Domestic indices trade in fine-fettle; Sensex surpasses 41,300 mark

Indian equity benchmarks rebounded from the previous session's losses with optimistic start on Tuesday, following sharp fall in crude oil prices overnight and positive cues from global markets. Domestic indices were trading in fine-fettle in early deals, led by gains in Metal, Basic Materials and Auto stocks. All the sectoral indices on the BSE were trading in green. Sentiments got some support with report that the Reserve Bank of India (RBI) announced detailed rules for exempting incremental car, home and micro, small and medium enterprises (MSMEs) loans from maintaining cash reserve ratio (CRR). The RBI said CRR will not have to be maintained for five years or for the tenure of the loan, depending upon which-ever is less. This will essentially mean a lower cost for banks and will help improve liquidity. Traders took note of Agriculture Minister Narendra Singh Tomar’s statement that India is on track to become self-sufficient in production of the protein-rich commodity and will further boost the output to meet global demand.

On the global front, Asian markets were trading in positive territory, on hopes for more stimulus measures by China to offset the economic impact of the deadly coronavirus outbreak. Investors also seemed reassured by Chinese President Xi Jinping's pledge to win the fight against the coronavirus outbreak. China's National Health Commission said that a total of 42,638 cases related to the coronavirus have been confirmed and 1,016 people have died in the country. Meanwhile, the Japanese market is closed for a holiday.

Back home, Finance Minister Nirmala Sitharaman said that public sector banks' (PSBs) bad loans came down to Rs 7.27 lakh crore at the end of September 2019, on host of measures taken by the government to improve financial health of the banks in the country. In stock specific development, Cipla gained as its wholly owned subsidiary Cipla Medpro South Africa and South Africa's third largest pharmaceutical company in the private sector, concluded an exclusive agreement securing originator and authorised generic brands of an atypical anti-psychotic drug, Quetiapine.

The BSE Sensex is currently trading at 41357.45, up by 377.83 points or 0.92% after trading in a range of 41179.14 and 41418.64. There were 29 stocks advancing against 1 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.67%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were Metal up by 2.12%, Basic Materials up by 1.33%, Auto up by 1.22%, Bankex up by 1.21% and Utilities was up by 1.17%, while there were no looser on the BSE sectoral front.

The top gainers on the Sensex were Tata Steel up by 2.74%, Axis Bank up by 1.98%, Ultratech Cement up by 1.80%, Indusind Bank up by 1.69% and SBI up by 1.66%. On the flip side, TCS down by 0.21% was the sole loser.

Meanwhile, with an aim to boost demand in the sagging economy, the Reserve Bank of India (RBI) has said the special lending window with cash reserve ratios (CRR) exemption will be open from February 14 and incremental loans disbursed under this facility will have CRR exemption for the next five years. This means that banks will not be needed to make additional cash reserve ratio against any incremental loans disbursed to the targeted segments. The window opens on February 14 for six months ending July 31, 2020, but the net demand and time liabilities (NDTL) will be calculated as of January 31, 2020.

The productive sectors identified by the regulator are auto and residential housing loans, and also loans to micro, small and medium enterprises (MSMEs). The central bank said banks can claim the first such deduction from the NDTL of February 14, 2020 for the amount equivalent to the incremental credit extended to the above identified sectors over the outstanding level of credit as at the end of the fortnight to January 31, 2020. An amount equivalent to the incremental credit outstanding from the fortnight beginning January 31, 2020 and up to the fortnight ending July 31, 2020 will be eligible for deduction from NDTL for the purpose of computing the CRR for a period of five years from the date of origination of the loan or the tenure of the loan, whichever is earlier.

The central bank feels revitalising credit flow to productive sectors like these can have multiplier effects to spur support growth. It added that proper fortnightly records of net incremental credit extended to these select sectors/NDTL exemption claimed, duly certified by the chief financial officer or an equivalent officer, must be maintained by banks for supervisory review. The RBI expects this special window to enable improved credit flow to needy sectors, reinforces monetary transmission, strengthens regulation and supervision, broadens and deepens financial markets; and also improves payment and settlement systems.

The CNX Nifty is currently trading at 12145.05, up by 113.55 points or 0.94% after trading in a range of 12103.10 and 12162.05. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 3.57%, Tata Motors up by 3.11%, JSW Steel up by 2.91%, Tata Steel up by 2.55% and Hindalco up by 2.25%. On the flip side, TCS down by 0.38% and Zee Entertainment down by 0.11% were the only losers.

All the Asian markets were trading in green; Hang Seng increased 341.68 points or 1.25% to 27,583.02, Taiwan Weighted strengthened 92.13 points or 0.8% to 11,666.20, KOSPI rose 26.28 points or 1.19% to 2,227.35, Straits Times advanced 23.56 points or 0.74% to 3,186.71, Shanghai Composite gained 9.65 points or 0.33% to 2,900.14 and Jakarta Composite was up by 4.14 points or 0.07% to 5,956.22.