Benchmarks extend gains; trade near intra-day high levels

Indian equity benchmarks extended early gains to continue firm trade in late morning session, hovering near intra-day high level, on account of buying in frontline blue chip counters. Sentiment got a boost after oil advanced to USD 50 a barrel for the first time this year as US industry data showed a decline in stockpile. Further, the G7 summit in Japan to take stock of the global economy also infused a sense of confidence. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 652.35 crore on May 25, 2016. Appreciation in the rupee against dollar too supported market sentiment. Indian rupee firmed up by 4 paise to 67.29 against the dollar in early trade on increased selling of the US currency by exporters and banks. However, investors remained nerves with the report that confidence among Indian businesses fell to a five month low in May, and with rising inflationary pressure, there is limited scope for the RBI to cut rates. This is the third consecutive decline and was led solely by the manufacturing sector, while sentiment among construction and service sector firms improved.

On the global front, Asian markets were trading mostly in red on Thursday amid worries about a U.S. rate hike and that a rally in oil prices may not be sustainable. While energy stocks outperformed, a slump in mainland China stocks to 2-1/2 month lows dampened any broader interest in riskier assets in Asia, offsetting overnight gains on Wall Street. US stocks climbed a second straight day on Wednesday, boosted by energy stocks. Meanwhile, Benchmark U.S. crude rose another 1.9 per cent to $49.56 a barrel in New York after the U.S. government reported a larger-than-expected drop in fuel stockpiles last week.

Back home, stocks from Capital Goods, Banking and information technology (IT) were supporting the markets’ uptrend, while those from Consumer Durables and Metal counters were adding to the underlying cautious undertone. In scrip specific development, shares of Strides Shasun gained after the company has received tentative approval from the United States Food & Drug Administration (USFDA) for Efavirenz Tablet USP, 600 mg. On the other hand, Container Corporation Of India has declined the company has posted a fall of 51.83% in its net profit at Rs 141 crore for the quarter ended March 31, 2016 as compared to Rs 292.71 crore for the same quarter in the previous year.

The market breadth on BSE was positive, out of 2108 stocks traded, 1196 stocks advanced, while 796 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26037.77, up by 156.60 points or 0.61% after trading in a range of 25941.51 and 26068.61. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.43%, while Small cap index up by 0.51%.

The top gaining sectoral indices on the BSE were Capital Goods up by 6.02%, Bankex up by 0.53%, TECK up by 0.48%, IT up by 0.42% and Power up by 0.41%, while Consumer Durables down by 0.15% and Metal down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 9.71%, BHEL up by 2.32%, ONGC up by 1.59%, Dr. Reddys Lab up by 1.43% and GAIL India up by 1.15%. On the flip side, Sun Pharma Inds. down by 1.31%, NTPC down by 1.06%, Asian Paints down by 0.84%, ITC down by 0.48% and HDFC down by 0.43% were the top losers.

Meanwhile, the Securities and Exchange Board of India (Sebi) has announced to put in place stringent norms for high-frequency trades along with higher penalties for misuse, initiate strong action against auditors for lapses and expressed hope that P-Note users will start directly investing in the Indian market. Outlining the priorities for 2016-17, Sebi chairman U.K. Sinha said the regulator will also significantly reduce the number of listed entities over the course of this year and is planning to have an online platform for sale and purchase of mutual funds.

Sinha raising concern over misuse of the high-frequency or algo trade, said a strong set of norms will be in place in three to four months to ensure fair opportunity for trading entities. He said that “While Sebi is among the first regulators to have some kind of regulations in place on HFT (high- frequency trading), there is a need to make it stronger. We are working on that. It is not only about misuse of algo trade and co-location facilities, but also about fairness, and we are trying to address the issue. We are now looking to increase penalty for its misuse.” The regulator will soon float a discussion paper in this regard.

The watchdog plans to seek delisting of over 4,200 listed companies whose shares are not being traded actively, while promoters refusing to provide an exit opportunity to investors will face strict penal action.  As part of efforts to further strengthen the domestic markets and protect investor interests, Sebi is also eyeing more strong regulations for credit rating agencies, which, among others, will require such entities to disclose reasons for their actions.

Sinha close on the heels of making norms stricter for Participatory Notes (P-Notes), ruled out any concession for hedge funds with riskier profile in Indian markets, and expressed hope that P-Note users will start directly investing in the Indian market. He noted that their share in foreign portfolio investments has already fallen to a record low of 9.3%.

The CNX Nifty is currently trading at 7975.00, up by 40.10 points or 0.51% after trading in a range of 7948.50 and 7986.35. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 9.59%, Idea Cellular up by 4.52%, BHEL up by 2.37%, Ambuja Cement up by 2.20% and ONGC up by 1.67%. On the flip side, Bharti Infratel down by 1.43%, Sun Pharma down by 1.11%, NTPC down by 0.99%, Asian Paints down by 0.83% and Hindalco down by 0.79% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 0.24%, Shanghai Composite down by 0.97%, Jakarta Composite down by 0.13%, Taiwan Weighted down by 0.06% and KOSPI Index was down by 0.12%. On the flip side, FTSE Bursa Malaysia KLCI was up by 0.69% and Nikkei 225 was up by 0.46%.