Markets trade lower in early deals on Tuesday

After gaining around a percent in previous session, Indian equity markets have made a negative start and are now trading with a cut of around quarter of a percent, as traders booked some profits. Weakness in the other Asian peers too weighed on the sentiments.  Further, Sentiments turned subdued as no major reforms seem likely, including GST with winter session of the Parliament concluding on Wednesday. However, the broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices gained around 0.30% each. Rupee opened higher against the dollar on Tuesday and was trading at 66.31, up 4 paise at the Interbank Foreign Exchange that kept supporting the sentiment. On the secotral front, traders were seen pilling position in Realty, Consumer Durables, Power, Capital Goods and PSU, while selling was witnessed in IT, TECK, FMCG, Metal and Auto.

In the scrip specific development, Tide Water Oil (India) surged 20% on the National Stock Exchange (NSE) after the company announced the bonus issue and stock split plan.

On the global front, the US stocks ended higher on Friday, shrugging off another new multi-year low in oil prices and rebounding after suffering big declines late last week. Asian markets were trading mostly in red on the back of thin volumes on caution over the continued weakness in crude oil prices.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,800 and 25,650 levels respectively.  The market breadth on BSE was positive in the ratio of 1108: 546 while 91 scrips remained unchanged

The BSE Sensex is currently trading at 25660.27, down by 75.63 points or 0.29% after trading in a range of 25655.11 and 25736.93. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.25%, while Small cap index gained 0.32%.

The top gaining sectoral indices on the BSE were Realty up by 1.55%, Consumer Durables up by 0.43%, Power up by 0.28%, Capital Goods up by 0.26% and PSU up by 0.15%, while IT down by 0.62%, TECK down by 0.51%, FMCG down by 0.47%, Metal down by 0.28% and Auto down by 0.15% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Inds. up by 1.66%, Cipla up by 0.59%, NTPC up by 0.55%, SBI up by 0.52% and Hindustan Unilever up by 0.50%. On the flip side, Infosys down by 1.03%, ITC down by 0.92%, Mahindra & Mahindra down by 0.80%, Adani Ports &Special down by 0.79% and Coal India down by 0.78% were the top losers.

Meanwhile, global rating agency Moody’s Investors Service has said that Reserve Bank of India’s (RBI) new uniform methodology for calculating base rate on marginal cost of funds is ‘credit positive' for Indian banks as it would ease pressure on their balance sheet. It said that RBI’s new guidelines for banks to calculate their lending rates will reduce pressure on their net interest margins (NIMs).

Moody’s said that Indian banks currently set their base rates on either their average cost of funds, or marginal cost of funds. However, because the marginal cost of funds would result in a lower cost of funds amid declining policy rates, banks have not used it. The rating agency further said that the interval between rate resets can be up to one year. This provides an additional layer of flexibility for banks to align their overall portfolio lending rates to their overall portfolio deposit costs.

MCLR will be a tenor-based benchmark instead of a single rate. The tenor-based lending rates will enable banks to price their loans more efficiently based on their funding composition and strategies, Moody’s said. This allows banks to more efficiently price loans at different tenors based on different MCLRs, according to their funding composition and strategies.

The new calculation methodology applies only to new loans after April 1, 2016 instead of all existing loans and banks will have a tenor-based benchmark. For new loans approved from April 1, banks will also be allowed to specify interest reset dates, which are linked either to the date the loan was approved or the date of MCLR review. Under the existing base-rate framework, banks can use any appropriate benchmark to determine their cost of funds, including the average cost of funds method.

The CNX Nifty is currently trading at 7809.80, down by 24.65 points or 0.31% after trading in a range of 7804.25 and 7831.05. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Sun Pharma Inds. up by 1.70%, Bank Of Baroda up by 1.00%, NTPC up by 0.77%, Idea Cellular up by 0.76% and PNB up by 0.73%. On the flip side, ITC down by 1.21%, Infosys down by 1.16%, TCS down by 1.00%, Mahindra & Mahindra down by 0.95% and HDFC down by 0.80% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 decreased 23.21 points or 0.12% to 18,892.81, Shanghai Composite decreased 18.91 points or 0.52% to 3,623.56, Hang Seng decreased 11.94 points or 0.05% to 21,779.74, Taiwan Weighted decreased 8.82 points or 0.11% to 8,273.35 and KOSPI Index decreased 3.54 points or 0.18% to 1,977.65.

On the flip side, Jakarta Composite increased 6.1 points or 0.14% to 4,496.78 and FTSE Bursa Malaysia KLCI increased 6.71 points or 0.41% to 1,635.80.