Markets maintain their gains on short covering

Indian markets are holding their gains, trading firm in the early noon session supported by some short covering, a day ahead of the February F&O series expiry. Also, traders are hopeful of big reform measures in the upcoming budget and were putting optimistic bets. Meanwhile, a day after Standard and Poor’s (S&P) said India must boost growth, cut its fiscal deficit and fulfill promises of financial and fiscal reforms, another global rating agency Moody’s Investors Service has said that its assessment of India’s credit ratings will be determined mainly by the extent of its fiscal reforms, not recent revisions to its economic growth data. Back on street, broader markets too are equally participating in the rally, while barring some profit booking in consumer durables all other sectoral indices on BSE were maintaining their gains, led by IT, realty and tech packs. The IT sector stocks were in jubilant mood since morning after the US announced that it will provide work permits to spouses of H-1B visa holders beginning May 26, a move that is expected to benefit thousands of talented and professional Indian spouses who come to America but are unable to work.

The BSE Sensex is currently trading at 29216.95, up by 212.29 points or 0.73% after trading in a range of 29115.32 and 29269.83. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were going neck-in-neck with the benchmarks; the BSE Mid cap index was up by 0.34%, while Small cap index gained 0.33%.

The top gaining sectoral indices on the BSE were Realty up by 1.07%, Oil & Gas up by 0.97%, IT up by 0.94%, TECK up by 0.84%, PSU up by 0.62% while, Consumer Durables down by 0.29% was the lone losing index on BSE.

The top gainers on the Sensex were HDFC up by 2.38%, Infosys up by 2.19%, Sesa Sterlite up by 1.70%, Mahindra & Mahindra up by 1.56% and ONGC up by 1.51%. On the flip side, Hindustan Unilever down by 1.00%, Sun Pharma Inds down by 0.78%, Hero MotoCorp down by 0.57%, Dr. Reddys Lab down by 0.50% and Larsen & Toubro down by 0.42% were the top losers.

Meanwhile, calling for more transparency in India's power subsidy regime, the global development finance body, World Bank has suggested re-identification of the target population to improve the balance-sheets of losses-stricken discoms. In a review report, the World Bank highlighting the gap between the volume of subsidies booked by utilities as compensation and the amount they receive from the government, said that this worsens economics of already struggling utilities, undermining their  creditworthiness and preventing them from investing to improve service  delivery.

In the report, the World Bank identified the customer-facing distribution companies as the vertical that needs attention. It said the sector should be allowed to operate in a commercially viable manner by making sure who are not eligible for subsidy pay for what they consume. Such an approach can lower the subsidy burden on the Government.

World Bank also asked banks to pull up their socks and critically look at every loan proposal from power sector firms, without the back up of a sovereign guarantee. Such a practice will ensure that the sector does not lose sight of commercial interests.

The report focusing distribution as a key to performance and viability of the Indian power sector was prepared by the World Bank team led by Sheoli Pargal and Sudeshna Ghosh Banerjee, at the request of power ministry and ministry of economic affairs to review the Indian power sector, enactment of the landmark Electricity Act of 2003. The covers various States of the country and mentions how the financial health of the sector is fragile, limiting its ability to invest in delivering better services. It also said that to ensure 24x7 power supply to citizens under the Modi government's 'power for all' initiative, utilities would have to strengthen their transmission grids and distribution infrastructure, and enhance billing and collection systems.

The CNX Nifty is currently trading at 8820.80, up by 58.70 points or 0.67% after trading in a range of 8798.00 and 8840.65. There were 35 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.64%, Ambuja Cement up by 2.51%, HDFC up by 2.32%, Sesa Sterlite up by 1.89% and Bharti Airtel up by 1.84%. On the flip side, Zee Entertainment down by 1.27%, Hindustan Unilever down by 1.09%, Power Grid Corpn down by 1.02%, Sun Pharma Inds down by 1.01% and Tech Mahindra down by 0.81% were the top losers.

Most of the Asian markets were trading in green Hang Seng was up by 9.23 points or 0.04% to 24,759.30, Jakarta Composite gained 12.18 points or 0.22% to 5,429.49, Straits Times was up by 12.21 points or 0.36% to 3,449.82, KOSPI Index gained 14.35 points or 0.73% to 1,990.47 and Taiwan Weighted was higher by 70.17 points or 0.73% to 9,699.54.

On the other hand, Shanghai Composite declined by 18.91 points or 0.58% to 3,228.00, Nikkei 225 lost 18.28 points or 0.1% to 18,585.20 and FTSE Bursa Malaysia KLCI  was down by 8.81 points or 0.48% to 1,809.87.