Benchmarks continue to hold their head above water

After making a cautious start, Indian benchmark indices continue to hold their head above water but in absence of any positive trigger, amid expiry of December futures and options (F&O) contracts later today. Sentiments got some support with report that the Cabinet Committee on Economic Affairs (CCEA) has approved the Road Connectivity Project for Left Wing Extremism (LWE) Affected Areas. Besides, covering-up of pending short positions with Thursday being this year’s last session of the expiry in the derivatives segment supported the upside. Going forward, the market may turn volatile as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. December 2016 series to next month i.e. January 2017 series. Investors remained cautious with report that over 90 percent of junked notes are already deposited in banks, dimming the expectation that Reserve Bank of India (RBI) will be able to give a substantial dividend to the government.

On the global front, Asian markets were trading mostly in red on Thursday, following Wall Street, which suffered a mild setback after weeks of gains, while the dollar faded against the yen in typical year-end profit taking. Sentiments took a hit after contracts to buy previously-owned US homes fell in November to their lowest level in nearly a year, a sign that rising interest rates could be weighing on the housing market. Also adding to the pessimism is the light global trading ahead of the New Year's holidays, keeping many players wary of taking action. Meanwhile, Japanese market was leading the decliners as the yen climbed against the dollar.

Back home, stocks from Oil & Gas, PSU and Consumer Durables counters were supporting the markets uptrend, while those from Capital Goods and Auto counters were adding to the underlying cautious undertone. In scrip specific development, Rajesh Exports has surged after the company bagged an export order worth Rs 929 crore of designer range of gold & diamond studded jewellery & medallions from UAE. Moreover, JK Tyre & Industries rose after the company received its board’s approval to raise up to Rs 1,000 crore by issuing securities.

The market breadth remained optimistic as there were 1454 shares on the gaining side against 721 shares on the losing side, while 136 shares remained unchanged.

The BSE Sensex is currently trading at 26215.24, up by 4.56 points or 0.02% after trading in a range of 26166.67 and 26429.63. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.57%, while Small cap index up by 0.66%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.92%, PSU up by 0.59%, Consumer Durables up by 0.52%, IT up by 0.46% and Metal up by 0.40%, while Capital Goods down by 0.32%, Auto down by 0.06% and Bankex down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.19%, TCS up by 0.92%, HDFC up by 0.54%, Hindustan Unilever up by 0.47% and NTPC up by 0.47%. On the flip side, Adani Ports &Special down by 1.47%, Larsen & Toubro down by 0.97%, Sun Pharma down by 0.82%, ITC down by 0.55% and Tata Motors down by 0.42% were the top losers.

Meanwhile, in order to provide relief to people hit by demonetization, the Reserve Bank of India (RBI) has extended the grace period for banks, non-banking finance companies (NBFC) and microfinance companies to classify bad loans by 30 days in the case of agriculture and term loans of up to Rs 1 crore. As per RBI notification, it has been decided to provide 30 days, in addition to the 60 days provided on November 21, thus, borrowers together get 90 days breather from getting the account classified under non-performing asset (NPA) category.

According to the RBI, the relief will be applicable to running working capital accounts (OD/CC) or crop loans where the sanctioned limit is Rs 1 crore or less and term loans for business purposes - secured or otherwise - where the sanctioned amount is Rs 1 crore or less on the books of any bank or any NBFC, including a microfinance company. This will also include agriculture loans. Further, dues payable after January 1, 2017 will be covered by the instructions for the respective entities.

Recently, the RBI had given additional 60 days for repayment incentive of 3 percent interest subsidy to farmers who repay their crop loans due in Nov-Dec. The surprise announcement made by Prime Minister Narendra Modi on November 8, to scrap Rs 500 and 1,000 notes resulted in a cash crunch in the market leading to slowdown in business. As a result, the repayment capacity of the borrowers were impacted and there was fear of loan default rising.

The CNX Nifty is currently trading at 8046.00, up by 11.15 points or 0.14% after trading in a range of 8020.80 and 8060.55. There were 34 stocks advancing against 16 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were BPCL up by 1.89%, Idea Cellular up by 1.47%, Ambuja Cement up by 1.34%, HCL Tech up by 1.27% and ONGC up by 1.08%. On the flip side, Adani Ports &Special down by 1.60%, Zee Entertainment down by 1.02%, Larsen & Toubro down by 0.87%, ITC down by 0.59% and Sun Pharma down by 0.57% were the top losers.

Asian markets were trading mostly in red; Shanghai Composite decreased 0.1%, Nikkei 225 declined 1.21%, Hang Seng slipped 0.12% and Taiwan Weighted was down by 0.53%. On the flip side, KOSPI Index rose 0.07%, FTSE Bursa Malaysia KLCI increased 0.2% and Jakarta Composite was up by 1.17%.