Benchmarks continue firm trade in late morning session

After getting a gap-up start, benchmark equity indices continued to trade in fine fettle in late morning deals on continued buying activities by both funds and retail investors. Besides, progress of monsoon and a firm trend in other Asian markets also influenced the trading sentiment. Some support came in from reports that foreign institutional investors (FIIs) bought shares worth a net Rs 574.47 crore on July 18, 2014. At present, Sensex and Nifty were trading above the crucial 25,800 and 7,700 levels respectively, with gains of over 0.60%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 1.20%.

On the BSE sectoral front, all major indices were trading in green with Oil and Gas index leading the rally up by 1.25% followed by Realty, Bankex, Consumer Durables and FMCG indices. In scrip specific development, shares of Reliance Industries were trading higher after reporting a better-than-expected earnings for the quarter ended June 30, 2014. Besides, Financial Technologies (India) has surged after the company announced that it has entered into a share purchase agreement (SPA) to sell its 15% stake in Multi Commodity Exchange (MCX) to Kotak Mahindra Bank for Rs 459 crore.

On global front, Asian stock markets were trading higher in early trade taking cues from Friday's close on the Wall Street, as better earnings from Google shifted investors' attention towards economic growth setting aside geopolitical concerns for the moment. Back home, Canara Bank, Exide Industries, Housing Development and Infrastructure, Hindustan Zinc and Idea Cellular will be in focus on account of June quarter earnings later in the day. Meanwhile, the market breadth on BSE was positive, out of 2279 stocks traded, 1576 stocks advanced, while 623 stocks declined on the BSE. 

The BSE Sensex is currently trading at 25828.15 up by 186.59 points or 0.73% after trading in a range of 25861.15 and 25769.21. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.23%, while Small cap index gained 1.22%.

The top gaining sectoral indices on the BSE were Oil and Gas up by 1.25%, Realty up by 0.98%, Bankex up by 0.89%, Consumer Durables up by 0.86% and FMCG up by 0.84%, while there was no loser on the sectoral index.

The top gainers on the Sensex were RIL up by 2.72%, HDFC up by 2.03%, Maruti Suzuki up by 1.57%, HDFC Bank up by 1.35% and BHEL up by 1.11%. On the flip side, Hindalco was down by 1.19%, Gail India was down by 0.84%, Tata Motors was down by 0.39%, ONGC down by 0.30% and Tata Power was down by 0.19% were the top losers on the Sensex.

Meanwhile, with an objective of furthering financial inclusion, the Reserve Bank of India (RBI) has floated draft guidelines for setting up of two new types of banks -payment banks and small banks. While, small banks will disburse small-ticket loans to farmers and businesses, payment banks will cater to marginalized sections of society, including migrant labourers, for collecting deposits and remitting funds.

A Payment Bank though would be able to take deposits, but cannot lend and would have to invest all the funds in government securities. On the other hand, small Bank would be allowed to lend, but with restrictions on where they can operate. These two types of banks will have uniform capital requirement of Rs 100 crore as against Rs 500 crore required for normal commercial banks, according to the guidelines. However, of the minimum capital requirement of Rs 100 crore, the promoters’ initial minimum contribution will be at-least 40%, to be locked in for a period of five years. This shareholding would be later brought down to 40% within three years, 30% within a period of 10 years, and to 26% within 12 years from the date of commencement of business of the bank.

As per the guidelines, the proposed small banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation. On the other hand, payment banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. Payment Bank would have a widespread network of access points particularly in remote areas, either through their own branch network or through Business Correspondents (BCs) or through networks provided by others.

Meanwhile, in terms of eligibility, while existing non-bank pre-payment instrument issuers, non-banking finance companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives and public sector entities may apply to set up a payments bank, resident individuals with 10 years of experience in banking and finance, companies and societies will be eligible as promoters to set up small banks. Besides, NBFCs, micro finance institutions (MFIs), and Local Area Banks (LABs) could also quality for conversion into small banks.

Notably, these guidelines come just days 10 after Finance Minister Arun Jaitley, in his budget speech, highlighted that RBI would create a framework for licensing small banks and other differentiated banks.

The CNX Nifty is currently trading at 7,713.50 up by 49.60 points or 0.65% after trading in a range of 7,722.10 and 7,700.95. There were 36 stocks advancing against 14 declining on the index.

The top gainers of the Nifty were RIL up by 2.76%, Kotak Mahindra Bank up by 1.93%, ACC up by 1.86%, HDFC up by 1.73% and Bank of Baroda up by 1.70%. On the flip side, Hindalco down by 1.35%, Ultratech Cement down by 1.15%, GAIL down by 0.73%, Lupin down by 0.53% and ONGC down by 0.39% were the major losers on the index.

Asian markets were trading mixed; Straits Times increased 0.12%, Jakarta Composite soared 0.65%, Taiwan Weighted was up by 0.36%. On the flip side, KOSPI Index down by 0.08%, Hang Seng down by 0.14%, Shanghai Composite tumbled by 0.12% and FTSE Bursa Malaysia KLCI was down by 0.07%. The Japanese market remained shut for the trade today for Marine Day Holiday.