Indices pare some gains in early noon session

Markets pared some initial gains but continued to trade in green in early noon session amid buying in blue chip stocks from across various sectors. Buying in Telecom, TECK and IT stocks helped markets to trade higher. Buying in frontline stocks such as HCL Technologies, Tata Motors - DVR and Bharti Airtel were aiding sentiment, while selling in Tata Steel, Indusind Bank and Axis Bank kept gains in the markets in check. Besides, broader indices were also trading in green, supporting their larger peers. The mood on the street remained optimistic with India Meteorological Department (IMD) data showing that India received 28% more rainfall than the 50-year average in the week to August 7, easing concerns of drought. Monsoon rains are crucial for farm output and economic growth, as agriculture forms about 15% of India's $2.5-trillion economy. Some comfort also came with private report highlighting that the Reserve Bank of India (RBI) move for an unconventional repo rate cut by 35 basis points, the first of such magnitude by the central bank, to arrest falling economic growth while insisting that banks must now pass on the benefits to their customers.

On the global front, Asian markets were trading mostly higher as the central banks of India, New Zealand and Thailand -all have made aggressive cuts to interest rates and participants eyed for additional rate cuts by Federal Reserve in the United States, to brace the global economy amid rising fears of slowdown. Back on street, Punjab National Bank (PNB) traded higher after it recovered Rs 278.66 crore as penalty in the financial year 2018-19 from the poor account holders for not maintaining a minimum balance. This amount has been recovered from about 12.7 million customers across the country.

The BSE Sensex is currently trading at 36755.97, up by 65.47 points or 0.18% after trading in a range of 36655.41 and 36903.81. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index rose 0.20%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Telecom up by 2.04%, TECK up by 1.21%, IT up by 1.10%, Realty up by 1.05% and Power up by 0.87%, while Consumer Durables down by 0.64%, Bankex down by 0.39%, Capital Goods down by 0.33%, Industrials down by 0.16%, Consumer Discretionary down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 3.68%, Tata Motors - DVR up by 2.45%, Bharti Airtel up by 2.12%, Tata Motors up by 2.04% and Yes Bank was up by 1.96%. On the flip side, Tata Steel down by 3.54%, Indusind Bank down by 2.92%, Axis Bank down by 1.62%, Larsen & Toubro down by 1.01% and HDFC was down by 0.84% were the top losers.

Meanwhile, with the Reserve Bank of India (RBI) cutting repo rate by 35 bps to 5.40% to help revive the economy, India Inc said its swift and full transmission by banks in the form of lower lending rates will be essential to lift consumption and investment in the economy. Ficci President Sandip Somany said the central bank has also kept liquidity in the surplus mode, and it is now critical for banks to move fast and transmit this ease in policy rate in the form of lower lending rates.

Besides, PHD Chamber of Commerce and Industry President Rajeev Talwar said the repo rate cut will help rejuvenate consumption and increase competitiveness of the producers with reduced cost of capital. However, he noted that at this stage, transmission of the cut in repo rate with an effective reduction in lending rates by the banking sector would be crucial to materialize the benefits at the ground level. He also said “going ahead, we expect repo rate to come down to 5 percent in the coming quarters for enhanced liquidity and availability of credit to the industry especially to the micro, small and medium enterprises (MSMEs) with a significant reduction in the cost of capital.

According to the Indian Chamber of Commerce, the cut in the repo rate will transmit to cheaper loans which will boost the economy at large, especially sectors such as real estate and automobiles, and spur the latent consumer demand in these segments. It said higher disposable income in the hands of consumer will also fuel the growth in domestic demand going forward. Also, Engineering Export Promotion Council (EEPC) of India Chairman Ravi Sehgal has suggested that the central bank should also ensure easy credit disbursal to the exporters, especially in the MSME sector and transmission by the banks of the earlier reductions in the lending rates.

The CNX Nifty is currently trading at 10871.60, up by 16.10 points or 0.15% after trading in a range of 10842.95 and 10915.70. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were HCL Technologies up by 3.65%, Bharti Infratel up by 2.12%, Hindalco up by 2.04%, Bharti Airtel up by 2.02% and JSW Steel was up by 1.86%. On the flip side, Tata Steel down by 3.72%, Cipla down by 3.32%, Indusind Bank down by 3.06%, Indiabulls Housing down by 3.06% and Axis Bank was down by 1.83% were the top losers.

Asian markets were trading mostly in green, Hang Seng increased 172.56 points or 0.66% to 26,169.59, Nikkei 225 surged 93.38 points or 0.46% to 20,609.94, KOSPI rose 21.07 points or 1.1% to 1,930.78. Taiwan Weighted strengthened 109.36 points or 1.05% to 10,495.54, Jakarta Composite soared 49.22 points or 0.79% to 6,253.42 and Shanghai Composite was up by 28.96 points or 1.05% to 2,797.64. On the flip side, Straits Times was down by 14.20 points or 0.45% to 3,170.49.