Equity benchmarks continue to trade in positive terrain

Mirroring strong global cues, Indian equity benchmarks continued to show a positive trend in late morning session, with a gain of over half a percent. Sentiments remained up-beat with private report stating that the Indian economy is witnessing a ‘cyclical upswing’ and the country is likely clock a GDP growth of 7.5 per cent this financial year, which will mark an improvement from the 6.7 per cent likely outturn in 2017-18. Investors took note of report that the early trend in the March 2018 quarter results season looks encouraging though driven by large companies such as Reliance Industries, Tata Consultancy Services, Infosys, and Wipro. Some optimism also came after Reserve Bank of India (RBI) further liberalized ECB policy. In a bid to facilitate cheaper access of overseas funds, RBI liberalized External Commercial Borrowings (ECB) Policy by including more sectors in the window. Traders shrugged off report that foreign investors have pulled out more than Rs 155 billion (Rs 15,500 crore) from the Indian capital markets so far this month due to a weak rupee, surge in global crude prices and uncertainty over US-China trade relations.

On the global front, all the Asian markets were trading in green, as tensions in the Korean Peninsula eased and first-quarter earnings shone, although some investors pondered whether this sunny outlook could dim in the near future. Back on domestic turf, in scrip specific development, IDFC gained with arm entering into definitive agreement with Global Infrastructure for the sale of its infrastructure asset management business. Besides, Lambodhara Textiles advanced on entering into a conversion agreement with Bharat Spinning Mill to utilize their spare capacity of 3168 spindles for conversion of fiber into yarn on job work basis.

The BSE Sensex is currently trading at 35176.48, up by 206.78 points or 0.59% after trading in a range of 35004.00 and 35198.43. There were 27 stocks advancing against 3 stocks declining on the index, while 1 stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index surged 0.44%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were IT up by 1.40%, TECK up by 1.13%, FMCG up by 1.08%, Metal up by 1.03% and Realty was up by 0.92%, while Energy down by 1.39%, Oil & Gas down by 0.51% and Telecom was down by 0.19% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.35%, SBI up by 2.10%, TCS up by 1.94%, ITC up by 1.58% and Mahindra & Mahindra was up by 1.57%. On the flip side, Axis Bank down by 3.09%, Reliance Industries down by 2.54% and ICICI Bank was down by 0.17% were the few losers.

Meanwhile, in an attempt to boost domestic bond market, the Reserve Bank of India (RBI) has withdrew a rule that mandated foreign portfolio investors (FPIs) to invest only in government bonds with a minimum residual maturity of three years. For corporate bonds, FPIs are now permitted to invest in bonds with minimum residual maturity of above one year as against minimum maturity of three years. The central bank has also revised the cap on aggregate FPI investments in any central government security to 30% from 20% of the outstanding stock of that security.

The minimum residual maturity requirement for central government securities (G-secs) and State Development Loans (SDLs) stands withdrawn, subject to the condition that investment in securities with residual maturity below 1 year by an FPI under either category should not exceed, at any point of time, 20 percent of the total investment of that FPI in that category. Currently, FPIs are permitted to invest in G-secs till the limit utilization reaches 90%, after which the auction mechanism is triggered for allocation of the remaining limit. With Clearing Corporation of India (CCIL) commencing online monitoring of utilisation of G-sec limits, it has been decided to discontinue the auction mechanism with effect from June 1, 2018. Thereafter, utilisation of FPI limits shall be monitored online.

With regard to single or group investor-wise limit in corporate bonds, investment by any FPI, including investments by related FPIs, should not exceed 50 percent of any issue of a corporate bond. FPIs should not have an exposure of more than 20 percent of its corporate bond portfolio to a single corporate including exposure to entities related to the corporate. No FPI shall invest in partly paid instruments and these directions would be applicable with immediate effect.

The CNX Nifty is currently trading at 10749.30, up by 57.00 points or 0.53% after trading in a range of 10704.60 and 10755.90. There were 40 stocks advancing against 9 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Vedanta up by 2.47%, Yes Bank up by 2.31%, SBI up by 2.18%, TCS up by 2.05% and HCL Tech was up by 1.62%. On the flip side, UPL down by 3.33%, Axis Bank down by 3.23%, Reliance Industries down by 2.77%, Bharti Infratel down by 1.37% and BPCL was down by 0.55% were the top losers.

All the Asian markets were trading in green, FTSE Bursa Malaysia KLCI surged 1.79 points or 0.1% to 1,865.26, Shanghai Composite rose by 7.2 points or 0.23% to 3,082.23, KOSPI Index gained 18.01 points or 0.72% to 2,510.41, Jakarta Composite advanced 37.03 points or 0.63% to 5,956.26, Taiwan Weighted soared 104.45 points or 0.99% to 10,657.88, Nikkei 225 strengthened 148.26 points or 0.66% to 22,467.87 and Hang Seng was up by 481.44 points or 1.59% to 30,762.11.