Benchmarks continue firm trade; Sensex surpasses 26,000 mark

Indian equity markets continued their firm trade in the late afternoon session on account of buying in front line blue chip counters taking cues from global counterparts. The sentiments were on optimistic note with Finance Minister Arun Jaitley vowing corruption-free governance, reasonable tax rates and non-discretionary allotment of natural resources to make it easier for companies to do business in India. Some additional buying also emerged as the seventh Central Pay Commission (CPC) has recommended a 23.6% hike in pay, allowances and pensions for central government employees, implementation of which would boost India’s consumption demand and GDP growth, benefitting consumer discretionary companies. Traders were seen piling position in Oil & Gas, Capital Goods and IT stocks while selling was witnessed in FMCG sector stocks. In the scrip specific development, Jindal Steel & Power (JSPL) was trading firm on receiving clean chit from Competition Commission of India (CCI) in coal auction cartelization case. Bosch was trading under pressure on reports that the US authorities are investigating Bosch India’s parent German auto supplier Robert Bosch GmbH over its role in Volkswagen AG’s massive scheme to cheat US emission standards.

On the global front, the Asian markets were trading mostly in green, while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,850 and 26,000 levels respectively. The market breadth on BSE was positive in the ratio of 1541:970 while 215 scrips remained unchanged.

The BSE Sensex is currently trading at 26037.69, up by 195.77 points or 0.76% after trading in a range of 25769.81 and 26058.76. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.16%, while Small cap index up by 1.03%.

The gaining sectoral indices on the BSE were Oil & Gas up by 2.38%, Capital Goods up by 1.29%, IT up by 1.15%, PSU up by 1.13%, Power up by 1.09% while, FMCG down by 0.10% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 9.70%, Bajaj Auto up by 3.08%, Vedanta up by 2.56%, Wipro up by 2.39% and TCS up by 2.09%.

On the flip side, Sun Pharma down by 1.56%, ITC down by 0.87%, HDFC down by 0.40%, Bharti Airtel down by 0.35% and Axis Bank down by 0.16% 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.

The CNX Nifty is currently trading at 7897.00, up by 54.25 points or 0.69% after trading in a range of 7817.80 and 7906.30. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 10.19%, Bajaj Auto up by 2.92%, Bank of Baroda up by 2.74%, Wipro up by 2.69% and Vedanta up by 2.67%.

On the flip side, Bosch down by 2.09%, Sun Pharma down by 1.55%, HCL Tech down by 1.17%, ITC down by 0.98% and HDFC down by 0.57% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 0.95 points or 0.05% to 1,989.86, FTSE Bursa Malaysia KLCI increased 1.59 points or 0.1% to 1,661.65, Shanghai Composite increased 13.44 points or 0.37% to 3,630.50, Nikkei 225 increased 20 points or 0.1% to 19,879.81, Jakarta Composite increased 35.38 points or 0.78% to 4,554.32 and Hang Seng increased 254.5 points or 1.13% to 22,754.72.

On the other hand, Taiwan Weighted decreased 11.75 points or 0.14% to 8,465.45.

The European markets were trading in green; France’s CAC increased 2.71 points or 0.06% to 4,917.81, Germany’s DAX increased 17.27 points or 0.16% to 11,102.71 and UK’s FTSE 100 increased 3.62 points or 0.06% to 6,333.55.