Domestic bourses continue to trade with traction

Indian equity markets continued to trade with traction in the early noon session, on the back of sustained buying in key heavyweights. Rupee appreciation and foreign investors pumping more funds into Indian equities also boosted sentiments. Traders took some support with S&P Global Ratings in its latest report stating that most of its rated Indian firms and banks can survive the recent sharp fall in the rupee since their overseas borrowings either have dollar-linked earnings or are hedged. Investors’ sentiments remained optimistic with report stating that the United States snapped sanctions back in place to choke off Iran's oil and shipping industries, while temporarily allowing top customers such as China and India to keep buying crude from the Islamic Republic. However, markets pared some of their gains as marketmen paid attention to Finance Minister Arun Jaitley’s statement that excessive competition at times can result in stress in a particular sector, pointing out that these are challenges of the growing economy. He also said that with the growing economy, the role of each regulator will expand.

On the global front, Asian markets were exhibiting mixed trend as investors awaited the U.S. midterm elections. Back home, stocks related to housing finance sector were in focus with report stating that India’s housing finance companies (HFCs) are facing a liquidity stress a situation that will put more pressure on the Reserve Bank of India to provide a special window to the sector as sought by the government.

The BSE Sensex is currently trading at 35085.39, up by 134.47 points or 0.38% after trading in a range of 35018.13 and 35196.03. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.04%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were TECK up by 1.12%, IT up by 1.10%, Telecom up by 1.07%, Energy up by 1.05% and Industrials up by 0.59%, while Metal down by 1.67%, Basic Materials down by 0.73%, FMCG down by 0.45%, PSU down by 0.18% and Healthcare down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 4.22%, Tata Motors up by 4.17%, Yes Bank up by 3.19%, TCS up by 2.20% and Reliance Industries up by 1.74%. On the flip side, Vedanta down by 6.13%, Axis Bank down by 2.93%, Indusind Bank down by 2.10%, SBI down by 1.66% and Mahindra & Mahindra down by 0.59% were the top losers.

Meanwhile, S&P Global Ratings in its latest report has said that most of its rated Indian firms and banks can survive the recent sharp fall in the rupee since their overseas borrowings either have dollar-linked earnings or are hedged. However, it noted that a deep and sustained decline in the currency could have broader economic effects on Indian corporates, including through knock-on effects of inflation and higher imported commodity costs squeezing margins. It pointed out that this would also result in an adverse impact on bank's asset quality, and may delay the recovery of Indian banks.

The US-based agency has stated that most emerging market issuers are buffered against further currency depreciation and do not face immediate downgrade risk from currency depreciation. It sees low risk from currency depreciation for companies in India, China and the rest of Southeast Asia and South Africa, while those in Argentina and Turkey are the most vulnerable to depreciation. It added that the rest of Latin America and Indonesia are in the medium-risk category.

According to the report, for many emerging market countries, the pace of currency depreciation has been less severe relative to the 'taper tantrum' and the global and Asian financial crises. It also said that factors like rising trade tensions, tightening of monetary policies in advanced economies, and the dollar's strength will continue to test emerging markets. It pointed out that interest-rate normalisation, combined with uncertainties around global trade and desynchronising global growth, is exacerbating pressures on emerging market currencies. Nevertheless, it said that the uneven movements across emerging markets show investors are discriminating based on economic fundamentals and policy frameworks.

The CNX Nifty is currently trading at 10552.55, up by 28.55 points or 0.27% after trading in a range of 10539.35 and 10600.25. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 4.06%, Yes Bank up by 3.24%, TCS up by 2.22%, Zee Entertainment up by 1.69% and Sun Pharma up by 1.64%. On the flip side, Vedanta down by 6.11%, Cipla down by 4.89%, Axis Bank down by 2.89%, Indian Oil Corp. down by 2.42% and HPCL down by 2.04% were the top losers.

Asian markets were trading mixed; Hang Seng decreased 29.770 points or 0.11% to 25,904.62, Shanghai Composite decreased 17.09 points or 0.65% to 2,648.34, Taiwan Weighted decreased 64.86 points or 0.66% to 9,824.95.

On the flip side, Nikkei 225 increased 248.76 points or 1.12% to 22,147.75, KOSPI increased 0.89 points or 0.04% to 2,077.81 and Jakarta Composite increased 0.97 points or 0.02% to 5,921.56.