Benchmarks continue to trade in green in late morning session

Local equity markets, after paring some gains in early deals, have gained some momentum on sustained buying by funds and retail investors amid hopes of a rates cut by the Reserve Bank of India following reports of above-normal progress in monsoon so far. Sentiments remained up-beat with the government dismissing the possibility of any material impact on the Indian economy from the developments in Greece, but it anticipates some impact on the rupee from investors pulling out in fear. Commerce and Industry Minister Nirmala Sitharaman has said that the government is “very closely” monitoring the developments in Greece as that could have implications on the international currency market. Some support also came with the India Ratings and Research (Ind-Ra) statement that even if monsoon turns out to be deficient this year, its impact on rural spending will be less severe than what it used to be a decade ago or earlier because the rural landscape of the country has changed a lot. However, some investors remained edgy as Greece voted decisively against the terms of a Eurozone bailout deal raising the fear of Grexit from the Euro zone.

On global front, Asian markets were trading mostly in red, as investors remained on edge amid uncertainty over Greece's position in the euro and volatility in mainland Chinese share markets. Overnight, the US stocks had ended a choppy session slightly lower as global equities came under pressure after Greece rejected its international lenders' bailout terms and moved closer to a potential exit from the eurozone. Back home, rising for the sixth straight day, the Indian rupee strengthened by 8 paise to 63.32 against the dollar in early trade on sustained selling of the American currency by exporters and banks.

Back on street, stocks from Realty, Metal and Consumer Durables counters were supporting the markets’ uptrend, while those from Auto counters was adding to the underlying cautious undertone. Shares of oil marketing companies logged smart gains after the US NYMEX Crude futures continue to trade in a downward trajectory. In scrip specific development, Shares of Ortel Communications have surged after the company introduced free broadband offer for its cable TV subscribers. Moreover, shares of L&T Finance Holdings were up on the report that American private equity fund Warburg Pincus was in talks to purchase stake in the company.

The market breadth on BSE was positive, out of 2276 stocks traded, 1636 stocks advanced, while 563 stocks declined on the BSE. 

The BSE Sensex is currently trading at 28263.62, up by 54.86 points or 0.19% after trading in a range of 28200.97 and 28335.23. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.61%, while Small cap index up by 1.02%.

The top gaining sectoral indices on the BSE were Realty up by 1.44%, Metal up by 0.93%, Consumer Durables up by 0.85%, PSU up by 0.60% and Bankex up by 0.47%, while Auto down by 0.12% was the only losing index on BSE.

The top gainers on the Sensex were Coal India up by 2.23%, Wipro up by 1.63%, HDFC up by 1.56%, SBI up by 1.13% and Tata Steel up by 0.95%. On the flip side, NTPC down by 1.34%, Hero MotoCorp down by 1.00%, Hindustan Unilever down by 0.96%, Hindalco down by 0.78% and Maruti Suzuki down by 0.59% were the top losers.

Meanwhile, supporting the demand of more funds by the public sector banks (PSBs), Reserve Bank of India (RBI) Deputy Governor R Gandhi has said that public sector banks need more capital than budgeted to strengthen their balance sheets and deal with non-performing assets (NPAs). The Deputy Governor further elaborated that banks need capital infusion for three things – ‘to meet Basel III, better provisioning and improving banks business.'

Gandhi stated that follow-on public offers and capital infusion by the government are two ways to raise the capital. Recently, RBI Governor Raghuram Rajan too had stressed that banks should have enough capital so that they can clean up their balance sheet; he has also flagged concerns over inadequate capital infusion.

For the current fiscal 2016, the government had allocated Rs 7,940 crore for state-owned banks. Later after Finance Minister Arun Jaitley assured to provide more than the budgeted amount current fiscal, the government announced its plan to infuse Rs 57,000 crore in PSBs in two years, with an infusion of about $3 billion in the current year and perhaps twice as much in the next year. The government has already assessed capital requirement of public sector banks. Public sector banks will need an additional capital of Rs 2.40 lakh crore by 2018 to meet the Basel III capital adequacy norms.

Earlier, Union cabinet in December 2014, keeping the huge capital requirements in mind, had allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52 per cent in phases.

The CNX Nifty is currently trading at 8539.25, up by 17.10 points or 0.20% after trading in a range of 8523.50 and 8561.35. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 3.71%, Coal India up by 2.39%, Tech Mahindra up by 2.00%, Bank of Baroda up by 1.63% and HDFC up by 1.59%. On the flip side, HCL Tech. down by 1.66%, NTPC down by 1.56%, Zee Entertainment down by 1.27%, Vedanta down by 1.13% and Hindustan Unilever down by 0.98% were the top losers.

Asian markets were trading mostly in red; Hang Seng was down by 1.42%, Shanghai Composite down by 4.1%, KOSPI Index down by 1.12%, Jakarta Composite down by 0.46%, FTSE Bursa Malaysia KLCI down by 0.5%. On the flip side, Nikkei 225 was up by 1.32%, Taiwan Weighted up by 0.1% and Straits Times up by 0.08%