Benchmarks trade lower in early deals tailing soft global cues

Extending their previous session's southward journey, Indian equity benchmarks are trading in the red in early deals tailing soft global cues. The US markets made a mixed closing after showing a lackluster trade in the last session with Technology stocks witnessing significant weakness, amid uncertainty about the monetary policy outlook ahead of the Fed's announcement on Wednesday. The Asian markets too were trading mostly in the red at this point of time on anxiety about US Fed’s interest rates review. Japanese market too has lost pace after gaining for five straight sessions.

Back home, sentiments remained down-beat after Reserve Bank of India governor Raghuram Rajan signalled that he would keep interest rates unchanged at the month-end monetary policy announcement. Rajan has said that though the inflation is coming down but still have some way to go before it can be declared that we are out of the woods. Sentiments also remained dampened after India’s export growth slipped to 2.35 per cent at $26.95 billion in August, pushing up trade deficit to $10.83 billion, as imports of gold surged 176 percent after policy makers eased shipment curbs.

On the sectoral front, realty, capital goods and power witnessed the maximum gain in trade, while oil and gas, auto and banking remained the top losers on the BSE sectoral space. The broader indices, however, were trading with traction, while the market breadth on the BSE was positive; there were 1453 shares on the gaining side against 663 shares on the losing side while 65 shares remain unchanged.

The BSE Sensex opened at 26854.90; around 38 points higher as compared to its previous closing of 26816.56, and has touched a high and a low of 26861.29 and 26765.87 respectively. The BSE Sensex is currently trading at 26769.97, down by 46.59 points or 0.17%. There were 11 stocks advancing against 19 stocks declining on the index.

The overall market breadth remained in the favour of advances with 66.62% stocks advancing against 66.62% declines. The broader indices were trading in green; the BSE Mid cap index was up by 0.49%, while Small cap index up by 0.81%.

The gaining sectoral indices on the BSE were Realty up by 1.63%, Capital Goods up by 0.42%, Power up by 0.32%, Consumer Durables up by 0.23% and Infrastructure up by 0.13% while, Oil & Gas down by 0.58%, Auto down by 0.29%, Bankex down by 0.18%, PSU down by 0.10% and IT down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Industries up by 1.78%, Dr. Reddys Lab up by 1.65%, Hindalco up by 0.98%, Wipro up by 0.74% and BHEL up by 0.64%. On the flip side, ONGC down by 1.32%, Tata Motors down by 1.18%, HDFC down by 0.90%, Axis Bank down by 0.62% and Sesa Sterlite down by 0.61% were the top losers.

Meanwhile, clearing the way for corporates to enter differentiated banks segments, the Reserve Bank of India (RBI) is likely to issue final guidelines on small and payments banks within two-three months. The final norms will allow micro finance institutions, telecom players, non-banking finance companies (NBFCs) and public sector companies eligible to apply for bank licences once RBI invites applications for the same.

India’s central bank, which back in July floated draft guidelines for small and payment banks, had sought comments until August 28. RBI presently is in the process of examining the suggestions received and is in the process of finalising the norms for such banks.

With an objective of furthering financial inclusion, the Reserve Bank of India (RBI) 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.

According to the guidelines, 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.

The CNX Nifty opened at 8,036.60; around 6 points lower as compared to its previous closing of 8,042.00, and has touched a high and a low of 8,044.90 and 8,024.50 respectively.

The CNX Nifty is currently trading at 8028.75, down by 13.25 points or 0.16%. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Sun Pharma Industries up by 1.84%, DLF up by 1.81%, United Spirits up by 1.57%, Lupin up by 1.38% and Dr. Reddys Lab up by 1.37%. On the flip side, ONGC down by 1.50%, Tata Motors down by 1.28%, Indusind Bank down by 1.15%, HDFC down by 1.13% and BPCL down by 1.02% were the top losers.

Asian markets were trading mostly in the red. Straits Times dipped 19.35 points or 0.58% to 3,293.12, Nikkei 225 shed by 49.35 points or 0.31% to 15,898.94, Jakarta Composite declined by 9.37 points or 0.18% to 5,135.53, FTSE Bursa Malaysia KLCI decreased by 8.34 points or 0.45% to 1,847.30, Hang Seng slipped by 238.33 points or 0.97% to 24,356.99, and Taiwan Weighted was down by 68.80 points or 0.75% to 9,148.66.

On the flip side KOSPI Index added by 8.25 points or 0.41% to 2,044.07 and Shanghai Composite was up by 1.82 points or 0.08% to 2,340.96.