Benchmarks make cautious start tailing sluggish global cues

Indian equity benchmarks have made a cautious start and are trading flat in early deals on Wednesday tracking sluggish global cues, amid increased speculation that the US will raise interest rates. However, traders took some encouragement with report that Indirect tax collection rose by about 30.8 percent during April-June to Rs 1,99,970 crore, from Rs 1,52,740 crore collected in the year-ago period. Some support also came with report that foreign portfolio investors (FPIs) bought shares worth a net Rs 684.73 crore yesterday as per provisional data released by the stock exchanges.

In the overseas markets, Asian shares were trading mostly in red at this point of time after the US Federal Reserve Bank president said the Fed could raise interest rates as soon as September, prompting investors to pause after rallies in recent weeks.

Back home, banking shares trade mixed, as the outgoing RBI governor Raghuram  Rajan has called for a level playing field between public and private sector banks, besides expressing concern over the rush into retail credit at the expense of project finance at a time when India needs massive infrastructure funding. In scrip specific development, Infosys extended yesterday’s losses and is down over 1% after a key client Royal Bank of Scotland (RBS) scrapped a project to set up a separate bank in the United Kingdom, for which IT major was a key technology partner.

The BSE Sensex is currently trading at 28080.66, up by 16.05 points or 0.06% after trading in a range of 28024.36 and 28136.10. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.19%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were Auto up by 1.04%, Metal up by 0.85%, Telecom up by 0.81%, Consumer Discretionary Goods & Services up by 0.64% and PSU up by 0.48%, while IT down by 0.92%, TECK down by 0.67%, Consumer Durables down by 0.09%, Power down by 0.06% and Realty down by 0.04% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 4.00%, Bajaj Auto up by 2.48%, Axis Bank up by 2.07%, Coal India up by 1.79% and Bharti Airtel up by 1.30%. On the flip side, TCS down by 1.42%, Infosys down by 1.28%, GAIL India down by 0.69%, SBI down by 0.63% and ICICI Bank down by 0.52% were the top losers.

Meanwhile, Reserve Bank India’s (RBI) outgoing governor Raghuram Rajan has suggested empowering public sector banks (PSBs) boards to take all major governance decisions freely without having multiple constituencies to satisfy, in order to phase out the government’s role in top-level appointments at PSB. The Governor also proposed withdrawing the central bank nominees from their boards.

A variety of authorities like Parliament, the Department of Financial Services, the Bank Board Bureau, the board of the bank, the vigilance authorities and various regulators and supervisors including the RBI monitor the performance of the PSBs. On temporary bases till the bank boards are professionalised, Governor favored the mandate for this to be vested with the fledgling Bank Board Bureau (BBB) so that it can help improve the governance and management structures at the PSBs by allowing it to fully handle the appointments.

Governor also said with so many overlapping constituencies to satisfy, it is a wonder that bank management has time to devote to the management of the bank. He stressed on the need to streamline and reduce the overlaps between the jurisdictions of the authorities, while specifying 'clear triggers or situations' where one authority's oversight is invoked. He said agencies like, CAG and CVC, should get involved only in extraordinary situations where there is evidence of malfeasance and not when legitimate business judgment has gone wrong. He further said though the most pressing task for public sector banks is to clean up their balance sheets, a process which is well underway, a parallel task is to improve their governance and management.

For the Finance Ministry's Department of Financial Services, the nodal department for banking sector, Rajan favored programme-specific roles (such as for Jan Dhan scheme) as also coordinating and developmental roles. On RBI, he said, it would perform a purely regulatory role and withdraw its representatives on bank boards, while adding this will require legislative change. Over time, RBI should also empower boards more, for instance, offering broad guidelines on compensation to boards but not requiring every top compensation package be approved.

The CNX Nifty is currently trading at 8641.70, down by 0.85 points or 0.01% after trading in a range of 8626.55 and 8657.60. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 4.03%, Bajaj Auto up by 2.31%, Axis Bank up by 2.06%, Coal India up by 2.00% and Bharti Airtel up by 1.64%. On the flip side, TCS down by 1.44%, Infosys down by 1.35%, Ultratech Cement down by 0.99%, Ambuja Cement down by 0.95% and ACC down by 0.95% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted slipped 14.58 points or 0.16% to 9,095.78, KOSPI Index decreased 14.51 points or 0.71% to 2,033.25, Shanghai Composite shed 5.95 points or 0.19% to 3,104.09 and FTSE Bursa Malaysia KLCI was down by 4.37 points or 0.26% to 1,695.52.

On the flip side, Jakarta Composite gained 51.29 points or 0.96% to 5,371.85, Hang Seng increased 52.67 points or 0.23% to 22,963.51 and Nikkei 225 was up by 99.91 points or 0.6% to 16,696.42.