 0.92%. There were no losing indices on BSE.   

The top gainers on the Sensex were Tata Motors up by 2.91%, ICICI Bank up by 2.70%, Hindalco Inds up by 2.18%, Wipro up by 2.15% and Axis Bank up by 1.98%. On the flip side, HDFC Bank down by 1.88%, NTPC down by 0.61%, ONGC down by 0.36%, Coal India down by 0.17% and Hindustan Unilever down by 0.55%.

Meanwhile, the Reserve Bank of India (RBI) suggested setting up of an independent body for recommending rupee interest rate and foreign exchange benchmarks by self-regulatory market bodies, FIMMDA and FEDAI. FIMMDA is an association of scheduled commercial banks, public financial institutions, primary dealers and insurance companies, whereas FEDAI is an association of banks dealing in foreign exchange in India. Presently, FIMMDA and FEDAI act as administrator of the Indian rupee interest rate and foreign exchange rate benchmarks respectively and benchmarks like Mumbai Inter-bank Forward Offered rate (MIBFOR), Mumbai Inter-bank Forward Offered rate (MIBOR) are being fixed by them.

The central bank has notified that an independent body, either separately or jointly, may be formed by the Fixed Income Money Market and Derivatives Association of India (FIMMDA) and Foreign Exchange Dealers' Association of India (FEDAI) for administration of the benchmarks in order to overcome the possible conflicts of interest in the benchmark setting process arising out of the current governance structure of the FIMMDA and FEDAI. These self-regulatory market bodies may put in place a code of conduct specifying various provisions, including hierarchy of data inputs for compliance as recommended by the central bank. The selected benchmark submitters have to comply with the various provisions specified in the code of conduct and necessarily participate in the polling process.

Financial benchmarks are primarily used for pricing, valuation and settlement purposes in financial contracts. The reliability and robustness of financial benchmarks play significant role for the stability of the financial system as the aggregate volume of underlying financial contracts referenced to or valued through financial benchmarks are quite huge. The RBI’s latest decision is based on the recommendations of the Committee on Financial Benchmarks, which was set up to strengthen governance related issues after manipulation of LIBOR that came to light in June 2012. These cases of manipulation of major financial benchmarks has raised concerns about the credibility and reliability of the financial benchmarks, particularly about their governance frameworks and setting methodologies.

The CNX Nifty is currently trading at 6,730.35 up by 55.05 points or 0.82% after trading in a range of 6,741.65 and 6,684.40. There were only 43 stocks advancing against 7 declining on the index.

The top gainers of the Nifty were Tata Motors up by 3.08%, ICICI Bank up by 2.83%, Jindal Steel up by 2.67%, Hindalco up by 2.18% and Wipro up by 2.17%. On the flip side, HDFC Bank down by 1.98%, NTPC down by 0.86%, Power Grid down by 0.70%, Mcdowell down by 0.52% and ONGC down by 0.38% were the major losers on the index.

Asian equity indices were trading in green; Nikkei 225 up by 0.24% to 14,451.18, Taiwan Weighted up by 0.23% to 8,944.16, Straits Times was up by 0.02% to 3,253.70, Jakarta Composite up by 0.24% to 4,884.85 and Hang Seng up by 0.31% to 22,765.32. While, Shanghai Composite down by 0.19% to 2,101.59