Benchmarks continue to trade in red in noon session

In an extremely range-bound session of trade, Indian bourses continued to trade in red in the noon session as funds and retail investors indulged in booking profits at prevailing levels. Sentiments around the globe remained cautious after the reports that US President Donald Trump is being investigated by a special counsel for possible obstruction of justice and crude oil’s steep fall of about 3% to a seven-month low. On the domestic front, investors turned jittery after the report that the likely increase in farm loan waivers will dampen sentiments on PSU banks, NBFCs. The agri stress indicates that Tamil Nadu, Karnataka and Haryana may follow up with farm loan waivers, taking the total farm loan waivers to about $28 billion from $10 billion. Adding pessimism among traders, four major lenders SBI, PNB, Axis Bank and HDFC Bank voiced concerns over stress in the telecom sector and flagged possibility of defaults by debt-laden operators at a meeting with an inter-ministerial group.

On the global front, Asian markets were trading mostly lower on Thursday, after the Federal Reserve raised interest rates as expected. The Federal Open Market Committee have voted to raise fed funds to between 1% and 1.25%, and will start ‘gradual’ shrinking of its $4.5 trillion balance sheet ‘this year.’ Lower oil prices took a toll on energy-related shares across the region, while Japan's benchmark slipped as the yen gained against the dollar. Oil prices wallowed near their lowest levels in seven months early on Thursday, hurt by high global inventories and doubts over OPEC's ability to implement production cuts.

Back home, stocks from Realty, Healthcare and Basic Materials counters were supporting the markets’ uptrend, while those from Oil & Gas, PSU and IT counters were adding to the underlying cautious undertone. In scrip specific development, Central Bank of India declined after Reserve Bank of India (RBI) put the bank under prompt corrective action in view of high net non-performing assets (NPA) and negative return on assets (RoA). On the other hand, SpiceJet gained on reports that it is likely to place an order for the Boeing 737 Max-10 planes at the aircraft’s debut at the Paris Air Show later this month, thus becoming one of its launch customers globally.

The BSE Sensex is currently trading at 31150.87, down by 5.04 points or 0.02% after trading in a range of 31113.43 and 31229.44. There were 12 stocks advancing against 17 stocks declining on the index, while stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 0.11%, while Small cap index up by 0.60%.

The top gaining sectoral indices on the BSE were Realty up by 1.59%, Healthcare up by 1.24%, Basic Materials up by 0.32%, Telecom up by 0.30% and FMCG up by 0.26%, while Oil & Gas down by 0.75%, PSU down by 0.56%, IT down by 0.34%, TECK down by 0.28% and Capital Goods down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 1.61%, Sun Pharma up by 1.56%, Wipro up by 1.48%, Reliance Industries up by 1.46% and Cipla up by 1.27%. On the flip side, GAIL India down by 1.71%, Coal India down by 1.26%, TCS down by 1.06%, Larsen & Toubro down by 0.92% and ONGC down by 0.91% were the top losers.

Meanwhile, acting on the request from market participants for review of margin trading facility (MTF) to enable greater participation, the capital market regulator, Securities and Exchange Board of India (SEBI) has issued a circular specifying the comprehensive review of MTF framework including disclosure norms, leverage & exposure limits and eligibility requirements for stock brokers to provide it to clients.

As per the circular, the corporate brokers with a net worth of at least Rs 3 crore will be eligible to offer MTF to their clients and the net worth for the purpose of MTF shall be as specified in SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. Besides, the stock brokers would need to submit a half-yearly certificate from an auditor confirming the net worth to the stock exchange. The SEBI further noted that at any point of time, the total indebtedness of a stock broker shall not exceed 5 times of its net worth.

The circular though mentioned that the brokers may use their own funds or borrow from scheduled commercial banks or Non Banking Financial Companies (NBFCs) regulated by Reserve Bank of India for providing MTF, while they are not allowed to borrow funds from any other source. Also, the total exposure of the broker towards MTF should not exceed the borrowed funds and 50 per cent of his net worth. Brokers have to ensure that the exposure to a single client does not exceed 10 per cent of its 'total exposure'. Besides, exposure towards stocks purchased under MTF and collateral kept in the form of stocks need to be well diversified.

Sebi has further guided that in order to avail margin trading facility, initial margin required for Group I stocks available for trading in the F & O Segment will be VaR in addition to three times of applicable ELM, while for Group I stocks other than F&O stocks, shall be the VaR in addition to five times of applicable ELM. The initial margin payable by the client to the  Stock Broker shall be in the form of cash, cash equivalent or Group I equity shares, with appropriate hair cut as specified  in  SEBI circular dated December 16, 2016.

The CNX Nifty is currently trading at 9601.45, down by 16.70 points or 0.17% after trading in a range of 9589.40 and 9621.40. There were 16 stocks advancing against 34 stocks declining on the index, while stock remained unchanged.

The top gainers on Nifty were Aurobindo Pharma up by 6.06%, Dr. Reddy’s Lab up by 1.59%, Cipla up by 1.46%, Reliance Industries up by 1.42% and Sun Pharma up by 1.33%. On the flip side, BPCL down by 3.01%, GAIL India down by 1.85%, IOC down by 1.63%, Coal India down by 1.40% and HCL Tech down by 1.23% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 0.95%, Nikkei 225 dropped 0.17%, KOSPI Index decreased by 0.44% and Jakarta Composite slipped 0.22%. On the flip side, Shanghai Composite increased by 0.11%, Taiwan Weighted surged 0.16% and FTSE Bursa Malaysia KLCI was up by 0.02%.