Benchmarks trade in green in early deals; Sensex above 38,600 mark

Indian equity benchmarks made optimistic start and are trading in green in early trade on Wednesday, with Sensex and Nifty reclaiming crucial physiological levels of 38,600 and 11,550, respectively. Traders took encouragement with the Reserve Bank of India’s (RBI) statement that it will buy government securities worth Rs 25,000 crore next month through two auctions of Rs 12,500 crore each. Based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, RBI has decided to conduct purchase of government securities under (OMOs). Besides, the RBI on Tuesday conducted its second successful dollar swap auction of $5 billion, receiving bids worth $18.65 billion, or more than three times what was on offer. Unlike the last time, RBI accepted bids from a small number of bidders. However, gains remained capped with Care Ratings’ report warning that a possible increase in fuel prices due to the US sanctions on Iranian crude exports can have adverse impacts on the current account deficit (CAD), the rupee and inflation. It said a 10 percent spike in crude prices can result in a 0.40 percent widening of the CAD, which can consequently play out into a 3-4 percent depreciation in the rupee and also push up inflation by 0.24 percent.

On the global front, Asian markets were trading mostly in red, amid losses in South Korea and worries that China has put any further stimulus on hold as the economy shows signs of regaining its footing. Back home, markets regulator SEBI has reduced the minimum subscription requirement as well as defined trading lots for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). REITs have to offer their units in lots worth at least Rs 50,000 in initial and follow on public offers. On the sectoral front, power sector stocks were buzzing with rating agency ICRA stating that it has estimated 7-7.5 GW solar power capacity addition during the current financial year, which includes 1 GW of rooftop solar.

The BSE Sensex is currently trading at 38618.62, up by 53.74 points or 0.14% after trading in a range of 38605.17 and 38701.52. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.06%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.64%, Energy up by 0.96%, Realty up by 0.95%, PSU up by 0.68%, Telecom up by 0.55%, while Auto down by 0.73%, Basic Materials down by 0.66%, Metal down by 0.63%, FMCG down by 0.22%, Consumer Disc down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.66%, Indusind Bank up by 1.29%, Asian Paints up by 1.01%, Bharti Airtel up by 0.84% and Yes Bank was up by 0.69%. On the flip side, Tata Motors down by 1.77%, Tata Motors - DVR down by 1.57%, Maruti Suzuki down by 1.37%, Hero MotoCorp down by 1.37% and Vedanta was down by 1.12% were the top losers.

Meanwhile, the Reserve Bank of India has decided to infuse more liquidity into market. It will buy government securities under Open market operations (OMOs) for an aggregate amount of Rs 25,000 crore in May 2019 through two auctions of Rs 12,500 crore each.

Based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, the central bank has decided to purchase government securities (g-secs). The first auction of Rs 12,500 crore will be conducted on May 2, 2019. The date of the other auction was not announced. It also added that the OMO amount of Rs 25,000 crore was indicative and RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions.

OMOs are conducted by the RBI by sale or purchase of g-secs to regulate money supply in the market. The sale or buying of g-secs infuses or reduces liquidity. OMOs like repo rate, cash reserve ratio and statutory liquidity ratio are monetary policy tools to balances inflation.

The CNX Nifty is currently trading at 11598.75, up by 22.80 points or 0.20% after trading in a range of 11589.30 and 11620.85. There were 27 stocks advancing against 22 stocks declining, while 1 stock reamin unchanged on the index.

The top gainers on Nifty were ONGC up by 3.82%, BPCL up by 2.57%, Indian Oil Corporation up by 2.48%, Indiabulls Housing Finance up by 1.62% and Indusind Bank was up by 1.52%. On the flip side, Tata Motors down by 2.14%, Grasim Industries down by 1.79%, Hero MotoCorp down by 1.69%, Vedanta down by 1.40% and Maruti Suzuki was down by 1.37% were the top losers.

Asian markets were mostly trading in red; Hang Seng decreased 253.79 points or 0.85% to 29,709.45, Nikkei 225 slipped 99.24 points or 0.45% to 22,160.50, Shanghai Composite declined 29.39 points or 0.92% to 3,169.20, KOSPI fell 29.36 points or 1.32% to 2,191.15, Jakarta Composite dropped 24.23 points or 0.37% to 6,438.59 and Taiwan Weighted was down by 2.46 points or 0.02% to 11,023.22. On the flip side, Straits Times was up by7.02 points or 0.21% to 3,360.49.