Benchmarks trade firm in early deals

Indian equity benchmarks have made an optimistic start and are trading firm in early deals on F&O series expiry session, as traders took some support with Arvind Panagariya’s statement that the escalating trade war between the US and China is an opportune time for India to attract the large multinationals looking for alternative locations outside the Communist country. Sentiments also got some support with a private report that the government can look at issuing infrastructure bonds via a special purpose vehicle (SPV), which could mop up over Rs 95,000 crore or 0.5 percent of GDP, as it looks for means to push growth.  Meanwhile, the Reserve Bank of India (RBI) has issued guidelines for setting up of financial benchmark administrator (FBA) for administering significant benchmarks in the markets for financial instruments. Benchmarks administered outside India do not fall under the scope of the guidelines.

Global cues also remained supportive, with all the Asian markets were trading higher, ahead of a meeting between President Donald Trump and Chinese leader Xi Jinping at the G-20 summit in Japan this week. Investors hope that the presidents will move toward resolving a trade dispute that has raised business costs and weighed on global financial markets.

Back home, the metal stocks were buzzing with report that India's finished steel exports in May fell to their lowest in three years as shipments to traditional markets in the European Union (EU) and Nepal shrank. Telecom stocks were in focus with Telecom Minister Ravi Shankar Prasad’s statement that foreign direct investment (FDI) in the Indian telecom sector dropped by around 43 per cent to $2.6 billion in fiscal year 2018-19. In scrip specific development, Welspun jumped on entering into JV with Sense Organics Import and Hindalco Industries gained on joining hand with Fortum.

The BSE Sensex is currently trading at 39653.41, up by 61.33 points or 0.15% after trading in a range of 39633.88 and 39717.58. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.20%, while Small cap index was up by 0.65%.

The top gaining sectoral indices on the BSE were Realty up by 1.60%, Auto up by 0.65%, Capital Goods up by 0.63%, Industrials up by 0.59%, Oil & Gas up by 0.44%, while Healthcare down by 0.33%, Energy down by 0.21%, Consumer Durables down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 1.27%, Indusind Bank up by 1.23%, Mahindra & Mahindra up by 1.05%, Axis Bank up by 1.01% and Tata Motors up by 0.96%. On the flip side, Tech Mahindra down by 1.37%, Power Grid down by 1.00%, Sun Pharma down by 0.83%, Reliance Industries down by 0.68% and HCL Tech down by 0.66% were the top losers.

Meanwhile, with an aim to boost micro, small and medium enterprises (MSME) sector, the UK Sinha Committee, set up by the Reserve Bank of India (RBI) has recommended financial support of Rs 15,000 crore to the sector. MSME sector contributes significantly to employment generation and has as a hefty share of over 40% in exports, while the contribution of the sector in the economy is currently constrained due to several challenges affecting growth in the sector. The committee recommended setting up of a government-sponsored 'fund of funds' (FoF) of Rs 10,000 crore to support the venture capital and private equity firms investing in the MSME sector that will support crowd funding from venture capital and private equity firms, which focus on investing in the MSME segment on modified terms sheets developed by SIDBI.

The 9-member panel also recommended that a Rs 5,000 crore distressed asset fund be structured to assist units in clusters where a change in external environment, such as a ban on plastics or dumping, has led to a large number of MSMEs becoming non-performing assets (NPAs). This fund could operate on the lines of the Textile Upgradation Fund Scheme (TUFS), which has been in existence for many years. This would be of significant size which makes equity investments that help unlock debt or help revive sick units. It also recommended introduction of voluntary certification of MSMEs that comply with prescribed internal governance standards.

The committee suggested use of priority sector shortfall (PSS) funds to create a low-cost lending window for state governments for infrastructure projects in clusters, civil works for rehabilitation of existing industrial estates and setting up of new industrial estates. This would require RBI approval and could be structured on the lines of the Rural Infrastructure Development Fund (RIDF). Also, SIDBI should help the state governments design or operate schemes for equity support, interest subvention, resolution of stressed MSMEs, learning events for MSME entrepreneurs including field visits to well-performing clusters and support to the sector to get onto the digital platforms, such as 'PSBLoansIn59Minutes', stock exchange listing and e-commerce platforms, among others.

However, the panel said the MSME sector faces several challenges. Formulation of targeted policies in infrastructure development, formalisation, technology adoption, backward and forward linkage, credit gap reduction and timely payments to MSMEs and their effective implementation has been a challenge for all the stakeholders. Recognising the sector's universal role as an engine of economic growth and for promoting equitable development, the committee said India is currently one of the fastest-growing economies of the world and the sector is likely to continue to play a significant role in the growth of the economy.

The CNX Nifty is currently trading at 11867.50, up by 19.95 points or 0.17% after trading in a range of 11859.45 and 11886.75. There were 32 stocks advancing against 17 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bharti Infratel up by 1.95%, Indiabulls Housing Finance up by 1.74%, Indusind Bank up by 1.51%, BPCL up by 1.23% and Axis Bank up by 1.13%. On the flip side, Tech Mahindra down by 1.43%, Power Grid down by 1.00%, UPL down by 0.95%, Dr. Reddy’s Lab down by 0.94% and Adani Ports & SEZ down by 0.89% were the top losers.

All the Asian markets were trading in green; Nikkei 225 surged 195.61 points or 0.93% to 21,282.20, Taiwan Weighted strengthened 125.72 points or 1.18% to 10,778.27, Hang Seng increased 320.25 points or 1.13% to 28,542.23, Straits Times advanced 21.63 points or 0.66% to 3,322.88, Shanghai Composite gained 26.44 points or 0.89% to 3,002.72, KOSPI rose 15.99 points or 0.75% to 2,137.84 and Jakarta Composite was up by 27.51 points or 0.44% to 6,338.00.