Local indices trim gains in morning deals

Indian equity benchmarks trimmed some of their opening gains but continued to trade in green in morning deals, helped by gains in Power, Auto and Telecom stocks. Sentiments remained positive as the Reserve Bank of India (RBI) announced a host of steps, including term repo operations totalling Rs 1 lakh crore in mid-September in order to ease pressure on the liquidity and maintain congenial financial conditions with a view to ensuring sustainable recovery of economic growth. Sharp recovery in rupee value against dollar too supported the markets. The rupee strengthened 48 paise to 73.12 against the US dollar supported by weak American currency and positive domestic equities. However, the market trimmed most of their gains, as anxiety remained among the local traders with report that India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment.

On the global front, Asian markets were trading mostly in red even as the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) showed China's factory activity expanded at the fastest clip in nearly a decade in August, bolstered by the first increase in new export orders this year. The Caixin/Markit manufacturing Purchasing Managers' Index or PMI for August rose to 53.1 from 52.8 in July. Back home, on the sectoral front, stocks related to fertilizer sector remained in focus with India Ratings and Research (Ind-Ra) in a report stating that India's fertiliser sales are likely to grow 10-15 percent in 2020-21, however, the momentum seen in first half of the fiscal is likely to moderate during the second half.

The BSE Sensex is currently trading at 38782.75, up by 154.46 points or 0.40% after trading in a range of 38542.11 and 39037.41. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.17%, while Small cap index was down by 0.28%.

The top gaining sectoral indices on the BSE were Power up by 1.45%, Auto up by 1.08%, Telecom up by 0.96%, Metal up by 0.85% and TECK up by 0.73%, while Realty down by 1.68%, Oil & Gas down by 1.19%, Energy down by 0.40%, FMCG down by 0.16% and PSU down by 0.09% were the top losing indices on BSE.
The top gainers on the Sensex were NTPC up by 2.69%, Maruti Suzuki up by 2.03%, Asian Paints up by 2.01%, Mahindra & Mahindra up by 1.66% and Bajaj Finance up by 1.59%. On the flip side, ONGC down by 4.02%, Axis Bank down by 1.31%, Nestle down by 0.93%, Sun Pharma down by 0.80% and ICICI Bank down by 0.76% were the top losers.

Meanwhile, In order to ease pressure on the liquidity and maintain congenial financial conditions with a view to ensuring sustainable recovery of economic growth, the Reserve Bank of India (RBI) announced a host of steps, including term repo operations totalling Rs 1 lakh crore in mid-September. It said the RBI stands ready to conduct market operations as required through a variety of instruments so as to ensure orderly market functioning, it added that recently market sentiment has been impacted by concerns relating to the inflation outlook and the fiscal situation amidst global developments that have firmed up yields abroad.

The RBI said that in order to reduce the cost of funds, banks that had availed of funds under long-term repo operations (LTROs) may exercise an option of reversing these transactions before maturity. Thus, the banks may reduce their interest liability by returning funds taken at the repo rate prevailing at that time (5.15 per cent) and availing funds at the current repo rate of 4 per cent. The last date for paying the second instalment of advance tax is September 15.

Further, the RBI will conduct additional special open market operation involving the simultaneous purchase and sale of government securities for an aggregate amount of Rs 20,000 crore in two tranches of Rs 10,000 crore each. The auctions would be conducted on September 10, 2020, and September 17, 2020. The RBI remains committed to conducting further such operations as warranted by market conditions.

The CNX Nifty is currently trading at 11423.95, up by 36.45 points or 0.32% after trading in a range of 11366.90 and 11510.00. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 2.95%, NTPC up by 2.75%, Grasim Industries up by 2.59%, Asian Paints up by 2.49% and JSW Steel up by 2.08%. On the flip side, ONGC down by 3.90%, Zee Entertainment down by 2.41%, Indian Oil Corporation down by 2.04%, Coal India down by 1.60% and UPL down by 1.51% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 13.61 points or 0.06% to 23,126.15, Straits Times trembled 12.92 points or 0.51% to 2,519.59, Hang Seng decreased 5.50 points or 0.02% to 25,171.55 and Jakarta Composite lost 1.05 points or 0.02% to 5,237.44.

On the flip side, Shanghai Composite gained 1.49 points or 0.04% to 3,397.17, KOSPI rose 24.41 points or 1.05% to 2,350.58 and Taiwan Weighted strengthened 81.83 points or 0.65% to 12,673.28.