Indian benchmarks trade near day's high; Nifty moves above 8,800 mark

Indian benchmark indices extended early gains to continue firm trade in noon session, hovering near intra-day high level, as investors bet the central bank would ease interest rates this week to help revive demand after Prime Minister Narendra Modi's currency crackdown last year. Slowing inflation and a fiscally responsible budget may sway the Reserve Bank of India (RBI) to cut interest rates on Wednesday. The central bank is scheduled to announce the monetary policy on February 8, a week after the Budget was unveiled. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Some support also came with Economic Affairs Secretary Shaktikanta Das’ statement expressing confidence that the economy will grow upwards of 7 per cent next fiscal. He reiterated that there will be transient impact of demonetisation on the economy, but it will not spill over to the next fiscal. The Economic Affairs Secretary taking a dig at global rating agencies for failing to upgrade India's sovereign rating despite significant improvement in macroeconomic parameters, has said the agencies are several steps behind from reality and are missing out on something which only they can best explain. Meanwhile, Auto stocks gained traction on Union Minister Nitin Gadkari’s statement that government is keen on implementing vehicle policy that aims at scrapping 15-year old commercial vehicles in the first phase and it will send the proposal to GST Council after Cabinet nod.

On the global front, Asian markets started the week on an optimistic note, with most of the regional indices gaining over quarter percent on Monday, cheered by the rise on Wall Street after President Donald Trump moved to scale back regulations on the financial industry last week. Banks across most indices led the rally as expectation of credit expansion saw financials lead the rally in stocks. Meanwhile, the latest survey from Caixin showed on Monday that the services sector in China continued to expand in January, albeit at a slower pace, with a PMI score of 53.1. That's down from 53.4 in December, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.

Back home, barring IT and technology, all other BSE sectoral indices were trading in the green. Among them, Realty index gained the most by 3.35 percent, followed by Banking 1.21 percent, Power 1.16 percent and FMCG 1.01 percent. In scrip specific development, Finolex Industries surged after the company reported 69.53% rise in its net profit at Rs 71.95 crore for the quarter ended December 31, 2016 as compared to Rs 42.44 crore for the same quarter in the previous year. On the other hand, Jet Airways (India) declined after the company reported 69.52% fall in its net profit at Rs 142.38 crore for third quarter ended December 31, 2016 as compared to Rs 467.11 crore for the same quarter in the previous year.

The market breadth remained optimistic, as there were 690 shares on the gaining side against 1699 shares on the losing side, while 119 shares remained unchanged.
The BSE Sensex is currently trading at 28460.99, up by 220.47 points or 0.78% after trading in a range of 28340.39 and 28477.30. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.94%, while Small cap index up by 1.03%.

The top gaining sectoral indices on the BSE were Realty up by 3.35%, Bankex up by 1.21%, Power up by 1.16%, FMCG up by 1.01% and Capital Goods up by 0.97%, while IT down by 0.02% and TECK was down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were Lupin up by 4.43%, ICICI Bank up by 2.77%, Sun Pharma up by 2.63%, Cipla up by 2.01% and Asian Paints up by 1.58%. On the flip side, Dr. Reddy’s Lab down by 0.75%, Coal India down by 0.63%, Bajaj Auto down by 0.43%, TCS down by 0.26% and Mahindra & Mahindra down by 0.19% were the top losers.

Meanwhile, in order to provide additional hedging products for Non-Residents Indians (NRIs), the Reserve Bank of India (RBI) has allowed NRIs access to the exchange traded currency derivatives (ETCD) market to hedge currency risk arising out of their investments in India under Foreign Exchange Management Act (FEMA), 1999. Under current regulations, NRIs are permitted to hedge their rupee currency risk through over the counter (OTC) transactions with banks authorised to deal in foreign exchange.

As per RBI notification, NRIs may take positions in the currency futures/exchange traded options market to hedge the currency risk on the market value of their permissible (under FEMA, 1999) rupee investments in debt and equity and dividend due and balances held in NRE accounts. RBI added that the access to ETCD will be subject to certain conditions. Also, NRIs will have to designate bank for the purpose of monitoring and reporting their combined positions in the OTC and ETCD segments.

The central bank specified that the responsibility of ensuring the existence of the underlying exposure rests with the NRI. It also said that if the magnitude of exposure through the hedge transactions exceeds the magnitude of underlying exposure, the concerned NRI shall be liable to such penal action as may be taken by Reserve Bank of India under the FEMA.

The CNX Nifty is currently trading at 8804.00, up by 63.05 points or 0.72% after trading in a range of 8779.85 and 8809.10. There were 37 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Lupin up by 4.44%, Ambuja Cement up by 4.12%, ACC up by 4.08%, ICICI Bank up by 2.66% and Sun Pharma up by 2.59%. On the flip side, Idea Cellular down by 1.87%, Coal India down by 0.90%, Dr. Reddy’s Lab down by 0.78%, Bajaj Auto down by 0.56% and HCL Tech down by 0.55% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI rose 0.11%, KOSPI Index gained 0.16%, Shanghai Composite increased 0.25%, Nikkei 225 gained 0.25%, Jakarta Composite jumped 0.37%, Taiwan Weighted added 0.87% and Hang Seng was up by 0.55%.