Markets continue to trade marginally higher

Key Indian equity benchmarks continued to trade higher in late morning session, with marginal gains of less than 0.20% each. The traders got some relief with Reserve Bank of India’s decision to constitute a five-member committee under the chairmanship of YH Malegam, a former RBI board member, in order to look into the reasons for high divergence observed in asset classification and provisioning in the credit portfolio of banks. Apart from this, the expert committee will check the factors leading to rising incidence of fraud in the banking system. Some support also came with Canadian Prime Minister Justin Trudeau’s statement that corporate India has committed $1 billion worth of investments in his country, which will create over 5,000 jobs.

Furthermore, firm cues from other Asian markets along with gains in IT, TECK and FMCG stocks, aided the indices to hold their heads in green terrain. However, the broader markets traded lower, contrasting the larger peers. Besides, the trade was thin on the street, as traders remained sidelines ahead of the expiry of derivative contracts for February series on Thursday. The markets participants also took note of Commerce and Industry Minister Suresh Prabhu’s statement that aspirational India cannot ignore new issues such as e-commerce in WTO but it has to articulate its position without sacrificing core matters which are important. In scrip specific development, Steel Strips Wheels (SSWL) gained after the company secured another prestigious export order from esteemed German OEM- BMW.

The BSE Sensex is currently trading at 33768.91, up by 65.32 points or 0.19% after trading in a range of 33702.50 and 33911.36. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.30%, while Small cap index was down by 0.17%.

The top gaining sectoral indices on the BSE were IT up by 1.71%, TECK up by 1.41%, FMCG up by 0.57%, Bankex up by 0.07% and Energy was up by 0.06%, while Metal down by 1.58%, Healthcare down by 1.53%, Basic Materials down by 0.96%, PSU down by 0.59% and Industrials was down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.97%, ITC up by 1.43%, Infosys up by 1.19%, Kotak Mahindra Bank up by 1.15% and Dr. Reddy’s Lab up by 1.06%. On the flip side, Sun Pharma down by 6.21%, Tata Steel down by 1.64%, Tata Motors down by 1.30%, Adani Ports & SEZ down by 1.09% and Indusind Bank down by 1.09% were the top losers.

Meanwhile, India’s retirement fund manager, the Employees Provident Fund Organization (EPFO), is expected to retain 8.65 percent interest rate on provident fund (PF) deposits for its nearly 5 crore members for 2017-18. Earlier this month, the EPFO has already sold a portion of its investments in the exchange traded funds (ETF) worth Rs 2,886 crore to maintain 8.65 percent interest for this fiscal.

The EPFO had provided 8.65 percent rate of interest on PF deposits for 2016-17, a tad lower than 8.8 percent in 2015- 16. It has earned a return of around 16 percent at Rs 1,054 crore on sale of ETFs, which would be sufficient to provide 8.65 per cent rate of interest this fiscal. The EPFO started investing in ETFs since August 2015 and it has so far not monetised the ETF investments. It has invested around Rs 44,000 crore in the ETFs till date.

EPFO at its trustees’ meet proposed to decide on the proposal for rate of interest on the EPF deposits for the current fiscal. Besides, the trustees may also review the proposal to credit the ETFs into the members' EPF account because a large number of members do not have that level of financial literacy. It is proposed that the members should be given option to have ETF credits in their EPF account.

The CNX Nifty is currently trading at 10371.90, up by 11.50 points or 0.11% after trading in a range of 10349.60 and 10426.10. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.80%, HCL Tech. up by 2.23%, TCS up by 1.97%, Eicher Motors up by 1.35% and ITC up by 1.27%. On the flip side, Sun Pharma down by 6.24%, Hindalco down by 3.52%, BPCL down by 2.42%, Bajaj Finance down by 2.39% and Aurobindo Pharma down by 1.73% were the top losers.

Asian markets were trading in green; Nikkei 225 increased 1.16 points or 0.01% to 21,926.26, FTSE Bursa Malaysia KLCI increased 2.35 points or 0.13% to 1,858.34, KOSPI Index increased 13.42 points or 0.56% to 2,428.54, Taiwan Weighted increased 276.15 points or 2.65% to 10,697.24 and Hang Seng increased 309.25 points or 1% to 31,182.88. On the flip side, Jakarta Composite decreased 20.32 points or 0.3% to 6,642.56.