Markets trim gains in late afternoon deals

Indian equity benchmarks trimmed gains in late afternoon session, despite firm opening of European markets. Indices pared gains, amid reports that markets view the rally in Brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India’s FY20 current account deficit and forecasts for a balance of payment surplus. Besides, Global rating agency Standard & Poor's (S&P) said that the killing of Iranian general Qassem Soleimani by the US and the ongoing fallout have rapidly escalated event risk in the Gulf region and the development does not alter the rating base-case assumption that any military action by either side will not lead to a fully-fledged direct military confrontation.

On the global front, European markets were trading in green, as Eurozone investor confidence rose for third successive month in January, and at a faster-than-expected pace, to its highest level in over a year amid signs of an easing in the US-China trade dispute. The Sentix investor confidence index climbed to 7.6 points from 0.7 in January. Asian markets were also trading in green, after South Korea's current account surplus increased in November from last year. The Bank of Korea reported that the current account balance showed a surplus of $5.97 billion versus $7.83 billion in the previous month. The surplus increased from $5.13 billion logged in the same period of last year.

The BSE Sensex is currently trading at 40816.22, up by 139.59 points or 0.34% after trading in a range of 40727.37 and 41230.14. There were 19 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 was up by 0.59%, while Small cap index was up by 0.84%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.41%, Realty up by 1.35%, Metal up by 0.74%, Energy up by 0.72% and Power up by 0.60%, while Telecom down by 0.93%, TECK down by 0.22%, Oil & Gas down by 0.16%, IT down by 0.16% and Consumer Durables down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.22%, NTPC up by 1.60%, HDFC Bank up by 1.20%, Reliance Industries up by 1.16% and Sun Pharma up by 1.15%. On the flip side, Infosys down by 1.31%, Hero MotoCorp down by 1.15%, Bharti Airtel down by 0.93%, Indusind Bank down by 0.89% and Power Grid down by 0.67% were the top losers.

Meanwhile, with an aim to ensure expeditious resolution of financial stress, the Reserve Bank of India (RBI) has revised the Supervisory Action Framework (SAF) for urban cooperative banks (UCBs). The Apex bank will continue to monitor asset quality, profitability and capital/net worth of UCBs under the revised SAF.

As per the revised norms, a UCB may be placed under SAF when its net NPAs exceed 6 percent of its net advances. Depending on the severity of stress, the Reserve Bank may ask them to curtail their lending powers, among other safeguards. A UCB could also be placed under SAF when it incurs losses for two consecutive financial years or has accumulated losses on its balance sheet.

Further, the issue of show cause notice for cancellation of banking license may be considered by the Reserve bank when continued normal functioning of the UCB is no longer considered to be in the interest of its depositors/ public. The revised SAF will be implemented with immediate effect. Supervisory action already taken under the earlier SAF will be reviewed and revised instructions, if any, will be issued to the UCBs concerned.

The CNX Nifty is currently trading at 12042.15, up by 49.10 points or 0.41% after trading in a range of 12005.35 and 12152.15. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.55%, Zee Entertainment up by 2.43%, Ultratech Cement up by 2.11%, UPL up by 1.96% and NTPC up by 1.64%. On the flip side, BPCL down by 1.53%, Bharti Infratel down by 1.42%, Infosys down by 1.22%, Hero MotoCorp down by 1.06% and Bharti Airtel down by 0.95% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 370.86 points or 1.6% to 23,575.72, Hang Seng increased 146.24 points or 0.52% to 28,372.43, Straits Times advanced 23.87 points or 0.74% to 3,242.73, KOSPI rose 20.47 points or 0.95% to 2,175.54 and Shanghai Composite was up by 20.05 points or 0.65% to 3,103.46. On the flip side, Jakarta Composite lost 3.60 points or 0.06% to 6,253.80 and Taiwan Weighted was down by 73.04 points or 0.61% to 11,880.32.

All European markets were trading in green; UK’s FTSE 100 gained 0.67 points or 0.01% to 7,576.01, France’s CAC rose 37.75 points or 0.63% to 6,051.34 and Germany’s DAX was up by 106.00 points or 0.81% to 13,232.99.