Benchmarks gain momentum in late afternoon session

Indian equity benchmarks gained momentum and are trading with a gain of around half a percent in late afternoon session, with frontline gauges recapturing their crucial 28,300 (Sensex) and 8,750 (Nifty) levels. Sentiment remained upbeat with the report that India moved up 16 positions to rank 39th on a global index of the world's most competitive economies, reflecting improved monetary and fiscal policies. Though, investors were anxiously awaiting the monetary policy review on October 4, the first to be held under RBI Governor Urjit Patel and the first to be decided by a six-member panel. Market participant also remained sideline ahead of September month F&O expiry tomorrow.

On the global front, European shares edged higher ahead of OPEC Meeting later in the day. Back home, on the sectoral front, banking stocks were trading in green with the private report stating that domestic banks, both public and private players, have managed to climb the wall of worries arising out of bad asset quality, and most of these stocks have reversed their losses in last one year. In scrip specific development, Bharti Airtel move up, after the company has launched new International Roaming (IR) packs that redefine the value proposition for customers traveling abroad.

The BSE Sensex is currently trading at 28338.80, up by 115.10 points or 0.41% after trading in a range of 28198.30 and 28351.00. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.91%, while Small cap index was up by 1.01%.

The gaining sectoral indices on the BSE were Metal up by 1.63%, Realty up by 1.54%, Capital Goods up by 1.30%, Auto up by 1.15%, PSU up by 1.11%, while IT down by 0.02% was the losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.43%, Tata Steel up by 2.23%, Tata Motors up by 2.10%, Adani Ports &Special up by 2.06% and Bharti Airtel up by 1.88%. On the flip side, Reliance Industries down by 1.76%, Hindustan Unilever down by 1.00%, Coal India down by 0.63%, Sun Pharma down by 0.57% and HDFC Bank down by 0.42% were the top losers.

Meanwhile, in order to regulate algorithmic or 'algo' trading in the commodity market, the market regulator Securities and Exchange Board of India (SEBI) has issued detailed guidelines for regulation of 'algo' trading. Under the new norms, commodity exchanges will be able to process 20 orders per second from a user, irrespective of the order size. In case the order-to-trade ratio of a member reaches 500 during a trading day, the member will not be allowed to place any order for the first 15 minutes on the next trading day as a cooling off action.

The guidelines also states that stock exchanges will have to ensure that immediate or cancel orders are not placed through the algo trade route. It added that only a portion of orders placed through trading terminals are executed due to non-fulfilment of certain conditions or cancellation by clients. Based on the daily order-to-trade ratio of the client, an additional charge ranging from 1-5 paise will be imposed on all algo orders.

For the purpose of calculation of daily order-to-order ratio, all algorithmic orders, i.e. order entry, order modifications and order cancellation shall be considered. Sebi said that the exchanges would have to continuously study the performance of its systems and, if necessary, undertake system upgrade, including periodic upgrade of its surveillance system, in order to keep pace with the speed of trade and volume of data that may arise through algo trading. The regulator asked commodities exchanges to submit a monthly report on algo trading, including its percentage in total trade and the number of members of using such trading.

The regulator proposed that, the capacity of trading system of the Exchange should be at least four times the peak order load encountered and the Exchange system should be upgraded on a regular basis. Maintaining efficiency for market participants, Sebi has not permitted stock exchange to host algorithmic trading via CTCL terminals. The regulator said that Co-Location, Co-Hosting or any other facility or arrangement which puts some members in disadvantageous position vis-à-vis other members shall not be allowed. It said that there will be some economic disincentives for algo trades based on the order-to-order ratio.

Algorithmic trading, mostly used by large institutional investors, refers to orders generated at a super-fast speed by use of advanced mathematical models that involve automated execution of trade.

The CNX Nifty is currently trading at 8751.75, up by 45.35 points or 0.52% after trading in a range of 8703.15 and 8755.80. There were 41 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 4.09%, Hindalco up by 2.80%, Bank of Baroda up by 2.62%, SBI up by 2.49% and BHEL up by 2.37%. On the flip side, Reliance Industries down by 1.76%, Hindustan Unilever down by 1.38%, Tech Mahindra down by 1.12%, Coal India down by 0.87% and Sun Pharma down by 0.71% were the top losers.

Asian market were trading mixed; Nikkei 225 decreased 218.53 points or 1.31% to 16,465.40, Shanghai Composite dropped 10.31 points or 0.34% to 2,987.86 and  KOSPI Index was down by 9.76 points or 0.47% to 2,053.06. On other hand, Jakarta Composite increased 0.97 points or 0.02% to 5,420.58, FTSE Bursa Malaysia KLCI was up by 1.12 points or 0.07% to 1,665.84 and Hang Seng increased 47.75 points or 0.2% to 23,619.65. Taiwan stock exchange was closed for the day due to Typhoon MEGI.

European Markets were trading in green; France’s CAC surged 61.24 points or 1.39% to 4,459.92, UK’s FTSE 100 increased 65 points or 0.95% to 6,872.67 and Germany’s DAX shined 148.38 points or 1.43% to 10,509.86.