Sensex, Nifty turn green in early noon deals

Local equity benchmarks erased all their losses to turn positive in early noon session with both Sensex and Nifty trading above 37,900 and 11,250 levels, respectively. Buying in frontline stocks such as Bajaj Finance, Yes Bank and Tata Motors - DVR were aiding sentiment, while selling in Vedanta, Bharti Airtel and TCS kept the gains in the markets in check. Besides, broader indices were also trading in green, supporting their larger peers. Market sentiments turned positive with Employees’ State Insurance Corporation (ESIC) payroll data which showed that around 12.66 lakh jobs were created in May, a tad higher than 11.15 lakh jobs in April this year. Gross enrolments of new subscribers with the ESIC were 1.49 crore during 2018-19. Some comfort also came in with Niti Aayog CEO Amitabh Kant’s statement that India was pursuing a policy of import substitution so far, and in future, the country's policy will essentially focus on export-led growth. He said India has huge potential to become a global manufacturing hub for electronics products.

On the global front, Asian markets were trading mostly in red, following the European Central Bank's monetary-policy decision, offsetting optimism about a aggressive rate reduction. Back on street, in scrip specific developments, shares of Tata Motors edged up despite reporting a consolidated net loss of Rs 3679.66 crore in Q1as compared to net loss of Rs 1862.57 crore for the same quarter in the previous year. Besides, Tata Steel rose on acquiring 2.58 crore rights equity shares of Tata Sponge Iron.

The BSE Sensex is currently trading at 37903.65, up by 72.67 points or 0.19% after trading in a range of 37690.47 and 37903.65. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.33%, while Small cap index was up by 0.05%.

The gaining sectoral indices on the BSE were Auto up by 1.29%, Industrials up by 0.77%, Capital Goods up by 0.76%, Bankex up by 0.76% and Healthcare was up by 0.61%, while IT down by 0.95%, TECK down by 0.81%, Telecom down by 0.55%, Oil & Gas down by 0.46% and Utilities was down by 0.42% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 5.87%, Yes Bank up by 3.37%, Tata Motors - DVR up by 3.23%, Tata Motors up by 3.19% and Hero MotoCorp was up by 2.72%. On the flip side, Vedanta down by 2.83%, Bharti Airtel down by 2.05%, TCS down by 1.10%, Infosys down by 1.08% and Tech Mahindra was down by 0.96% were the top losers.

Meanwhile, Crisil in its latest report has stated that the Reserve Bank of India’s (RBI) newly introduced guidelines on loan system for delivery of bank credit will result in a better assessment of working capital requirements by borrowers and improve financial discipline among them. Effective July 1, 2019, the RBI made it compulsory for borrowers, having aggregate fund-based working capital exposure to the banking system in excess of Rs 150 crore, to maintain 60 percent of this as loan component, up from 40 percent earlier.

According to the report, there is no likelihood of a widespread disruption on account of the new rules. It also said that there is a need for closer monitoring of liquidity as 60 percent of the fund-based working capital facilities of large borrowers shall have scheduled repayments. It noted that the policy on rolling over of working capital loans will also become crucial. Further, it said the undrawn portion of cash credit or overdraft facilities sanctioned to such borrowers will attract a 'credit conversion factor' of 20 percent, implying higher capital cost.

The report further stated that the move would goad towards better working capital planning by corporates, aligning their limits to the cash conversion cycle. It noted that this is because the flexibility of cash credit facilities-- innumerable withdrawals and deposits (within the drawing power and limits) -- would no longer be available fully. It added that the objective is to shift the onus of treasury operations from lenders to borrowers, thereby fostering greater financial discipline.

The CNX Nifty is currently trading at 11279.25, up by 27.10 points or 0.24% after trading in a range of 11210.05 and 11282.80. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 5.64%, Bajaj Finserv up by 4.74%, Eicher Motors up by 4.01%, Yes Bank up by 3.42% and Tata Motors was up by 3.15%. On the flip side, Vedanta down by 3.70%, Indian Oil Corporation down by 2.93%, Bharti Airtel down by 2.06%, Britannia down by 1.52% and Tech Mahindra was down by 1.11% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 118.30 points or 0.41% to 28,476.00, Nikkei 225 slipped 106.05 points or 0.49% to 21,650.50, Straits Times trembled 27.26 points or 0.81% to 3,354.00, Jakarta Composite lost 85.64 points or 1.34% to 6,315.73, Taiwan Weighted dropped 46.34 points or 0.42% to 10,895.07 and KOSPI was down by 7.41 points or 0.36% to 2,067.07. On the other hand, Shanghai Composite was up by 1.66 points or 0.06% to 2,939.02.