Benchmarks trade with traction in early deals

Indian equity benchmarks made a gap-up opening and are trading in fine fettle in early deals on Wednesday, as traders took some support with report that the RBI has received a good response to its dollar swap window on March 26, establishing the instrument as a credible liquidity tool and paving the way for more such auctions in the coming months. Banks offered $16.31 billion for the proposed swaps of up to $5 billion. The RBI accepted $5.02 billion at a cut-off premium of Rs 7.76 for three-year dollars - close to the rate at which the market was trading at. Some support also came with a private report indicated that although 2018 brought some cyclical challenges, India maintains top ranking in overall consumer sentiment, while Brazil has overtaken China to come second.

On the global front, Asian markets are trading mixed at this point of time amid lingering fears that the global economy is slowing down. The US markets rose on Tuesday as investors overlooked lackluster housing and consumer data, with energy and pharmaceutical stocks among the leaders.

Back home, power sector stocks remained in focus with the secretary of ministry of renewable energy’s statement that India will launch $5 billion of transmission-line tenders in phases, beginning in June, to route a targeted 175 gigawatts (GW) of power from renewable sources into the country's grid by 2022. Meanwhile, state-owned Rail Vikas Nigam (RVNL) has fixed a price band of Rs 17-19 per equity share for its upcoming initial public offering (IPO), which would run from March 29-April 3, to raise about Rs 481 crore. In scrip specific development, shares of ICICI Prudential Life Insurance Company rallied in early morning trade as the promoter’s share sale programme received good response from non-retail investors.

The BSE Sensex is currently trading at 38395.93, up by 162.52 points or 0.43% after trading in a range of 38319.64 and 38456.86. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.77%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.90%, Bankex up by 0.75%, Industrials up by 0.68%, Basic Materials up by 0.61% and FMCG was up by 0.58%, while Realty down by 0.61%, Oil & Gas down by 0.21%, Energy down by 0.19% and Utilities was down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 4.02%, Yes Bank up by 3.96%, Bajaj Finance up by 1.25%, Larsen & Toubro up by 1.16% and SBI up by 1.12%. On the flip side, Power Grid Corporation down by 0.52%, Hero MotoCorp down by 0.38%, Coal India down by 0.23%, NTPC down by 0.21% and ICICI Bank down by 0.20% were the top losers.

Meanwhile, in a bid to ease liquidity ahead of elections, the Reserve Bank of India (RBI) has bought $5 billion through long-term forex swap auction. The Central Bank has successfully concluded the forex swap auction, buying the targeted $5 billion as part of the long term dollar/rupee swap with a three-year tenor. In turn, Rs 34,561 crore was infused into the Indian banking system.

The RBI has received $16.31 billion in bids for the auction for which the cut-off was set at 776 paise. It has accepted $5.02 billion of dollars tendered. This formed part of RBI's announcement earlier this month that it would buy dollars from banks for three years and offer them rupees in return. The swap will bulk up India's foreign exchange reserves while injecting liquidity into the financial system to ease a cash crunch typically seen before the beginning of a financial year.

It is meant to give RBI greater flexibility in managing banking system cash while helping soak up any potential large dollar inflows, such as from the Rs 42,000 crore purchase of Essar Steel by ArcelorMittal which could make the rupee rise sharply. The central bank has bought Rs 3 lakh crore of bonds this fiscal to support the market at a time when a record $100 billion borrowing plan of the government had cooled demand for debt.

The CNX Nifty is currently trading at 11522.05, up by 38.80 points or 0.34% after trading in a range of 11500.30 and 11538.50. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.13%, Yes Bank up by 3.98%, Indiabulls Housing up by 2.60%, Larsen & Toubro up by 1.25% and Bajaj Finance up by 1.16%. On the flip side, HPCL down by 1.03%, Tech Mahindra down by 0.95%, NTPC down by 0.75%, BPCL down by 0.63% and ONGC down by 0.62% were the top losers.

Asian markets are trading mixed; Straits Times gained 8.94 points or 0.28% to 3,209.22, Hang Seng jumped 150.41 points or 0.53% to 28,717.32, KOSPI added 1.10 points or 0.05% to 2,149.90 and Shanghai Composite was up by 16.47 points or 0.55% to 3,013.57.

On the flip side, Nikkei 225 shed 88.43 points or 0.41% to 21,339.96, Taiwan Weighted slipped 10.07 points or 0.10% to 10,549.13 and Jakarta Composite was down by 13.90 points or 0.21% to 6,456.10.