Benchmarks keep head above water in early deals

Indian equity benchmarks have made a choppy start, but markets managed to keep their head above water in early deals on Thursday. Investors are keeping a close eye on a central banking conference in Jackson Hole, Wyoming, which begins on Thursday, where Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are both due to speak. Buying in public sector bank lending some support to the markets after the Cabinet on Wednesday approved a framework to speed up mergers of public sector banks, the first of which could take place by March. The mergers will not involve any cash but only share swaps. The government also said there would be no job losses after any of the mergers.

On the global front, Asian markets were trading mostly in red at this point of time on concerns about the Trump administration’s ability to enact its fiscal agenda. The Japanese market too was in red despite the yen decline. The US markets gave up some ground in the last session after surging in the previous one.

Back home, shares of liquor companies rallied in early trade with report suggesting that the Supreme Court on Wednesday clarified that the liquor ban on highways does not extend to municipal areas. Media stocks remained buzzing, as the Finance Ministry has said that the rate of Goods and Services Tax (GST) applicable on selling of advertisement space in print media would depend on the terms of the contract between the newspaper, advertisement agency and the client.

The BSE Sensex is currently trading at 31587.41, up by 19.40 points or 0.06% after trading in a range of 31546.05 and 31678.19. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.36%, while Small cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.04%, Utilities up by 0.88%, IT up by 0.83%, Power up by 0.75% and TECK was up by 0.58%, while Telecom down by 0.20%, Bankex down by 0.16% and Realty was down by 0.12% were the few losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.15%, Lupin up by 1.49%, Infosys up by 1.43%, Tata Motors up by 0.96% and Cipla up by 0.95%. On the flip side, Adani Ports down by 1.05%, Maruti Suzuki down by 0.71%, Hindustan Unilever down by 0.67%, Bharti Airtel down by 0.61% and Bajaj Auto down by 0.60% were the top losers.

Meanwhile, in a bid to improve the health of Public Sector Banks (PSBs), the government has decided to set up an Alternative Mechanism to oversee the proposals for consolidation of state owned banks. The decision would facilitate consolidation among the Nationalised Banks to create strong and competitive banks. The move aims at meeting the credit needs of the growing Indian economy and building capacity in the PSB space to raise resources without dependence on the state exchequer.

The Cabinet has given its in-principle nod to the constitution of the mechanism which will clear proposals of banks for mergers and amalgamation. As per the framework, mergers decisions should originate from the banks and these should be based on commercial decisions. The Alternative Mechanism will comprise of senior ministers of the government.

Elaborating on the decision, Finance Minister Arun Jaitley said that the proposals received from banks for in-principle approval to formulate schemes of amalgamation shall be placed before the Alternative Mechanism. After the in-principle approval the banks will take steps in accordance with law and Securities and Exchange Board of India’s (SEBI’s) requirements. The final scheme will be notified by the central government in consultation with the Reserve Bank of India.

The CNX Nifty is currently trading at 9860.90, up by 8.40 points or 0.09% after trading in a range of 9848.85 and 9881.50. There were 29 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.08%, Tata Power up by 1.71%, Infosys up by 1.68%, Lupin up by 1.27% and Tech Mahindra up by 1.22%. On the flip side, Adani Ports down by 0.97%, Maruti Suzuki down by 0.73%, Hindustan Unilever down by 0.70%, Asian Paints down by 0.64% and Ambuja Cement down by 0.61% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 39.99 points or 0.21% to 19,394.65, Jakarta Composite shed 18.15 points or 0.31% to 5,895.87, Shanghai Composite slipped 1.28 points or 0.04% to 3,286.42 and FTSE Bursa Malaysia KLCI was down by 0.29 points or 0.02% to 1,772.65.

On the flip side, KOSPI Index increased 11.04 points or 0.47% to 2,377.44, Taiwan Weighted added 67.7 points or 0.65% to 10,474.51 and Hang Seng was up by 166.06 points or 0.61% to 27,567.73.