Local equities pare early gains; Nifty holds 12,350 mark

Local equity benchmarks have erased some of their early gains in morning session and currently trading marginally higher amid alternate bouts of buying-selling. Traders were seen piling positions in Telecom, Healthcare and Consumer Durables sector, while selling was witnessed in Metal, Basic Materials and PSU sector stocks. Traders turned cautious with a report that exports dropped 1.8% y-o-y in December to $27.36 billion, the fifth straight month of contraction, despite a favourable base, as external headwinds, on top of subdued domestic manufacturing, continue to hurt. However, some optimism came with NITI Aayog vice chairman Rajiv Kumar’s statement that the government is likely to take more measures to deal with the problem of financial sector.

On the global front, Asian markets are trading mixed, after the United States and China ended some uncertainties for the world economy by signing a partial trade agreement. Back home, Commerce and Industry Minister Piyush Goyal has asked those importers to seek HSN or tariff code within 30 days from the foreign trade office, failing which the government would impose strong restrictions on their inbound shipments.

The BSE Sensex is currently trading at 41929.78, up by 57.05 points or 0.14% after trading in a range of 41885.65 and 42059.45. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.59%, while Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were Telecom up by 0.76%, Healthcare up by 0.57%, Consumer Durables up by 0.44%, FMCG up by 0.44% and Utilities was up by 0.35% while Metal down by 1.57%, Basic Materials down by 0.41%, PSU down by 0.29% and Oil & Gas was down by 0.22% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.34%, Power Grid up by 1.26%, Nestle up by 1.23%, Hindustan Unilever up by 0.99% and TCS was up by 0.86%. On the flip side, Tata Steel down by 1.78%, NTPC down by 1.53%, Hero MotoCorp down by 1.00%, Tech Mahindra down by 0.98% and IndusInd Bank was down by 0.97% were the top losers.

Meanwhile, in order to deal with the problem of financial sector, NITI Aayog vice chairman Rajiv Kumar has said the government may take more measures. Kumar said this is a very different type of situation that the country facing. He mentioned ‘Credit markets are jammed. It continues despite government's best efforts in the sense of assuring people. I believe some other steps are now in pipeline for further such adverse impact not to take place. This is something that all of us in the government and outside who are interested in India's economic development need to go very deep into it. I don't think there are no easy answers here. I do not think there are short-cut solutions here because what's happening to credit growth, what's happening to bond markets, what's happening to NBFCs.’

Since August several steps have been taken by the government, including liquidity support to housing finance companies, one-time partial credit guarantee to public sector banks for purchase of high-rated pooled assets of non-banking finance companies (NBFCs) and mega merger of public sector banks.  Pointing out that there are 92,000 urban and rural credit cooperative in the country, he said it is fragmented and only top 500 are functional. He said ‘I think this requires very deep study. I suppose the research department of (the) RBI would be very well placed to do so. This is time to study this issue much more carefully than what we have done in the past.’

Besides, talking about the changes made in the Finance Act, he said, ‘I am amazed to find SEBI's financial autonomy is now being challenged and threatened...all the funds and fee it collects has to be put to Consolidated Fund of India. Imagine what it will do the SEBI's autonomy when it will have to ask for the fund from the government.’ As per the Finance Act 2019, SEBI will have to transfer 75 per cent of its surplus from the general fund every year to the Consolidated Fund of India. He pitched for convergence of regulators in the financial sector for effective and efficient regulation. He added there are 20 regulators are in financial sector space alone.

The CNX Nifty is currently trading at 12351.65, up by 8.35 points or 0.07% after trading in a range of 12345.10 and 12389.05. There were 24 stocks advancing against 25 stocks declining, 1 stock remain unchanged on the index.

The top gainers on Nifty were Eicher Motors up by 2.33%, Power Grid up by 1.57%, Yes Bank up by 1.51%, Nestle up by 1.30% and Bharti Airtel was up by 1.09%. On the flip side, Vedanta down by 1.94%, Tata Steel down by 1.80%, JSW Steel down by 1.70%, NTPC down by 1.53% and Hindalco was down by 1.47% were the top losers.

Asian markets are trading mixed, Hang Seng increased 13.38 points or 0.05% to 28,786.97, KOSPI rose 10.82 points or 0.48% to 2,241.80, Straits Times advanced 9.23 points or 0.28% to 3,266.21 and Nikkei 225 surged 5.90 points or 0.02% to 23,922.48.

On the other hand, Jakarta Composite lost 6.39 points or 0.1% to 6,276.98, Shanghai Composite declined 9.57 points or 0.31% to 3,080.47 and Taiwan Weighted dropped 37.37 points or 0.31% to 12,054.51.