Markets maintain gain supported by capital goods and FMCG stocks

Indian markets after a smart bounce back were maintaining their lead in early noon trade, supported by value buying at lower levels. The National Stock Exchange index Nifty reclaimed the crucial 8,400-mark and the BSE Sensex was trading near 27700 mark. Though, the benchmarks have pared some gains from the highs of the day but the broader markets continue to outperform with good margin. Firming trend in other Asian markets following the gains in US markets on Friday after Fed chief Janet Yellen said that an interest rate hike may well be warranted later this year but stressing that any increase in interest rates would be gradual, has led to global rally in equities. There was some somberness in oil and gas majors' Reliance Industries and ONGC, as the domestic gas prices are set to fall about nine per cent to  $5.01 per million British thermal units (mBtu) on the basis of net calorific value (NCV) and $4.56 on gross calorific value (GCV) from April 1, owing to lower global benchmark prices last year. On the sectoral front, barring oil & gas all other gauges were trading in green led by capital goods and defensive FMCG. Reliance Industries was trading at its fresh 52 weeks low.

The BSE Sensex is currently trading at 27698.41, up by 239.77 points or 0.87% after trading in a range of 27624.76 and 27791.43. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.17%, while Small cap index surged by 2.23%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.66%, INFRA up by 1.51%, FMCG up by 1.45%, Power up by 1.01%, PSU up by 0.83%, while Oil & Gas down by 0.48% was the only losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.81%, HDFC up by 2.48%, ITC up by 2.16%, BHEL up by 1.87% and Coal India up by 1.74%. On the flip side, Hindalco down by 1.91%, Tata Power down by 1.66%, Reliance Industries down by 1.38%, GAIL India down by 1.36% and Sesa Sterlite down by 0.77% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) in its discussion paper on ‘Large Exposures Framework and Enhancing Credit Supply through Market Mechanism' has proposed to lower the ceiling on how much a bank can lend to a single corporate group, in a move to curb risks in the banking sector at a time when NPAs (non-performing assets) in the banking sector are on the rise. According to the central bank, Indian banks on an average have Tier I and Tier II capital in the ratio of 70:30.

Under the proposal of the RBI, banks can lend up to 25 per cent of their core capital to a single corporate group, while currently, they have been given flexibility, with riders though, to lend up to 55 per cent of their core capital to a single corporate group. Through its new proposal the RBI also wants to align its lending caps to companies with the 25 per cent norm set by the Basel Committee on Banking Supervision, which comes into effect from January 1, 2019.

The central bank also said that it would consider setting a minimum percentage of capital requirements that companies must raise from corporate bond and commercial paper markets, saying the corporate sector had become too dependent on banks for their financial needs. It further added that it is important to have alternate sources of funding for the corporate sector, both to finance growth, de-risk the balance sheets of banks and also to strengthen balance sheets of investors as well as issuers.

In its discussion paper the RBI has proposed that large corporate borrowers enjoying working capital (fund-based) limits above a certain threshold from the banking system should necessarily meet a minimum prescribed percentage of their working capital requirements from the commercial paper market and this percentage could be progressively increased.

The CNX Nifty is currently trading at 8407.90, up by 66.50 points or 0.80% after trading in a range of 8380.75 and 8432.65. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 4.76%, Bharti Airtel up by 3.59%, BPCL up by 2.89%, Asian Paints up by 2.58% and HDFC up by 2.42%. On the flip side, Tech Mahindra down by 3.16%, Hindalco down by 2.16%, Cairn India down by 2.14%, Tata Power down by 1.60% and GAIL India down by 1.38% were the top losers.

All the major Asian markets were trading in green, Straits Times was up by 2.2 points or 0.06% to 3,452.30, FTSE Bursa Malaysia KLCI gained 9.46 points or 0.52% to 1,822.83, KOSPI Index was up by 10.24 points or 0.51% to 2,030.04, Taiwan Weighted gained 18.15 points or 0.19% to 9,521.87, Jakarta Composite was higher by 50.59 points or 0.94% to 5,447.45, Shanghai Composite surged by 84.12 points or 2.28% to 3,775.22, Nikkei 225 gained 125.77 points or 0.65% to 19,411.40 and Hang Seng zoomed by 427.89 points or 1.75% to 24,914.09.