Benchmarks trade in fine fettle in early deals

Indian equity benchmarks made an optimistic start and are trading in fine fettle in early deals with frontline gauges trading above their crucial 35,400 (Sensex) and 10,600 (Nifty) levels. Sentiments remained upbeat with the Union Cabinet approving an agriculture export policy with an aim to double the shipments to $60 billion by 2022. The policy would focus on all aspects of agricultural exports including modernising infrastructure, standardisation of products, streamlining regulations, curtailing knee-jerk decisions, and focusing on research and development activities. Traders also took some encouragement with the Reserve Bank of India’s (RBI) deputy governor Viral Acharya’s statement that the RBI will continue to inject liquidity into the banking system through open market operation (OMO) purchases till the end of this fiscal. In the current financial year, the central bank has conducted OMO purchases to the tune of Rs 1.36 trillion, with over Rs 1 trillion of the infusion in the last three months.

Global cues too remained supportive with all the Asian markets are trading in green at this point of time, as investors grappled with shifting indications on US-China trade talks and prospects for a pause in Federal Reserve tightening. The US markets ended mostly lower on Thursday on fears that the arrest of a Huawei executive would reignite trade worries. Back home, textile sector stocks remained in focus with report that India’s annual cotton output could drop 12% to the lowest in nine years as limited rainfall in the top two producing states has slashed crop yields, potentially cutting exports from the world’s top producer. Telecom sector stocks rang loud with Trai Secretary S K Gupta’s statement that the telecom sector will move to 5G by 2022 and access to digital platform will become highly advanced in the next five years.

The BSE Sensex is currently trading at 35467.30, up by 155.17 points or 0.44% after trading in a range of 35415.71 and 35540.49. There were 25 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.49%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.00%, FMCG up by 0.70%, Auto up by 0.67%, Consumer Disc up by 0.63% and Realty was up by 0.56%, while Utilities down by 0.35%, IT down by 0.35%, Metal down by 0.29%, TECK down by 0.17% and PSU was down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.13%, Asian Paints up by 1.10%, ITC up by 1.07%, Bajaj Auto up by 1.03% and Mahindra & Mahindra up by 0.98%. On the flip side, Wipro down by 1.84%, Coal India down by 0.77%, ONGC down by 0.57%, Tata Steel down by 0.41% and Hindustan Unilever down by 0.26% were the top losers.

Meanwhile, amid liquidity crunch in the financial system, the Reserve Bank of India’s (RBI) deputy governor Viral Acharya has said that the Central Bank will continue to inject liquidity into the banking system through open market operation (OMO) purchases till the end of this fiscal (FY19). The RBI has conducted OMO purchases to the tune of Rs 1.36 trillion in the current financial year, with over Rs 1 trillion of the infusion in the last three months.

Acharya said ‘We expect that this increased frequency and quantum of OMO purchases may be required until end of March, but the exact calibration will depend on sustained changes in the behaviour of currency in circulation and the magnitude of sterilisation for RBI's forex operation, which keeps evolving with external sector conditions’. He further said RBI has also provided infusion of liberal liquidity through term repo in addition to the usual provision via the liquidity adjustment facility (LAF).

On the liquidity crisis faced by the non-banking finance companies (NBFCs) and housing finance companies (HFCs), he said RBI has been watching the market developments closely since the end of August. He said ‘We have been in regular touch with the Securities and Exchange Board of India to assess the fallout in terms of mutual fund redemptions and the resulting roll-over risks for NBFCs and HFCs’. Besides, in order to meet liquidity needs, the Central Bank recently had announced that it would conduct purchases of government securities under OMO for an amount of Rs 40,000 crore in December.

The CNX Nifty is currently trading at 10632.30, up by 31.15 points or 0.29% after trading in a range of 10619.40 and 10655.75. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.86%, Cipla up by 2.64%, Dr. Reddys Lab up by 2.08%, Asian Paints up by 1.27% and Grasim Industries up by 1.15%. On the flip side, HCL Tech. down by 5.13%, GAIL India down by 4.03%, Wipro down by 1.85%, Indiabulls Housing down by 1.19% and JSW Steel down by 0.93% were the top losers.

All the Asian markets are trading in green; Nikkei 225 increased 117.80 points or 0.54% to 21,619.42, Taiwan Weighted surged 74.88 points or 0.77% to 9,759.60, Straits Times jumped 12.83 points or 0.41% to 3,128.35, Jakarta Composite rose 19.88 points or 0.32% to 6,135.37, Hang Seng gained 70.41 points or 0.27% to 26,226.79, KOSPI added 4.38 points or 0.21% to 2,073.07 and Shanghai Composite was up by 1.96 points or 0.08% to 2,607.14.