Jubilation continues on D-Street in noon deals; Nifty reclaims 7,900 mark

Indian equity benchmarks are trading jubilantly in noon deals with frontline gauges recapturing their crucial 7,900 (Nifty) and 26,000 (Sensex) levels, as investors opted to buy beaten down but fundamentally strong stocks. Sentiments also remained up-beat with Chief Economic Adviser Arvind Subramanian’s statement that the country’s inflation is totally under control and is also within the target of the Reserve Bank of India and not at 2 or 1 per cent or so. He further stated that India’s inflation had come down and is not at the levels of the US and China. Appreciation in Indian rupee too supported the sentiments. The rupee strengthened by 10 paise to 66.08 against the dollar in noon deals at the Interbank Foreign Exchange on increased selling of the US currency by exporters and banks.

Asian markets too reversed trend and entered into positive trajectory with most of the indices were trading marginally in green at this point of time. Back home, on the sectoral front, oil and gas, capital goods and software witnessed the maximum gain in trade, while fast moving consumer goods remained the lone loser on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1,494 shares on the gaining side against 818 shares on the losing side while 218 shares remain unchanged.

The BSE Sensex is currently trading at 26027.99, up by 186.07 points or 0.72% after trading in a range of 25769.81 and 26058.76. 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 0.90%, while Small cap index up by 0.93%.

The gaining sectoral indices on the BSE were Oil & Gas up by 1.95%, Capital Goods up by 1.25%, IT up by 1.18%, PSU up by 1.04% and Bankex up by 1.00%, while FMCG down by 0.21% was the lone losing index on BSE.

The top gainers on the Sensex were GAIL India up by 8.76%, Wipro up by 2.65%, TCS up by 2.06%, Mahindra & Mahindra up by 2.04% and Bajaj Auto up by 2.02%. On the flip side, Sun Pharma down by 1.29%, ITC down by 1.07%, Bharti Airtel down by 0.68% and Hindalco down by 0.19% were the top losers.

Meanwhile, opening the doors for mergers and acquisitions in the banking industry for the first time in decades, the Reserve Bank of India (RBI) has signaled that it is open to persons owning more than 10 percent stake in a banks. RBI said the revision was necessitated after the Banking Law (Amendment) Act, 2012, adding that there could be structured transactions which could hide the actual ownership. These directions will also apply to compulsorily convertible bonds, voting rights or convert optionally convertible bonds.

As per the latest policy revision , the Central Bank could permit promoters, or investors to own more than 10 per cent if the applicant meets certain conditions including if ‘it is in public interest’ and in the ‘desirability of diversified ownership’.

The central bank had been rigid about the 5 per cent cap on ownership and a 10 per cent voting rights to ensure that no single holder gets a dominant position in running a bank. Till now many investors who owed up to 4.99 per cent in banks were keen on raising it but did not do so. But now will have an opportunity to raise their holdings. If they get the central bank permission to buy 5 per cent, then they automatically have a right to go up to 10 per cent. Shareholders owning more than 5 per cent will have to give an annual declaration to the concerned bank of which they own shares.

RBI has however said that “If in the bank's assessment any major shareholder is not 'fit and proper', it will have to immediately furnish the requisite information to the Reserve Bank”.  While, giving the details of the ‘fit and proper criterion’ which would be used to grant permission for bigger stakes, the Central Bank notified that ‘The applicant’s integrity, reputation and track record in financial matters and compliance with tax laws,'' will be a barometer to judge the ‘fit and proper criteria’.

RBI further said that sourcing of funds would be critical for raising stake beyond 10 per cent, and the major shareholder will have to furnish the details of the source of funds for such incremental acquisition and obtain 'no objection' from the concerned bank before such incremental acquisition. 7842.75

The CNX Nifty is currently trading at 7905.20, up by 62.45 points or 0.80% after trading in a range of 7817.80 and 7906.30. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 8.62%, Wipro up by 2.89%, Ambuja Cement up by 2.22%, Dr. Reddys Lab up by 2.15% and TCS up by 2.15%. On the flip side, Sun Pharma down by 1.27%, HCL Tech down by 1.24%, ITC down by 1.12%, Bosch down by 1.00% and Bharti Airtel down by 0.57% were the top losers.

Most of the Asian markets were trading in green; KOSPI Index rose 0.95 points or 0.05% to 1,989.86, FTSE Bursa Malaysia KLCI increased 1.87 points or 0.11% to 1,661.93, Shanghai Composite gained 10.15 points or 0.28% to 3,627.22, Jakarta Composite jumped 18.26 points or 0.4% to 4,537.20, Nikkei 225 added 20 points or 0.1% to 19,879.81 and Hang Seng was up by 43.64 points or 0.19% to 22,543.86. On the flip side, Taiwan Weighted was down by 11.75 points or 0.14% to 8,465.45.