Benchmarks recover from day’s low; bounce back into positive territory

Bouncing back from day’s low, benchmark equity indices were trading firmly in green, with gains of around quarter of a percent, which took Sensex above the psychological 26,350 level and Nifty just short of the crucial 7,900 mark. Meanwhile, broader indices continuing with their outperformance were trading with gains of around four tenths of a percent. Positive start of European markets mainly boosted investor’s sentiment in other dull markets, which lacked any positive domestic trigger.

Benchmarks in afternoon deals, shifting gears had slipped into negative territory after reports suggested that states agreed on GST threshold, but failed to get much further from thereon as consensus on the contentious issues continues to be elusive and also as disappointing weather reports weighed on the sentiment. As per the latest weather report, monsoon had started weakening again, delivering scanty showers for three days after a spell of good rains that helped drought stressed crops and planting in certain regions of the country.

However, on the global front, European shares advanced as bets the Federal Reserve will continue to support the economy outweighed a slowdown in manufacturing growth in China. Meanwhile, investors also drew some sense of relief from France's August estimate, which posted a rise to 50.0 for the composite figure which measures the manufacturing and the services sector. This was above July's number of 49.4 but was effectively flat with the 50-point line marking the difference between a contraction and an expansion.

Closer home, majority of the sectoral indices on BSE were trading into positive territory, with the prominent gainers being the stocks from Consumer Durables, banking and Auto counters. On the flip side, stocks from Realty, Metal and Power counters were the top losing counters, which were limiting further upside of the markets. Metal stocks took a hit after government approved increasing royalty rates on minerals including iron ore and bauxite, in a long-awaited move that will significantly increase the annual revenue of states. Meanwhile, NBFC stocks were in limelight after Reserve Bank of India, waking up to the problem of ‘unofficial margin trading’ in the stock market, called for more disclosures from NBFCs which give loans against shares. In a circular issued today, the RBI said that henceforth NBFCs cannot lend more than 50 percent of the value of shares pledged. Also, NBFCs can accept only Group 1 securities as collateral. The overall market breadth on BSE was in the favour of advances, which thumped declines in the ratio of 1044:866; while 30 shares remained unchanged. 

The BSE Sensex is currently trading at 26377.56, up by 63.27 points or 0.24% after trading in a range of 26262.52 and 26464.80. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index up by 0.41%.

The gaining sectoral indices on the BSE were Consumer Durables up by 3.19%, Bankex up by 1.30%, Auto up by 0.69%, Capital Goods up by 0.56%, FMCG up by 0.37% while, Realty down by 1.12%, Metal down by 1.07%, Power down by 0.89%, TECK down by 0.18%, IT down by 0.18% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 3.00%, SBI up by 2.07%, Sun Pharma Inds. up by 1.64%, Axis Bank up by 1.51% and HDFC Bank up by 1.29%. On the flip side, NTPC down by 1.82%, Dr. Reddys Lab down by 1.64%, Tata Steel down by 1.40%, Sesa Sterlite down by 1.17% and Hindalco down by 1.16% were the top losers.

Meanwhile, with a view to make finance cheaper for weaker sections of the society, the government will soon announce new scheme interest subsidy scheme under which eligibility cap for the 5 percent interest subvention scheme will be enhanced to Rs 5 lakh from the present Rs 1 lakh. 

Under the interest subvention scheme, the government shares the interest burden on a loan for the particular target segment and such schemes presently exist for a slew of sectors including agriculture and sugar.

The move is likely to benefit poor to purchase house as over 58 percent of people from the economically weaker sections and over 39 percent from the low-income groups do not have access to housing. 

Financial Services Secretary G S Sandhu stated that banks cannot go below their cost of funds and to make credit cheaper, the government has to give the interest subsidy. Sandhu also asserted that the government will soon announce affordable housing policy. Banks' ability to finance the housing requirement is constrained by a slew of factors and there is a need to look at alternatives like pension money, insurance companies etc., participating in the sector. He further added that the move to liberalise the taxation regime for the real estate investment trusts (REITs) would be a game changer helping smaller, retail investors to participate in the sector.

The CNX Nifty is currently trading at 7898.50, up by 23.20 points or 0.29% after trading in a range of 7855.95 and 7919.65. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were PNB up by 3.32%, Bank of Baroda up by 3.10%, Bajaj Auto up by 2.99%, Kotak Mahindra Bank up by 2.65% and SBI up by 2.28%. On the flip side, United Spirits down by 2.71%, NTPC down by 1.89%, Dr. Reddys Lab down by 1.52%, Tata Steel down by 1.38% and Sesa Sterlite down by 1.25% were the top losers.

Asian markets closed mostly in red; Hang Seng down by 165.66 points or 0.66% to 24,994.10; Taiwan Weighted down by 34.67 points or 0.37% to 9,253.38; KOSPI Index down by 28.57 points or 1.38% to 2,044.21; Shanghai Composite down by 9.75 points or 0.44% to 2,230.46; FTSE Bursa Malaysia KLCI decreased 5.58 points or 0.3% to 1,873.31; Straits Times decreased 0.28 points or 0.01% to 3,323.37.

On the flip side, Jakarta Composite up by 5.75 points or 0.11% to 5,195.92 and Nikkei 225 rose by 131.75 points or 0.85% to 15,586.20.

European markets were trading into positive territory; with UK’s FTSE 100 up by 17.38 points or 0.26% to 6,772.86; France’s CAC up by 23.5 points or 0.55% to 4,264.29 and  Germany’s DAX up by 39.19 points or 0.42% to 9,353.76