Local equities continue bull run; Nifty surpasses 11,950 mark

Local equity benchmarks continued their bull run in morning session, following gains in Capital Goods, Industrials and BANKEX stocks. Traders remained encouraged as counting trends showed that Prime Minister Narendra Modi is set to win a majority on his own. Sentiments also remain energized with a report that finance ministry has begun the pre-Budget consultation exercise with industry bodies in the run-up to the full budget for the current financial year to be unveiled by the new government sometime in July. Sentiment on the street also improved on Vice Chairman Rajiv Kumar’s statement that Niti Aayog is working on the economic agenda for the new government where the focus will be on achieving long term sustainable growth and boosting private investments in the country. Traders took note of External Affairs Minister Sushma Swaraj’s statement that India subscribes to a rule-based, transparent, open and inclusive multilateral trading system and firmly opposes unilateralism and protectionism.

On the global front, Asian markets were trading mostly in red, amid continued Sino-US trade tensions, while an escalating technology cold war between the nations piled on. Back home, Fitch Ratings stated that the debt crunch in Infrastructure Leasing and Financial Services (IL&FS) has adversely impacted growth of the Non-banking financial company (NBFC) sector in India and might lead to its consolidation.

The BSE Sensex is currently trading at 39990.83, up by 880.62 points or 2.25% after trading in a range of 39464.69 and 40012.35. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.89%, while Small cap index was up by 1.58%.

The top gaining sectoral indices on the BSE were Capital Goods up by 4.96%, Industrials up by 3.79%, BANKEX up by 3.73%, PSU up by 3.39% and Energy was up by 2.99%, while there were no losing indices.

The top gainers on the Sensex were Yes Bank up by 8.06%, Larsen & Toubro up by 6.64%, IndusInd Bank up by 6.63%, SBI up by 5.91% and ICICI Bank was up by 4.57%. On the flip side, Sun Pharma down by 0.59%, Vedanta down by 0.57%, TCS down by 0.25%, Bajaj Auto down by 0.17% and ITC was down by 0.10% were the top losers.

Meanwhile, in order to avoid default risks, the Finance Ministry is likely to ask the Reserve Bank of India (RBI) to put strong regulatory framework around non-banking financial companies (NBFCs) accessing non-bank public deposits, like pension and provident fund. The Ministry may ask for putting strong regulatory framework as these are savings, pension and provident fund, of the salaried class and must be kept away from avoidable risks like infrastructure NBFCs.

NBFCs are major finance providers, they are at present in deficit. Their sources of funds are the market, not public. There has to be greater granularity in their liquidity requirements vis-a-vis the assets and liabilities, and the RBI will look into that. Remarking that there are asset-liability mismatches in some cases, only the infrastructure-funding NBFCs need a separate credit window. Public deposit is not the option, in case of such NBFCs.

Retirement and insurance funds are hard-earned money of the middle class saved for twlight years and emergencies. Such savings should not be invested in markets, where the risks are unseen and sudden and the hope for higher returns may sometimes result in exemplary losses, as seen in the case of IL&FS, where after losing money the middle class investors looked up to the government for recovery.

The CNX Nifty is currently trading at 11994.10, up by 256.20 points or 2.18% after trading in a range of 11836.90 and 12003.50. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 9.43%, Yes Bank up by 8.32%, IndusInd Bank up by 6.27%, SBI up by 5.72% and Indiabulls Housing Finance up by 5.60%. On the flip side, Dr. Reddys Lab down by 0.91%, Hindalco down by 0.66%, Sun Pharma down by 0.49%, Wipro down by 0.37% and Vedanta was down by 0.36% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 376.76 points or 1.36% to 27,329.18, Taiwan Weighted dropped 146.39 points or 1.4% to 10,310.83, Nikkei 225 slipped 145.43 points or 0.68% to 21,137.94, Shanghai Composite declined 24.22 points or 0.84% to 2,867.48, Straits Times trembled 13.31 points or 0.42% to 3,169.83 and KOSPI was down 2.70 points or 0.13% to 2,062.16. On the other side, Jakarta Composite was up by 89.94 points or 1.51% to 6,029.58.