Local equities trade in fine fettle

Local equity benchmarks have gathered pace and continued their trade in fine fettle in morning deals, with Sensex and Nifty gaining around 180 and 50 points, respectively. Traders remain energized with a report that the Reserve Bank of India (RBI) extended minimum holding period requirement for Non-banking financial companies (NBFCs) to raise funds via loan securitisation to help the sector overcome liquidity shortage. NBFCs have been permitted to securitise loans of over five-year maturity after holding them for six months on their books. Traders took note of a report that the RBI constituted a committee to review the existing state of mortgage securitisation in India and suggest measures to deepen it. The mortgage securitisation market in India is primarily dominated by direct assignments among a limited set of market participants on account of various structural factors impacting both the demand and the supply side. Besides, a report stated that the RBI may leave repo rate unchanged next week due to uncertainty over oil prices, monsoon, weak transmission of monetary policy and on expected pick-up in inflation. The central bank will also evaluate the implications of policies of the new government for growth and inflation.

On the global front, Asian markets were trading mostly in red as Beijing ratcheted up its rhetoric against Washington, fanning investor anxiety over the US-China trade war and a potential global economic slowdown. Back home, a report stated that the Solvent Extractors Association of India (SEA) has approached the Director General of Foreign Trade seeking permition of exports of rapeseed oil and mustard oil in bulk without any restrictions of pack size and MEP in line with other edible oils.

The BSE Sensex is currently trading at 39690.98, up by 188.93 points or 0.48% after trading in a range of 39500.56 and 39758.60. There were 23 stocks advancing against 7 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.17%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Telecom up by 0.89%, Power up by 0.81%, Utilities up by 0.69%, TECK up by 0.67% and IT was up by 0.64% while, Auto down by 0.40% and Metal was down by 0.18% were the only losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.91%, Bharti Airtel up by 1.68%, Yes Bank up by 1.55%, Asian Paints up by 1.47% and TCS was up by 1.41%. On the flip side, Mahindra & Mahindra down by 1.50%, ONGC down by 1.05%, Sun Pharma down by 1.04%, Tata Steel down by 0.84% and Vedanta was down by 0.36% were the top losers.

Meanwhile, with an aim to help the non-banking financial companies (NBFCs) overcome liquidity shortage, the Reserve Bank of India (RBI) has extended minimum holding period (MHP) requirement for NBFCs to raise funds via loan securitization. NBFCs have been permitted to securitise loans of over five-year maturity after holding them for six months on their books. Earlier, they were supposed to hold it for at least a year.

The relaxation in MHP criteria will primarily benefit housing finance companies (HFCs) and NBFCs, offering mortgage loans where the tenure is typically more than five years. Accordingly, these entities can raise more funds through the securitisation route, which will provide them with additional liquidity.

As per the earlier notification issued by RBI in November, the dispensation was valid till May, 2019. On a review, it has been decided to extend the dispensation provided therein till December 31, 2019. NBFCs and HFCs are facing a crisis of confidence following the default by IL&FS in late-August, which led to its takeover by the government. This, in turn, led to a liquidity crunch for the sector.

The CNX Nifty is currently trading at 11910.70, up by 49.60 points or 0.42% after trading in a range of 11859.40 and 11928.30. There were 31 stocks advancing against 18 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were NTPC up by 1.95%, Yes Bank up by 1.62%, Bharti Airtel up by 1.56%, Asian Paints up by 1.39% and TCS was up by 1.30%. On the flip side, Eicher Motors down by 1.93%, Mahindra & Mahindra down by 1.47%, Sun Pharma down by 1.25%, ONGC down by 0.90% and Zee Entertainment was down by 0.87% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 109.88 points or 0.4% to 27,125.83, Nikkei 225 slipped 100.69 points or 0.48% to 20,902.68, Straits Times trembled 24.67 points or 0.78% to 3,138.61 and Shanghai Composite was down by 24.12 points or 0.83% to 2,890.58. On the other hand, KOSPI rose 7.24 points or 0.36% to 2,030.56 and Taiwan Weighted was up by 69.98 points or 0.68% to 10,371.76.