Benchmarks trade firm in early deals; Nifty above 10,900 mark

Indian equity benchmarks made cautious start and sooner gained momentum to trade firm with gains of around half a percent each in early deals on Tuesday. Barring IT and TECK, all the sectoral indices are trading in green on the BSE. Some support came in with Finance Minister Nirmala Sitharaman’s statement that the government planned steps to improve the state of the economy fairly quickly after getting inputs from business leaders. Traders took note of report that the ASSOCHAM expects the Reserve Bank of India to cut the benchmark policy Repo rate by 50 basis points or more, in the wake of a realistic assessment of the state of economy which needs an immediate demand push and investment support by way of reduced cost of borrowing. Besides, a private report indicated that India's economy needs external capital flow to grow at 9% and touch $5 trillion in the next five years. Though, upside remained limited amid weakness in the Asian peers.

On the global front, all the Asian markets were trading in red after China let its currency sink and halted purchases of US farm goods, fueling fears Beijing's trade war with President Donald Trump will harm the global economy. Beijing allowed its yuan to fall past the politically sensitive level of seven to the dollar following Trump's threat last week to extend punitive tariffs to an additional $300 billion of Chinese imports.

Back home, on the sectoral front, the Non-banking finance companies (NBFCs) stocks were in focus with report that bank credit to NBFCs fell by over Rs 6,000 crore between April and June, once again highlighting the risk aversion towards the sector. In scrip specific development, Bharat Dynamics soared on inaugurating 5 MW solar power project. Muthoot Finance zoomed on planning to raise funds in the form of loans including bank loans or by issuance of foreign currency bonds or rupee denominated bonds overseas on public/private basis in international markets.

The BSE Sensex is currently trading at 36884.48, up by 184.64 points or 0.50% after trading in a range of 36536.59 and 36933.13. There were 29 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.86%, while Small cap index was up by 1.00%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.53%, Auto up by 1.24%, Industrials up by 1.17%, Utilities up by 1.14% and Basic Materials was up by 1.10%, while IT down by 0.15% and TECK was down by 0.14% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.16%, Tata Motors up by 2.10%, Indusind Bank up by 1.96%, Hero MotoCorp up by 1.86% and Tata Motors - DVR up by 1.79%. On the flip side, TCS down by 0.82% and Infosys down by 0.08% were the only losers.

Meanwhile, amid continuing overseas fund outflow from the markets following the decision to impose surcharge on certain class of such investors, Finance Minister Nirmala Sitharaman has said that the government will soon hold discussions with representatives of Foreign Portfolio Investors (FPIs). She added that Economic Affairs Secretary Atanu Chakraborty would hold discussions with representatives of FPIs soon. She said ‘I am quite open to hear them out what they (FPIs) have to say’.

Besides, FPIs pulled out Rs 2,881.10 crore from debt and equity segments on August 1 and 2. In July, they had withdrawn a net amount of Rs 2,985.88 crore from the capital markets. In the 2019-20 Budget, the government had decided to increase surcharge from 15 per cent to 25 per cent on taxable income between Rs 2 crore and Rs 5 crore, and from 15 per cent to 37 per cent for income above Rs 5 crore. It would also be applicable for FPIs operating as trusts or as association of persons.

Moreover, talking about sovereign bonds, the Minister said nothing more has been done apart from the announcement in the Budget as the ministry was busy in dealing with three bills, including amendment to the Insolvency and Bankruptcy Code (IBC). The government has announced it would start raising a part of its gross borrowing programme from external markets in foreign currencies. India's sovereign external debt-to-GDP level is among the lowest globally at less than 5 per cent.

The CNX Nifty is currently trading at 10923.20, up by 60.60 points or 0.56% after trading in a range of 10813.80 and 10938.65. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 2.97%, GAIL India up by 2.64%, Indusind Bank up by 2.29%, Tata Motors up by 2.14% and Hero MotoCorp up by 1.95%. On the flip side, Zee Entertainment down by 1.77%, Titan Company down by 0.92%, TCS down by 0.84%, Bharti Airtel down by 0.24% and Wipro down by 0.11% were the top losers.

All the Asian counters are trading in red; Nikkei 225 declined 132.10 points or 0.64% to 20,588.19, Straits Times shed 21.34 points or 0.64% to 3,173.17, Hang Seng slipped 184.73 points or 0.71% to 25,966.59, Taiwan Weighted tumbled 39.04 points or 0.37% to 10,384.37, KOSPI decreased 1.68 points or 0.09% to 1,945.30, Jakarta Composite slipped 27.08 points or 0.44% to 6,148.62 and Shanghai Composite was down by 68.61 points or 2.43% to 2,752.89.