Benchmarks continue to trade in green in late morning session

Indian bourses continued to trade in green in late morning session on continued buying activities by foreign funds and retail investors, triggered by a firm trend in other Asian markets after China’s decision to ease the mortgage rules fuelled hopes for further stimulus measures, and overnight rally in US markets. At present, Sensex and Nifty were trading above the crucial 28,000 and 8,500 levels respectively, with gains of over 0.30%. The broader markets outperformed benchmark indices as investors turned their focus on fundamentally sound mid-cap and small-cap stocks as valuations in large-cap stocks seem stretched after yesterday’s rally. Sentiments got a boost with report that the credit rating agency Moody's has said that Indian government's efforts to revive the stranded gas-based power projects will benefit the banks as they have significant exposure to such plants. Besides, the RBI allowing banks to utilise up to 50 per cent of their provisioning buffer towards making specific provisions for bad loans or non-performing assets against the earlier 33 per cent also influenced the trading sentiment. However, some inventors would keep a close eye on uncertainty over the geo-political tensions and global cues would continue to drive markets going ahead. Traders remained cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 313.40 crore on March 30, 2015.

On global front, Asian stock markets mostly rose after a rally on Wall Street and steps by China to shore up its economy boosted risk appetite, while Greek debt worries again haunted the sagging euro. Among the all, Japanese market is in positive territory, from a sharp decline last week and on the back of a weaker yen. Back home, Indian rupee recovered by 10 paise at 62.57 against the US dollar in early trade on fresh selling of the American currency by exporters.

Back on street, Traders were seen piling positions in Oil & Gas, Metal and Consumer Durables stocks while selling was witnessed in Banking stocks. In scrip specific development, Shares of Kiri Industries have surged after the company’s board approved allotment of cumulative non convertible redeemable preference shares to Tata Capital Financial Services. Further, TD Power Systems rose after the company received order from Diesel Locomotive Works to supply 10 traction alternators.

The market breadth on BSE was positive, out of 2138 stocks traded, 1453 stocks advanced, while 621 stocks declined on the BSE. 

The BSE Sensex is currently trading at 28065.68, up by 89.82 points or 0.32% after trading in a range of 28026.27 and 28107.11. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.69%, while Small cap index up by 1.20%.

The gaining sectoral indices on the BSE were Oil & Gas up by 2.10%, Metal up by 1.15%, PSU up by 0.95%, Consumer Durables up by 0.79% and Infrastructure up by 0.70% while, Bankex down by 0.20% was the sole losing index on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 2.44%, Reliance Industries up by 2.20%, Dr. Reddys Lab up by 2.10%, GAIL India up by 2.08% and Tata Power up by 1.95%. On the flip side, NTPC down by 1.56%, HDFC Bank down by 0.59%, ITC down by 0.58%, Bajaj Auto down by 0.48% and Hero MotoCorp down by 0.38% were the top losers.

Meanwhile, the Reserve Bank of India (RBI), giving more flexibility to cover bad loans has relaxed the provisioning rules against bad loans. The apex bank said that it would allow banks to set aside up to 50 per cent of floating provisions from 33 per cent earlier. Floating provisions are the amount that banks set aside that are above the mandatory provisioning requirement against bad loans established by the central bank.  The new relaxation will be applicable for floating provisions held by them as of the end of December 2014.

RBI further stated that utilisation of countercyclical provisioning buffer/floating provisions under this measure would be over and above the utilisation of countercyclical provisioning buffer/ floating provisions as permitted...on Framework for Revitalising Distressed Assets in the Economy-Refinancing of Project Loans, Sale of NPA and Other Regulatory Measures.

Countercyclical provisioning buffer is created in good times. It can be utilised during economic downturns when banks are often required to make unusually high badloan provisions. Banks had long been lobbying with the central banks to allow them to draw a higher amount from the buffer as the stress on their loan book has increased significantly. Last year in February, RBI had allowed to utilise up to 33 per cent of countercyclical provisioning buffer/floating provisions held by banks as on March 31, 2013.  Mounting bad loans have been a concern for the RBI and this relaxation may help banks provide for such loans thereby reducing the hit banks may face on their profitability due to the bad loans.

The CNX Nifty is currently trading at 8519.80, up by 27.50 points or 0.32% after trading in a range of 8499.85 and 8530.60. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.76%, Sesa Sterlite up by 2.35%, Dr. Reddys Lab up by 2.24%, Tata Power up by 2.22% and GAIL India up by 2.12%. On the flip side, NTPC down by 1.66%, Ultratech Cement down by 1.22%, Hero MotoCorp down by 0.77%, Bajaj Auto down by 0.71% and HDFC Bank down by 0.67% were the top losers.

Most of Asian markets were trading in the green; Shanghai Composite rose 0.11%, FTSE Bursa Malaysia KLCI gained 0.31%, KOSPI Index increased 0.28%, Taiwan Weighted added 0.42%, Jakarta Composite surged 0.9% and Hang Seng was up by 0.47%. On the flip side, Nikkei 225 down by 0.24% and Straits Times was down by 0.11%.