Bourses continue to trade in positive territory

Key benchmark indices continued to trade in positive territory in early afternoon session, backed by buying in IT, TECK, FMCG and Telecom stocks. Investors’ sentiment got a support with report that the Reserve Bank of India (RBI) has set up a five-member expert panel to look into the reasons for high divergence observed in asset classification and provisioning by banks. Moreover, covering-up of pending short positions by speculators in view of tomorrow’s February monthly expiry in the derivatives segment, too gave some support to domestic benchmarks to remain in green. Traders also took note of 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. However, acting contrary to the trend, the broader indices were trading lower with losses in the range of 0.18%-0.38%. In scrip specific development, Central Bank of India was trading in green on planning to raise additional equity capital up to Rs 4835 crore on preferential basis.

On the global front, Asian markets were trading mostly in green, as traders brushed off a retreat on Wall Street, with attention turning to the release later in the day of minutes from the Federal Reserve's most recent policy meeting. Back home, the BSE Sensex is currently trading at 33798.64, up by 95.05 points or 0.28% after trading in a range of 33702.50 and 33911.36. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.38%, while Small cap index was down by 0.18%.

The top gaining sectoral indices on the BSE were IT up by 1.67%, TECK up by 1.40%, FMCG up by 0.56%, Telecom up by 0.33% and Energy up by 0.27%, while Metal down by 1.61%, Healthcare down by 1.23%, Basic Materials down by 1.01%, Realty down by 0.54% and PSU down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.98%, ITC up by 1.39%, Dr. Reddy’s Lab up by 1.24%, Infosys up by 1.14% and Kotak Mahindra Bank up by 1.04%. On the flip side, Sun Pharma down by 5.45%, Tata Steel down by 1.74%, Tata Motors down by 1.33%, Indusind Bank down by 1.11% and Adani Ports & SEZ down by 0.96% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has decided 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 and also will look into role and effectiveness of various types of audits conducted in banks in mitigating the incidence of divergence and frauds. 

The development assumes importance as it comes just a week after the biggest banking scam worth Rs 11,400 crore was disclosed by Punjab National Bank (PNB), alleging that diamond importer Nirav Modi and his uncle Mehul Chokshi's group firms connived with two of the bank's employees to fraudulently receive multiple Letter of Undertakings (LoUs) to seek loans against them. Besides, the central bank has said that as part of ongoing efforts for strengthening of the supervisory framework in the country, it has been issuing necessary instructions to banks from time to time on a variety of issues of prudential supervisory concern, in.cluding the management of operational risks inherent in the functioning of banks.

The RBI further stated that the risks arising from the potential malicious use of the SWIFT infrastructure, created by banks for their genuine business needs, has always been a component of their operational risk profile. Therefore, it had confidentially cautioned and alerted banks of such possible misuse, at least on three occasions since August 2016, advising them to implement the safeguards detailed in the RBI's communications, for pre-empting such occurrences. However, it added that the banks have been at varying levels in implementation of such measures.

The CNX Nifty is currently trading at 10376.35, up by 15.95 points or 0.15% after trading in a range of 10349.60 and 10426.10. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.40%, HCL Tech. up by 2.24%, TCS up by 1.96%, Eicher Motors up by 1.28% and ITC up by 1.20%. On the flip side, Sun Pharma down by 5.29%, Hindalco down by 3.34%, Bajaj Finance down by 2.50%, BPCL down by 2.28% and Tata Steel down by 1.84% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 2.35 points or 0.13% to 1,858.34, KOSPI Index rose 14.53 points or 0.6% to 2,429.65, Nikkei 225 added 45.71 points or 0.21% to 21,970.81, Taiwan Weighted was up by 293.35 points or 2.81% to 10,714.44 and Hang Seng surged 450.44 points or 1.46% to 31,324.07.

On the flip side, Jakarta Composite was down by 20.32 points or 0.3% to 6,642.56.