Key indices keep head above water in early noon deals

Local equity benchmarks managed to keep their head above water in early noon deals with both Sensex and Nifty were trading above 39,100 and 11,700 marks, respectively. Some comfort came with Finance Ministry’s statement that the effective taxpayer base grew 13.5% for the assessment year (AY) 2018-19, recording the highest rate in the last five years. The tax base, which includes assessees filing I-T returns along with those whose tax is deducted at source, rose to 8.44 crore in 2018-19, compared with 7.42 crore in FY18. Also, anxiety remained on the street by multiple factors such as slowing economic growth, delay in monsoons and rising crude oil prices due to US- Iran skirmish. However, gains remain capped with a report that unaccounted wealth outside the country held by Indians was estimated in the range of $216.48 billion to $490 billion over various periods between 1980 and 2010.

On the global front, Asian markets were trading mostly in red as expectations of more dovish talk from the Federal Reserve pushed down treasury yields and the dollar, while propelling gold prices to six-year peaks. Back on street, in scrip specific developments, shares of Emami traded higher as the promoters of Emami Group have undertaken a stake sale 10% in Emami for raising approximately Rs 1,230 crore. Alembic Pharmaceuticals edged up after the company received approval from the USFDA for its Abbreviated New Drug Application Oseltamivir Phosphate Capsules.

The BSE Sensex is currently trading at 39132.16, up by 9.20 points or 0.02% after trading in a range of 38946.04 and 39154.99. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.21%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were Utilities up by 1.03%, Power up by 0.94%, Energy up by 0.81%, Oil & Gas up by 0.66% and Metal was up by 0.62%, while Capital Goods down by 0.83%, Industrials down by 0.46%, TECK down by 0.42%, IT down by 0.36% and Bankex was down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.40%, Power Grid Corporation up by 1.38%, Mahindra & Mahindra up by 1.04%, Vedanta up by 1.01% and Reliance Industries was up by 0.99%. On the flip side, Yes Bank down by 1.83%, HCL Technologies down by 1.16%, Larsen & Toubro down by 1.06%, ICICI Bank down by 0.99% and Sun Pharma was down by 0.96% were the top losers.

Meanwhile, ratings agency Crisil in its latest report has said that the National Housing Bank's (NHB) new norms for housing finance companies (HFCs) will structurally strengthen the sector and increase investor confidence at a time of liquidity stress among non-banks. It found 25 HFCs accounting for 90 percent of the industry's assets are already complying with the norms by having their core tier-I capital at 4 percentage points higher. It added that stronger balance sheets and increased capital levels will make HFCs better placed to absorb asset-side risks in future.

In the revised guidelines, the NHB has asked HFCs to increase the core capital adequacy to 10 percent from 6 percent and asked them to increase the overall capital adequacy (CAR) to 15 percent from 12 percent earlier. The report noted that the maximum leverage that HFCs can take up has been reduced to 12 times from 16 times over a period of three years and the ceiling on the deposits that HFCs can mobilise has been lowered to three times of net owned funds from five times.

Ratings agency has stated that the NHB’s revised guidelines are not expected to constrain too many players as the mortgage growth expectations are lower. It pointed out that HFCs have grown at an average of 20 percent over the past three years, despite the slowdown in growth in second half of fiscal 2019. It noted that even if this growth were to be maintained over the next couple of years, existing net worth and internal accruals should be adequate for the vast majority of players.

The CNX Nifty is currently trading at 11702.25, up by 2.60 points or 0.02% after trading in a range of 11651.00 and 11710.75. There were 26 stocks advancing against 23 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were JSW Steel up by 1.61%, NTPC up by 1.44%, Power Grid Corporation up by 1.31%, BPCL up by 1.23% and Mahindra & Mahindra was up by 1.20%. On the flip side, Zee Entertainment down by 4.00%, Bharti Infratel down by 2.20%, Yes Bank down by 1.83%, HCL Technologies down by 1.17% and Larsen & Toubro was down by 1.17% were the top losers.

Asian markets were trading mostly in red, Shanghai Composite declined 44.61 points or 1.48% to 2,963.54, KOSPI fell 6.69 points or 0.31% to 2,119.64, Hang Seng decreased 337.07 points or 1.18% to 28,175.93, Nikkei 225 slipped 110.95 points or 0.52% to 21,175.04, Straits Times trembled 4.11 points or 0.12% to 3,307.42 and Taiwan Weighted was down by 72.73 points or 0.67% to 10,706.72. On the flip side, Jakarta Composite was up by 24.72 points or 0.39% to 6,313.19.