Benchmarks trade in fine fettle in early deals on Wednesday

With a gap-up opening Indian equity markets have extended their previous session gains and are now trading in fine fettle up by over half a percent, on sustained buying by funds and retail investors, triggered by the Reserve Bank of India’s (RBI) steeper-than-expected cut in the policy repo rate under the liquidity adjustment facility by 50 basis points to 6.75%. Traders were also getting encouragement with a report that India has become the top destination for FDI in the world. With $31 billion of foreign capital inflows, India has surpassed China and the US to take the pole position in attracting largest FDI in the first half of 2015. Also, the Chief Economic Advisor Arvind Subramanian said that the government is committed to contribute its share by adhering to its fiscal deficit target so that inflationary pressures remain under control. However gains remained capped on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 1112.59 crore September 29, 2015, as per provisional data released by the stock exchanges.

On the global front, the US markets ended higher after macro data showed consumer confidence was at its highest since January. The Asian markets were trading mostly in green led by gains in Japan where investors were buoyed by expectations for more economic stimulus.

In scrip specific development, Eveready Industries surged 7% on the BSE in early morning trade after the Reserve Bank of India allowed foreign investors to invest up to 49% stake in the company under the Portfolio Investment Scheme.

Closer home, all the sectoral indices on the BSE were trading in green led by Metal, Realty, FMCG, Consumer Durables. The market breadth on BSE was positive in the ratio of 1300:449 while 64 scrips remained unchanged.

The BSE Sensex is currently trading at 25961.15, up by 182.49 points or 0.71% after trading in a range of 25942.72 and 26044.60. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.86%, while Small cap index gained 0.95%.

The top gaining sectoral indices on the BSE were Metal up by 2.23%, Realty up by 1.99%, FMCG up by 1.25%, Consumer Durables up by 1.22% and Healthcare up by 1.07%, while there were no losers.

The top gainers on the Sensex were Tata Steel up by 3.80%, Hindalco up by 2.64%, Coal India up by 2.13%, ITC up by 1.87% and Vedanta up by 1.68%. On the flip side, GAIL India down by 0.71%, Cipla down by 0.37%, ONGC down by 0.20% and Axis Bank down by 0.06% were the top losers.

Meanwhile, Economic Affairs Secretary Shaktikanta Das has said that the government will review the framework to fix interest rate on small saving deposits like public provident fund (PPF), post office deposits, in order to bring them in line with market rates. This was being done in response to the 0.5 per cent cut in key lending (repo) rate announced by the Reserve Bank of India.

Small-saving deposits, which are collected by the government, have attractive interest rates of 8.7 to 9.3 per cent and banks have been reluctant to cut their deposit rates. This makes the banks shy of cut lending rates. They also want to keep their deposit rates attractive to match those in small saving schemes. High interest rates on PPF and post office deposits restrict the ability of lenders to reduce deposit rates, which in turn makes lending rates rigid.

Shaktikanta Das further stated that, small savings are a decision which the government has taken in response to the policy action by RBI and further RBI is working closely with the finance ministry to see the rates are transmitted by banks and financial institutions.

Smalls saving schemes include Post Office Monthly Income Scheme (MIS), Public Provident Fund (PPF), Post Office Time Deposit Scheme, Senior Citizen's Savings Scheme, Post Office Savings Account, and Sukanya Samriddhi Accounts.

The CNX Nifty is currently trading at 7895.00, up by 51.70 points or 0.66% after trading in a range of 7882.50 and 7924.25. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.82%, Hindalco up by 2.49%, Idea Cellular up by 2.15%, ITC up by 1.90% and Coal India up by 1.85%. On the flip side, GAIL India down by 0.81%, Bosch down by 0.71%, Tech Mahindra down by 0.51%, Cipla down by 0.38% and Zee Entertainment down by 0.32% were the top losers.

Asian markets were trading mostly in green, KOSPI Index increased 7.03 points or 0.36% to 1,949.88, FTSE Bursa Malaysia KLCI increased 9.85 points or 0.61% to 1,613.17, Jakarta Composite increased 14.92 points or 0.36% to 4,193.33, Shanghai Composite increased 21.23 points or 0.7% to 3,059.36, Taiwan Weighted increased 29.25 points or 0.36% to 8,161.60, Hang Seng increased 283.04 points or 1.38% to 20,839.64 and Nikkei 225 increased 426.75 points or 2.52% to 17,357.59.

On the flip side, Straits Times decreased 6.63 points or 0.24% to 2,781.31.