Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade in late morning session, on account of buying in frontline blue chip counters. The rupee opened higher against dollar on account of selling of American currency by bank and exporters. Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 384.77 crore on Wednesday with gross purchases and gross sales of Rs 7272.13 crore and Rs 6887.36 crore, respectively, as per provisional data. The sentiments were on upbeat mood after Japanese financial services major reported that India’s GDP growth witnessed a trough in January-March quarter, but going forward the economy is expected to see gradual improvement in growth numbers primarily driven by consumption. The report added that consumption has recovered from the demonetization shock and while external demand may be down, it remains supportive of growth. Some GST-related disruptions could spill into early part of the third quarter. But good monsoons, strong rural wage growth, pay hikes for state government employees, lower lending rates and a modest pick-up in external demand may push GDP growth to 7.1% in September quarter and further to 7.7% in the next quarter. Another foreign brokerage firm enlightened that loan growth in the country is expected to pick up to 15 per cent in 2017-18, from 9.1 per cent in the previous fiscal. The loan growth in the country is now at a historic low and is expected to bottom out. The report further said RBI open market operation (OMO) is also expected to push up loan supply and pull down bank lending rates, which in turn will spur loan demand.

Meanwhile, Niti Aayog CEO Amitabh Kant said that the government is set to give private investment in infrastructure a big boost as steps such as a dedicated financial institution for big-ticket projects, fast-track dispute resolution and flexible structuring of public-private-partnership (PPP) projects are on the horizon. Separately, India has made a strong pitch to the World Bank seeking improvement in the country’s ranking on the ease of doing business from a poor 185 to among top 25. The Centre on Wednesday made its first presentation before a World Bank team and showcased how its procedures, cost of construction and time taken in approvals have improved manifold. In the ease of doing business rankings for construction permits for 2017, announced last year by the World Bank, India was ranked 185 among the 190 countries surveyed. 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. June 2017 series to next month i.e. July 2017 series. The near month June 2017 derivatives contracts will expire today i.e. June 29, 2017.

Traders were seen piling up position in Metal, Telecom and Basic Materials stocks. In scrip specific development, Eris Lifesciences was trading in red after making a modest debut on BSE. The IPO, which was sold in Rs 600-603 band during June 16-20, was subscribed 3.29 times. Rashtriya Chemicals and Fertilisers (RCF) was trading under pressure as the government will sell over 2.75 crore equity shares in the company on June 29-30 for about Rs 200 crore as part of its plan to divest shares in PSUs. The floor price would be Rs 74.25 per equity share.

On the global front, Asian shares were trading in green, with finance stocks broadly leading gains after all major US financial institutions received approval from the Federal Reserve to ramp up dividend payouts and share buybacks. Japan’s retail sales fell to a seasonally adjusted annual rate of 2.0%, from 3.2% in the preceding month. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,550 and 31,000 levels respectively. The market breadth on BSE was positive in the ratio of 1633:425, while 91 scrips remained unchanged.

The BSE Sensex is currently trading at 31024.69, up by 190.37 points or 0.62% after trading in a range of 30905.86 and 31069.35. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.78%, while Small cap index was up by 1.22%.

The gaining sectoral indices on the BSE were Metal up by 1.53%, Telecom up by 1.19%, Basic Materials up by 1.18%, TECK up by 1.04%, IT up by 1.01%.

The top gainers on the Sensex were Axis Bank up by 3.31%, Tata Steel up by 2.00%, Infosys up by 1.87%, Mahindra & Mahindra up by 1.34% and Bharti Airtel up by 1.30%.

On the flip side, Sun Pharma down by 1.00%, Kotak Mahindra Bank down by 0.60%, Lupin down by 0.39% and Wipro down by 0.37% were the top losers.

Meanwhile, the former Reserve Bank of India (RBI) governor Y V Reddy has said that India needs to find its own way to attain capital adequacy ratio (CAR) for public sector banks (PSBs) as required by the comprehensive Basel-III norms. He said that these banking norms are sort of guidelines in international standards. He also said that in principle they want to go towards the Basel III banking norms and added that the pace of implementation is left to each country.

Reddy said ‘I think it is appropriate that India decided its own path to the comprehensive basel III norms. So I would not consider it as an unwelcome thing, if it is being done wisely, I am sure.’ The Basel-III norms have been implemented in a phased manner by the Reserve Bank of India since April 1, 2013. They are to be fully implemented as on March 31, 2019. As per the norms, banks need to maintain a minimum common equity ratio of 8 percent and total capital ratio of 11.5 percent by March 2019.

Recently, the Union Finance Ministry, incidentally, has made a case for extending the RBI’s deadline for applying Basel III banking norms in a view of higher capital requirement to deal with bad loans which have reached deplorable levels. In a recent meeting with the RBI, senior officials from the Finance Ministry pitched for deferring the implementation of Basel III capital regulations beyond March 2019, and said that it will help banks meet the capital needs and increase credit flow to productive sectors along with balance sheet clean-up.

The CNX Nifty is currently trading at 9552.60, up by 61.35 points or 0.65% after trading in a range of 9522.45 and 9562.75. There were 44 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.94%, Indiabulls Housing up by 2.07%, Infosys up by 1.87%, Tata Steel up by 1.81% and GAIL India up by 1.76%.

On the flip side, Sun Pharma down by 1.18%, Kotak Mahindra Bank down by 0.46%, NTPC down by 0.34%, Lupin down by 0.31% and Wipro down by 0.29% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 0.29 points or 0.02% to 1,771.52, Shanghai Composite increased 7.44 points or 0.23% to 3,180.64, KOSPI Index increased 13.54 points or 0.57% to 2,396.10, Taiwan Weighted increased 23.81 points or 0.23% to 10,414.36, Nikkei 225 increased 66.97 points or 0.33% to 20,197.38 and Hang Seng increased 199.66 points or 0.78% to 25,883.16.

Jakarta Stock Exchange is closed on account of national holiday.