Benchmarks make optimistic start on Monday

Indian equity benchmarks made a gap-up opening and are trading in fine fettle in early deals on Monday, as traders opted to buy beaten-down but fundamentally strong stocks amid firm global cues. Traders took some encouragement with Reserve Bank of India (RBI) Governor Urjit Patel’s statement that stock market bubble will not cause any major problem. He also said transmission of RBI decisions by banks have improved now, partly aided by demonetisation. Some support also came with report that India’s external debt has remained within manageable limits as indicated by the external debt indicators, and the country is not among the world’s top debtors. India’s external debt stock stood at $495.7 billion at quarter ending September 2017.

Global cues too remained supportive with Asian markets rallying at this point of time following a late Friday rally on Wall Street and the worst week in years for many global stock benchmarks. The U.S. markets edged higher on Friday, as traders reacted positively to news that lawmakers managed to end a brief government shutdown with a bill raising spending caps and funding the government until March 23.

Back home, stocks related to banking space edged higher on report that gross non-performing assets (NPAs) of banks declined marginally to 9.8 per cent at the end of September 30, 2017 from 10 per cent as on June 30, 2017. Infrastructure related stocks too remained in focus on report that the Centre has released nearly Rs 9,940 crore to the states so far for the Smart Cities Mission, with Maharashtra accounting for the highest amount of Rs 1,378 crore, followed by Madhya Pradesh getting Rs 984 crore.

The BSE Sensex is currently trading at 34143.23, up by 137.47 points or 0.40% after trading in a range of 34115.12 and 34278.24. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.90%, while Small cap index was up by 1.18%.

The top gaining sectoral indices on the BSE were Realty up by 1.59%, Healthcare up by 1.12%, Metal up by 0.99%, Capital Goods up by 0.96% and Industrials was up by 0.92%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Tata Steel up by 3.78%, ONGC up by 2.74%, Sun Pharma up by 1.63%, Hero MotoCorp up by 1.15% and Larsen & Toubro up by 1.06%. On the flip side, SBI down by 2.63%, Coal India down by 0.48%, ICICI Bank down by 0.34%, NTPC down by 0.25% and HDFC down by 0.21% were the top losers.

Meanwhile, since the Indian benchmark indices have fallen by over 1% and closed at a one-month low level, the capital markets regulator, Securities and Exchange Board of India (SEBI) chief Ajay Tyagi has said that the volatility in the Indian equity markets may continue for some time. He explained that the global factors are mainly responsible for the volatility in the Indian markets, and outweighs the concerns related to long-term capital gains tax (LTCG). He also said that there are no issues of concern for investors in terms of safety and security of the Indian marketplace.

On the matter of re-introduction of LTCG tax as proposed in the Budget, Tyagi said that SEBI has not received any representation from investors so far against this. He admitted that the tax would impact the market and also said that it will be wrong to say LTCG will have no impact at all on Indian markets, but any such impact would be small and global factors pose bigger risks. About the timing of imposing the LTCG, he said it was an opportune time as markets were booming.

SEBI chief further said that small investors need not panic since they are doing well to invest via Mutual Funds. But, he pointed out that they cannot be as risk-free as bank deposits. He added that the market regulator is also set to come out with norms on corporate bonds to encourage firms to tap this route for fund raising. Besides, Finance Minister Arun Jaitley, on February 1, proposed to tax LTCG on equities exceeding Rs 1 lakh at 10%, which is expected to bring in a revenue of Rs Rs 20,000 crore.

The CNX Nifty is currently trading at 10496.35, up by 41.40 points or 0.40% after trading in a range of 10485.40 and 10538.10. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.56%, ONGC up by 3.02%, Sun Pharma up by 2.48%, Aurobindo Pharma up by 1.59% and Lupin up by 1.32%. On the flip side, SBI down by 2.50%, BPCL down by 1.76%, HCL Tech down by 1.21%, HPCL down by 0.95% and Vedanta down by 0.57% were the top losers.

All the Asian markets are trading in green; FTSE Bursa Malaysia KLCI gained 12.1 points or 0.66% to 1,831.92, Jakarta Composite increased 15.97 points or 0.25% to 6,521.49, Shanghai Composite added 25.17 points or 0.8% to 3,155.02, KOSPI Index surged 25.87 points or 1.09% to 2,389.64, Taiwan Weighted jumped 94.29 points or 0.91% to 10,466.04 and Hang Seng was up by 210 points or 0.71% to 29,717.42.