Benchmarks trade in fine fettle in morning deals

Indian equity benchmarks made a cautious start but gained traction and are trading in fine fettle in early deals on Monday, as traders remained optimistic with the Reserve Bank of India’s (RBI) statement that it will inject Rs 15,000 crore into the financial system next month through purchase of government bonds via the auction route. The decision has been taken in view of the evolving liquidity situation. Traders took a note of a private report stating that India has decided to join hands with Japan and Sri Lanka to expand the port in Colombo as part of efforts to balance Chinese inroads into the neighbourhood. This marks one of the government’s first foreign policy moves following its reelection. Market participants shrugged off report that foreign investors have pulled out a net amount of Rs 4,375 crore from the Indian capital markets in May so far, driven by global and domestic factors. Traders also paid no heed to the RBI data showing that after rising for the past few weeks, the country's foreign exchange reserves declined $2.057 billion to $417.998 billion in the week to May 17 on account of a fall in foreign currency assets.

On the global front, the US markets ended higher on Friday amid easing trade concerns as President Donald Trump said he remains hopeful of a US-China trade deal. Asian markets are trading mixed on Monday as investors watched for developments from US President Donald Trump’s state visit to Japan as well as results from the European parliamentary election.

Back home, a report stated that the fourth quarter (January to March 2019) financial results released by 304 companies in the corporate sector show a sequential drop in revenue growth to 10.7 per cent from 20.1 per cent in the previous quarter (October to December 2018). In scrip specific developments, Glenmark gained on getting USFDA’s nod for Aspirin and Extended-Release Dipyridamole Capsules and Grasim Industries spurts on reporting 79% rise in Q4 consolidated net profit.

The BSE Sensex is currently trading at 39554.86, up by 120.14 points or 0.30% after trading in a range of 39353.16 and 39569.06. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.51%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Power up by 2.28%, Utilities up by 2.14%, Capital Goods up by 1.24%, PSU up by 1.02% and Industrials up by 0.97%, while Energy down by 0.66%, Telecom down by 0.43%, Healthcare down by 0.24% and Consumer Durables was down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 4.57%, Tata Steel up by 2.17%, Yes Bank up by 1.77%, Power Grid Corporation up by 1.43% and Larsen & Toubro was up by 1.28%. On the flip side, Bharti Airtel down by 1.32%, Asian Paints down by 1.00%, Indusind Bank down by 0.94%, Tata Motors down by 0.93% and Reliance Industries was down by 0.93% were the top losers.

Meanwhile, with a view of evolving liquidity situation in the market, the Reserve Bank of India (RBI) has said it will inject Rs 15,000 crore into the financial system in the month of June 2019. It will infuse liquidity through purchase of government bonds via the auction route. The government securities (G-secs) will be bought under Open Market Operations (OMO).

The central bank said ‘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 OMO for Rs 150 billion on June 13, 2019’.

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 11872.00, up by 27.90 points or 0.24% after trading in a range of 11812.40 and 11876.65. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were NTPC up by 4.84%, Tata Steel up by 2.06%, Yes Bank up by 1.84%, Bharti Infratel up by 1.71% and Indiabulls Housing was up by 1.45%. On the flip side, JSW Steel down by 2.41%, Tech Mahindra down by 1.77%, Bharti Airtel down by 1.50%, Zee Entertainment down by 1.23% and Titan Company was down by 1.20% were the top losers.

Asian Market were trading mixed; Nikkei 225 surged 59.28 points or 0.28% to 21,176.50, Jakarta Composite soared 46.33 points or 0.76% to 6,103.68, Shanghai Composite gained 7.51 points or 0.26% to 2,860.50 and Taiwan Weighted was up by 2.69 points or 0.03% to 10,330.97. On the flip side, KOSPI fell 5.10 points or 0.25% to 2,040.21, Straits Times trembled 8.44 points or 0.27% to 3,161.45 and Hang Seng was down by 165.08 points or 0.6% to 27,188.85.