Benchmarks continue firm trade in late morning session

After getting a gap-up start, benchmark equity indices continued to trade in fine fettle in late morning deals as investors stepped up buying in bluechips at attractive valuations after inflation eased, raising hopes of a rate cut by the Reserve Bank of India (RBI). Besides, a further decline in the crude oil prices has boosted the sentiments as it will help India in controlling the fiscal deficit. Till now there is not even iota of profit taking and apart from blue-chips broader markets too are participating equally in the upmove. Sentiments remained up-beat with government keeping its options open on convening a special session of Parliament for enacting the GST law on which Finance Minister Arun Jaitley declared that it was determined to stick to the rollout deadline of April 1, 2016. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 626 crore on August 13, 2015.

On the global front, Asian markets were trading mixed as crude oil futures remained under pressure, crashing to 6-1/2-year lows after data indicated a big increase in US stockpiles arising fears of a growing global glut. Further, US stocks closed mostly lower as favourable retail sales and jobless claims suggested the US economy is in a good shape and hence indicates a rate hike by the Fed this year. Back home, extending its slide for the eighth straight day, Indian rupee shed another 24 paise to 65.34 against the dollar in early trade, its weakest level since September 2013, on appreciation of the American currency against others overseas.

Back on street, stocks from Realty, Infrastructure and Auto counters were supporting the markets’ uptrend, while those from FMCG counters was adding to the underlying cautious undertone. In scrip specific development, Shares of Rajesh Exports have surged after the company reported 100.41% rise in its net profit at Rs 237.16 crore for the quarter ended June 30, 2015, as compared to Rs 118.34 crore for the same quarter in the previous year. On the flip side, shares of MMTC declined after the company reported a net loss of Rs 31.22 crore for the quarter ended June 30, 2015 as compared to a net profit of Rs 40.77 crore for the same quarter in the previous year.

The market breadth on BSE was positive, out of 2388 stocks traded, 1327 stocks advanced, while 975 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27723.60, up by 174.07 points or 0.63% after trading in a range of 27643.20 and 27725.55. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.23%, while Small cap index up by 0.90%.

The top gaining sectoral indices on the BSE were Realty up by 3.60%, Infrastructure up by 0.99%, Auto up by 0.85%, Power up by 0.68%, Bankex up by 0.60%, while FMCG down by 0.05% was the sole losing index on BSE.

The top gainers on the Sensex were Vedanta up by 2.76%, Sun Pharma Inds. up by 2.13%, Cipla up by 1.90%, Bajaj Auto up by 1.69% and Bharti Airtel up by 1.67%. On the flip side, Axis Bank down by 1.73%, Hindustan Unilever down by 0.89%, GAIL India down by 0.63%, Tata Motors down by 0.60% and Tata Steel down by 0.47% were the top losers.

Meanwhile, a government-appointed panel headed by Bimal Jalan, to suggest ways to prune subsidies has favoured extending the cash transfer scheme to kerosene and food in three years for directly helping beneficiaries. Jalan has said that “We are trying to see what way we can use DBT (direct benefit transfer) and apply it to other entitlements and other things. I won’t name the products because what we will do will take some more time. The whole idea is to make it easy because it saves expenditure.”

Jalan in his meeting with Finance Minister Arun Jaitley, batted very strongly for the direct benefit transfer scheme. That one development, he says, will go a long way in helping the process is the setting up of payment banks. He said that 'We already have a DBT system and can look for utilisation of payments banks in rural areas by tying it up with DBT.' He added that whenever action is taken to set up payment bank, it will increase the outreach of our financial system to the rural areas and we can implement it.

Subsidy rationalisation is high on economic agenda of the government and it has already introduced direct benefit transfer scheme to plug leaks in LPG subsidy and other welfare schemes to ensure the benefit reaches the poor directly.

The government had set up the Commission under the former RBI Governor in August last year to suggest steps to reduce subsidies on food, fertiliser and oil and narrow the fiscal deficit. Former finance secretary Sumit Bose and former RBI deputy governor Subir Gokarn are members of the Commission.  The Commission had submitted its interim report in January and will submit its comprehensive report to the government by the end of the year, as it is mandated to submit the final one before Budget 2016-17.

The CNX Nifty is currently trading at 8405.10, up by 49.25 points or 0.59% after trading in a range of 8381.20 and 8409.35. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 2.86%, Vedanta up by 2.85%, Sun Pharma up by 2.07%, Asian Paints up by 1.94% and Cipla up by 1.86%. On the flip side, NMDC down by 2.52%, Cairn India down by 1.98%, Axis Bank down by 1.92%, Hindustan Unilever down by 0.84% and Tata Motors down by 0.83% were the top losers.

Asian markets were trading mostly mixed; KOSPI Index was up by 0.4%, Hang Seng up by 0.16%, Straits Times up by 0.63% and Shanghai Composite up by 0.83%. On the flip side, Nikkei 225 was down by 0.36%, FTSE Bursa Malaysia KLCI down by 1.85%, Jakarta Composite down by 0.31% and Taiwan Weighted down by 0.08%.