Benchmarks rallies over 1% on crude oil price fall

Indian benchmarks continued their firm trade in the noon session and surged to new life time high levels, though the major indices were following a tight range but there was no sense of any profit booking since morning. Sharp plunge in the international crude prices coupled with positive announcement on domestic front and encouraging result of latest OPEC meet that group members countries would keep its official production target unchanged at 30 million barrels a day has enthused the markets to extend their gains. All major sectoral indices on the BSE were trading in green with banking as the top gaining index up by 3.12%. Investors were also seen piling up positions in PSU, auto and realty stocks. Crude slumped to the lowest level since May 2010 and all companies who use crude witnessed sharp buying. Further, the stocks of NBFC companies were also on buyer radar as RBI allowed existing NBFCs and micro finance lenders to set up small finance banks. Banking stocks were also in demand amid reports that Finance Minister is likely to coax RBI Governor Raghuram Rajan to cut interest rates ahead of the central bank’s monetary policy meeting.  Broader indices too equally participated in the rally with both mid and small cap indices were trading up by over 1%.

Shares of Just Dial were trading higher by over 2% to Rs 1,602 after the Reserve Bank of India (RBI) allowed overseas investors to buy up to 75% in the company under the portfolio investment scheme (PIS). Shares of Jet Airways has surged over 10% to Rs 296 on back of heavy volumes on the bourses after fall in crude oil prices.

On global front, most of the Asian markets were trading mixed with Nikkei 225 up by 1.16% and Jakarta Composite down 0.34%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 8,500 and 28,500 levels respectively. The market breadth on BSE was positive, out of 2,619 stocks traded, 1,565 stocks advanced, while 964 stocks declined on the BSE.

The BSE Sensex is currently trading at 28743.46, up by 304.55 points or 1.07% after trading in a range of 28483.99 and 28772.18. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.38%, while Small cap index up by 0.97%.

The gaining sectoral indices on the BSE were Bankex up by 3.12%, PSU up by 1.86%, Auto up by 1.80%, Realty up by 1.36% and Consumer Durables up by 1.24%. There was no losing index on BSE.

The top gainers on the Sensex were SBI up by 4.30%, Axis Bank up by 3.28%, Tata Motors up by 2.85%, ICICI Bank up by 2.65% and HDFC Bank up by 1.73%. On the flip side, Sesa Sterlite down by 1.41%, Coal India down by 0.34%, Bajaj Auto down by 0.33%, Bharti Airtel down by 0.30% and BHEL down by 0.28% were the top losers.

Meanwhile, in a move to expand banking services to more people and small businesses, the Reserve Bank of India (RBI) has issued final guidelines for companies seeking to set up payments banks and small finance banks.

According to RBI’s guidelines, companies seeking to set up these two new categories of banks would need minimum Rs 100 crore of capital and fulfill the necessary 'fit and proper' criteria, among other conditions. Existing NBFCs and micro finance lenders would be allowed to set up small finance banks, while other large state-run entities and business houses barred to establish such banking entities. Meanwhile, central bank allowed corporate houses, including telecom players, business correspondents, PSU companies, real sector cooperatives and supermarket chains to set up payment banks, and also gave them the option of forming joint ventures with commercial banks.

Small finance banks are aimed at lending to unserved and underserved sections including small business units. On the other hand, payments banks can accept deposits and remittances but cannot provide loans. The RBI’s notification highlighted that such banks must maintain cash reserve ratio (CRR) and should keep 75 percent of their deposits in SLR up to 1 year maturity. Moreover, these banks need to keep maximum 25 percent as deposits with other banks for operational use. Under the new norms for payments banks, the minimum paid-up equity capital is Rs 100 crore and the leverage ratio should not be less than 3 percent. Liabilities must not exceed net worth by 33.3x and the promoters must hold 40 percent of equity for the first 5 years. The RBI further noted that foreign holding should be as per FDI policy for private banks and they must have a high-powered customer grievances cell.

Further, such banks will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer and will be allowed to issue ATM/debit cards and also other prepaid payment instruments, but not credit cards. Companies will have to apply by January 16, 2015, for licences in both categories, and the central bank said it would consider more applications at a later stage.

The CNX Nifty is currently trading at 8598.95, up by 104.75 points or 1.23% after trading in a range of 8516.25 and 8604.00. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 7.00%, PNB up by 5.85%,  Asian Paints up by 5.07%, Indusind Bank up by 4.66% and SBI up by 4.38%. On the flip side, Cairn India down by 3.19%, Sesa Sterlite down by 1.36%, Jindal Steel & Power down by 0.60%, Power Grid Corpn down by 0.50% and BHEL down by 0.39% were the top losers.

Most of the Asian markets were trading mixed, Hang Seng up by 10.7 points or 0.04% to 24,014.98, Straits Times up by 12.73 points or 0.38% to 3,353.69, Shanghai Composite up by 17.87 points or 0.68% to 2,648.36, Taiwan Weighted up by 21.84 points or 0.24% to 9,187.15 and Nikkei 225 up by 200.38 points or 1.16% to 17,448.88. While, Jakarta Composite down 17.39 points or 0.34% to 5,127.93, FTSE Bursa Malaysia KLCI down 7.62 points or 0.42% to 1,822.29 and KOSPI Index down 1.31 points or 0.07% to 1,980.78.