Benchmarks reverse gears; enter into positive territory

Reversing gears, Indian equity markets have entered into positive territory in late afternoon session on account of buying in front line counters. The sentiments were on up-beat note on government’s expectation that FDI inflows will rise by 40-45 percent in the New Year while further steps could be on anvil to attract foreign capital. As per the latest available figure for 2015, FDI inflows during January-September period has increased by 18 percent to $26.51 billion. Traders were seen piling position in Auto, Oil & Gas and Bankex stocks, while selling was witnessed in Realty, FMCG and Consumer Durables sector stocks. In the scrip specific development, shares of liquor companies such as United Spirits, United Breweries, Tilaknagar Industries, Jagatjit Industries, Empee Distilleries and Pincon Spirit were trading under pressure after the Supreme Court upheld Kerala’s policy to go dry in 10 years. The market may remain volatile as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. December 2015 series to next month i.e. January 2015 series. The near month December 2015 derivatives contracts will expire on Thursday i.e. December 31, 2015.

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 7,900 and 26,100 levels respectively. The market breadth on BSE was negative in the ratio of 1135:1405 while 243 scrips remained unchanged.

The BSE Sensex is currently trading at 26100.28, up by 66.15 points or 0.25% after trading in a range of 25994.45 and 26133.78. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.51%, while Small cap index down by 0.06%.

The gaining sectoral indices on the BSE were Auto up by 0.70%, Oil & Gas up by 0.41%, Bankex up by 0.38%, TECK up by 0.19% and Power up by 0.02%, while Realty down by 0.50%, FMCG down by 0.48%, Consumer Durables down by 0.44%, Capital Goods down by 0.25% and Metal down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.75%, Mahindra & Mahindra up by 1.46%, GAIL India up by 1.35%, Bharti Airtel up by 1.33% and Hero MotoCorp up by 1.06%.

On the flip side, BHEL down by 1.37%, Coal India down by 1.15%, ITC down by 0.72%, Hindustan Unilever down by 0.68% and TCS down by 0.31% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) committee on medium-term path on financial inclusion, headed by RBI executive director Deepak Mohanty, has recommended that the government should transfer cash directly to persons instead of giving subsidies, and should replace interest subvention on agriculture loans with affordable universal crop insurance scheme. The group opined that the most efficient way for an effective financial inclusion is direct cash transfer which can be tried to address problems in the irrigation sector and instead of charging “abnormally low electricity tariffs” for agricultural use, equivalent cash can be transferred into beneficiaries’ accounts.

The committee which was set up in mid-July also recommended that linking credit accounts with unique identification number, or Aadhaar number, and share information with credit information companies to enhance stability of the credit system and improve access.  Currently, the government gives interest rate subvention of two per cent for short-term crop loans of up to Rs 3 lakh. Another three per cent subvention for prompt repayment lowers the effective cost further. Payments towards such subvention have increased rapidly over time. From less than Rs 2,500 crore in subvention in 2006, government’s subvention in 2016 is projected to be above Rs 12,500 crore.  Further, the committee recommended that a mandatory crop insurance scheme covering all crops should be introduced starting with small and marginal farmers with a monetary ceiling of Rs 2 lakh. Farmers will have to pay a nominal premium to get this insurance and the balance could come from government subsidy. Heavy use of technology, like satellite images for crop mapping and assess damage, could make the insurance scheme more efficient.

Among other major recommendations, the panel suggested stepping up efforts to include more women in the financial inclusion fold. The All-India Debt and Investment Survey (AIDIS) suggested that interest rates paid by female household head are, on average, higher than those paid by male household heads. In order to include more women, and with the government’s emphasis on the welfare of girl child, the panel recommended that a new welfare scheme, called Sukanya Shiksha that can be jointly funded by the central and state governments, be formed.  As per the Mohanty report, the mobile phones are the way forward for inclusion. Public sector banks account for only 14 per cent of the total mobile banking transactions worth Rs 270 billion, suggesting there is significant room for market players to grow. Besides, an eco-system should be developed where full-service banks, regional banks, non-banking finance companies, semi-formal financial institutions, as well as the newly-licensed payments banks and small finance banks, could work together for effective inclusion.

The CNX Nifty is currently trading at 7933.75, up by 8.60 points or 0.11% after trading in a range of 7902.75 and 7942.15. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 1.52%, GAIL India up by 1.40%, Ambuja Cement up by 1.33%, Bharti Airtel up by 1.30% and ACC up by 1.27%.

On the flip side, HCL Tech. down by 2.04%, Coal India down by 1.32%, BHEL down by 1.31%, Power Grid down by 0.81% and Hindustan Unilever down by 0.72% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 1.61 points or 0.04% to 4,558.96, KOSPI Index increased 2.25 points or 0.11% to 1,966.31, FTSE Bursa Malaysia KLCI increased 14.32 points or 0.86% to 1,685.05, Shanghai Composite increased 29.96 points or 0.85% to 3,563.74, Hang Seng increased 80 points or 0.36% to 21,999.62 and Nikkei 225 increased 108.88 points or 0.58% to 18,982.23.

On the other hand, Taiwan Weighted decreased 64.58 points or 0.77% to 8,293.91.

The European markets were trading in green; UK’s FTSE 100 increased 15.73 points or 0.25% to 6,270.37, France’s CAC increased 46.49 points or 1.01% to 4,664.44 and Germany’s DAX increased 108.61 points or 1.02% to 10,762.52.