Local equities continue sluggish trend

Local equity benchmarks continued to show a sluggish trend in morning session, with losses of over half a percent amid a spike in oil price tracking an attack on Saudi Arabia’s oil facilities that cut more than 5% of global oil supply. Market participants were concerned with Former Prime Minister Manmohan Singh’s statement that the government should have taken chief ministers’ views before changing the terms of reference of the 15th Finance Commission, adding that unilateralism is not good for federal policy and cooperative federalism. However, further losses remained capped with a report that incentives announced by the government will help in boosting the country’s exports at a time when there are signs of worsening global economic conditions and it will help in boosting outbound shipments. Traders took some solace with Finance minister Nirmala Sitharaman’s announced that a new Rs 50,000-crore scheme to make exports zero rated and replace the government’s flagship, but WTO-incompatible, Merchandise Exports From India Scheme from January 2020 to boost faltering outbound shipments that have contracted twice in the past five months.

On the global front, Asian markets were trading mixed, as global crude futures soared following the weekend attack on Saudi Arabian oil facilities. Back home, Indian think-tank Centre for Civil Society reported that India has jumped 11 spots on Global Economic Freedom index from last year’s 96th spot to the current ranking of 79. The latest gain is promising news for the Indian economy which is currently reeling under slowdown.

The BSE Sensex is currently trading at 37194.73, down by 190.26 points or 0.51% after trading in a range of 37111.29 and 37252.23. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.07%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.63%, Consumer Durables up by 0.57%, FMCG up by 0.40%, Utilities up by 0.31% and Telecom was up by 0.15%, while Energy down by 1.48%, Oil & Gas down by 1.36%, PSU down by 0.70%, Capital Goods down by 0.62% and Industrials was down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.09%, Hindustan Unilever up by 0.79%, Bharti Airtel up by 0.67%, Tech Mahindra up by 0.63% and Power Grid was up by 0.57%. On the flip side, Asian Paints down by 2.31%, HDFC down by 1.70%, Reliance Industries down by 1.45%, Tata Steel down by 1.32% and Larsen & Toubro was down by 1.16% were the top losers.

Meanwhile, with an aim to expand the banking services through high technology-low cost operations, the Reserve Bank of India (RBI) has proposed a minimum equity capital of Rs 200 crore to set up a small finance bank (SFB) under the 'on tap' licence regime. The objectives of setting up of SFBs are to further financial inclusion and supply of credit through high technology-low cost operations.

Unveiling the draft guidelines for 'on tap' licensing of SFBs in the private sector, the RBI said existing non-banking financial companies (NBFCs), micro finance institutions and local area banks in the private sector, which are controlled by residents, can opt for conversion into small finance banks. It also said proposals from public sector entities and large industrial house/business groups, and autonomous boards/bodies will not be entertained.

Further, in view of the inherent risk of an SFB, it shall be required to maintain a minimum capital adequacy ratio of 15 per cent of its risk weighted assets (RWA) on a continuous basis. The draft also said the promoters should hold a minimum of 40 per cent of the paid-up voting equity capital of the bank, which would remain locked in for five years from the date of commencement of the bank's business.

Besides, it mentioned that after the SFB reaches the net worth of Rs 500 crore, listing will be mandatory within three years of reaching that net worth. Moreover, SFBs having net worth of below Rs 500 crore could also get their shares listed voluntarily, subject to fulfilment of the requirements of the capital markets regulator. The foreign shareholding in the small finance bank would be as per the extant foreign direct investment (FDI) policy for private sector banks.

The CNX Nifty is currently trading at 11021.40, down by 54.50 points or 0.49% after trading in a range of 10988.80 and 11034.25. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 1.81%, GAIL India up by 1.74%, ONGC up by 1.01%, Titan Company up by 0.96% and Grasim Industries was up by 0.90%. On the flip side, BPCL down by 5.36%, Indian Oil Corporation down by 2.50%, Asian Paints down by 2.39%, HDFC down by 1.60% and Bharti Infratel was down by 1.47% were the top losers.

Asian markets were trading mixed; Taiwan Weighted strengthened 47.99 points or 0.44% to 10,875.54, KOSPI rose 8.20 points or 0.4% to 2,057.40 and Shanghai Composite was up by 0.93 points or 0.03% to 3,032.17.

On the other side; Straits Times trembled 1.82 points or 0.06% to 3,209.67, Jakarta Composite lost 115.56 points or 1.82% to 6,219.28 and Hang Seng was down by 326.61 points or 1.19% to 27,026.08.