Benchmarks continue firm trade ahead of F&O expiry

Indian equity benchmarks continued their firm trade in the late morning session on account of buying in frontline blue chip counters ahead of F&O expiry. The sentiments were on optimistic note after Commerce and Industry Minister Nirmala Sitharaman pitched for as much as 200 basis points or 2%, interest rate cut by RBI to help the cash-starved MSME sector. Separately, in a big boost to infrastructure companies, NITI Aayog is preparing a Cabinet note for infra related ministries - road transport, urban development, petroleum - to ease arbitration norms and release stalled payments of infra companies. This comes amid reports that about Rs 1.65 lakh crore of banks’ Rs 3.65 lakh crore exposure to the construction sector is stressed. The rupee recovered against the US dollar in early trade at the Interbank Foreign Exchange on increased selling of the American currency by exporters and banks, provided some upside support. The foreign fund inflows and a higher opening in the domestic equity market also supported the domestic unit. Traders were seen piling position in Realty, FMCG and Consumer Durables stocks, while selling was witnessed in IT and TECK sector stocks. In scrip specific development, cement stocks like Sagar Cement, NCL Industries, Rain Industries and KCP were trading firm as cement prices have been hiked. The cement demand seems to be rising in the southern states where the cement has seen a hike in price by 12-15 percent. In Andhra Pradesh and Telangana, cement prices have risen by Rs 30-40 per bag in last two days. On the other hand, Monsanto India was trading in red as it has withdrawn an application seeking approval for its next generation of genetically modified cotton seeds in India, a major escalation in a long-running dispute between New Delhi and the world’s biggest seed maker.  The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. August 2016 series to next month i.e. September 2016 series. The near month August 2016 derivatives contracts will expire today i.e. August 25, 2016.

On the global front, Asian stocks were trading mostly in green, ahead of Federal Reserve Chairwoman Janet Yellen's speech scheduled tomorrow which could provide hints about the timing of the next rate hike from the Fed. China’s central bank has urged banks to spread out the tenors of their loans, hinting at its displeasure with a recent trend of banks focusing on overnight lending. The People’s Bank of China reiterated to banking circles that its monetary policy bias to provide reasonable ample liquidity is unchanged as it nudged the financial system to align lending maturities and avoid a mismatch with short-term, particularly overnight funds. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,650 and 28,100 levels respectively. The market breadth on BSE was positive in the ratio of 1322:783, while 146 scrips remained unchanged.

The BSE Sensex is currently trading at 28122.85, up by 62.91 points or 0.22% after trading in a range of 28097.77 and 28154.21. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index was up by 0.49%.

The gaining sectoral indices on the BSE were Realty up by 0.91%, FMCG up by 0.90%, Consumer Durables up by 0.63%, Auto up by 0.42% and Capital Goods up by 0.41%, while IT down by 0.61% and TECK down by 0.59% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.82%, Axis Bank up by 1.48%, Power Grid Corporation up by 1.12%, Cipla up by 0.90% and Bajaj Auto up by 0.74%.

On the flip side, Adani Ports & Special Economic zone down by 2.55%, Wipro down by 1.51%, Infosys down by 1.21%, Bharti Airtel down by 0.55% and NTPC down by 0.53% were the top losers.

Meanwhile, in order to ease the cost of credit for the micro, small and medium enterprises (MSME) sector, Commerce and Industry Minister Nirmala Sitharaman has urged Reserve Bank of India (RBI) to cut interest rate by as much as 200 basis points (bps) or 2%. Though, she did not specify if it would be at one go or over a period of time.

The Sitharaman said that the cost of credit in India is high. Particularly MSMEs, which create a lot of jobs and contribute to exports, are all hard pressed for money and for them, approaching a bank is no solution because of the prevailing rate of interest. Therefore, she would take up the matter with the Finance Minister about directing banks to pass on benefits of the rate cuts to the industry. She added that every sector approaching the commerce ministry was all for access to affordable credit.

Minister further said that the interest subvention scheme announced for exporters has been helpful in dealing with the impact of global demand slowdown. After rising for the first time in 18 months in June, exports shrank again in July, contracting 6.84 per cent, due to decline in shipments of engineering goods and petroleum products. She added that the e-commerce policy was being looked at to address any discrepancies. Besides, an online grievance redressal mechanism on complaints against e-tailers will be created under Department of Industrial Policy and Promotion (DIPP) with representation from the Ministry of Consumer Affairs.

Repo rate is the rate at which the central bank lends money to commercial banks in the event of any shortfall of funds. The repo rate now stands at 6.5% since April this year citing inflationary concerns, is scheduled to hold its next policy review on October 4 and it will be presented by Urjit Patel, who will take charge as governor on September 4.

The CNX Nifty is currently trading at 8668.35, up by 18.05 points or 0.21% after trading in a range of 8664.05 and 8683.05. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were ITC up by 1.84%, Axis Bank up by 1.40%, HCL Tech up by 1.18%, Power Grid Corporation up by 1.15% and Aurobindo Pharma up by 1.12%.

On the flip side, Adani Ports & Special Economic Zone down by 2.50%, Wipro down by 1.62%, Bharti Infratel down by 1.38%, Infosys down by 1.22% and Zee Entertainment down by 1.05% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 0.28 points or 0.01% to 2,044.04, FTSE Bursa Malaysia KLCI increased 3.22 points or 0.19% to 1,685.28, Hang Seng increased 20.9 points or 0.09% to 22,841.68, Jakarta Composite increased 23.14 points or 0.43% to 5,427.13 and Taiwan Weighted increased 71.45 points or 0.79% to 9,088.83.

On the other hand, Shanghai Composite decreased 33.94 points or 1.1% to 3,051.94 and Nikkei 225 decreased 26.04 points or 0.16% to 16,571.26.