Local equities continue to trade in green

Local equity benchmarks are trading in green in morning session, with Sensex and Nifty garnering gains of over one third a percent, ahead to the outcome of the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy review meeting later in the day. Traders are expecting that the Reserve Bank is likely to go for yet another rate cut, as inflation is within the comfort zone and the need to boost the economy is pressing. Optimism came in with a report that Commerce and Industry Minister Piyush Goyal and US Secretary for Commerce Wilbur Ross held discussions to increase bilateral trade between the countries. The meeting assumes significance as India and the US are negotiating a bilateral trade deal to boost two-way commerce. However, gains remained capped with a report that the declining trend in goods and services tax (GST) revenue this fiscal is largely due to a cyclical consumption slowdown, especially in the auto sector. Besides, foreign portfolio investors (FPIs) have once again expressed their opposition regarding the proposed data protection norms that mandate local storage of financial data and put restrictions on the cross-border movement.

On the global front, Asian markets were trading mostly in green, as investors took a wait-and-see approach after Wall Street rallied late to snap a two-day losing streak. Back home, US commerce secretary Wilbur Ross stated that there was no reason why a limited trade deal with India couldn’t be signed quickly, even as he asked New Delhi to balance the interest of large e-tailers.

The BSE Sensex is currently trading at 38292.85, up by 185.98 points or 0.49% after trading in a range of 38258.08 and 38403.54. There were 20 stocks advancing against 10 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.28%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were IT up by 0.95%, Auto up by 0.91%, TECK up by 0.73%, Power up by 0.55% and Healthcare was up by 0.38%, while FMCG down by 0.85%, Oil & Gas down by 0.45% and Telecom was down by 0.18% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.00%, HDFC up by 1.56%, Infosys up by 1.51%, TCS up by 1.32% and Hero MotoCorp was up by 1.26%. On the flip side, ITC down by 1.53%, HCL Tech down by 0.66%, Tata Motors - DVR down by 0.55%, Asian Paints down by 0.54% and Tata Motors was down by 0.53% were the top losers.

Meanwhile, Rating agency Crisil in its latest report has said the top 10 commercial real estate developers and operators in the country have the potential to raise as much as Rs 1.5 lakh crore through the real estate investment trust (REIT) route by monetising 184 million sqft space assuming a capitalisation rate of 8.5 per cent and stake dilution of 75 per cent.

The report highlighted with annual lease rentals of around Rs 17,000 crore, represent around 30 per cent of Grade A properties across major micro-markets in the country. It mentioned that portfolios with annual rentals of over Rs 1,000 crore, translating into a minimum asset valuation of Rs 10,000 crore, can absorb higher transaction costs and comply with regulations, and are more likely to use this option.

It said that while investor interest in the residential segment is declining fast because of limited property price appreciation and inability to monetise assets, REITs can be a potential investment option, providing assured and ongoing returns. Through REITs, private equity firms can divest at the portfolio level instead of individual assets. This would sync better with their typical exit timelines of 7-10 years.

However, it noted that  that given the high level of compliance and stringent regulatory requirements for REITs, developers with smaller commercial portfolios would continue to use lease rental discounting loans, which are accessible at rates as low as nine per cent.

The CNX Nifty is currently trading at 11355.90, up by 41.90 points or 0.37% after trading in a range of 11345.75 and 11400.30. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.12%, Wipro up by 1.63%, SBI up by 1.55%, HDFC up by 1.54% and Mahindra & Mahindra was up by 1.52%. On the flip side, Zee Entertainment down by 3.54%, Indian Oil Corporation down by 2.24%, BPCL down by 1.90%, ITC down by 1.47% and Nestle was down by 1.00% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 46.78 points or 0.22% to 21,388.52, Jakarta Composite soared 20.74 points or 0.34% to 6,059.27, Taiwan Weighted strengthened 4.47 points or 0.04% to 10,880.38 and KOSPI rose 0.60 points or 0.03% to 2,032.51.

On the other side, Straits Times trembled 10.27 points or 0.33% to 3,077.70 and Hang Seng decreased 117.32 points or 0.45% to 25,992.99.