Indices trim gains in late morning deals

Indian equity benchmarks trimmed their gains in late morning session, with both Sensex and Nifty trading near their neutral lines in green terrain. Gains got trimmed, as domestic sentiments were negative, as contracting for the sixth straight month, India's exports slipped 12.66 per cent to $22.7 billion in August, on account of decline in the shipments of petroleum, leather, engineering goods and gems and jewellery items. The country's imports too declined 26 per cent to $29.47 billion in August, leaving a trade deficit of $6.77 billion, compared to a shortfall of $ 13.86 billion in the same month last year.

On the global front, Asian markets were trading mostly higher, as Japan had a merchandise trade surplus of 248.299 billion yen in August. The Ministry of Finance said that was well above expectations for a deficit of 37.5 billion following the 11.6 billion yen surplus in July. Exports were down 14.8 percent on year to 5.232 trillion yen, beating forecasts for a fall of 16.1 percent after sinking 19.2 percent in the previous month.

The BSE Sensex is currently trading at 39064.53, up by 20.18 points or 0.05% after trading in a range of 39037.96 and 39217.02. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.02%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Auto up by 1.49%, Consumer Discretionary up by 0.48%, Energy up by 0.43%, Healthcare up by 0.42% and Metal up by 0.39%, while Bankex down by 0.97%, Utilities down by 0.81%, PSU down by 0.80%, Telecom down by 0.70% and Oil & Gas down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 4.77%, Bajaj Auto up by 2.66%, Ultratech Cement up by 0.80%, Nestle up by 0.70% and Bajaj Finance up by 0.69%. On the flip side, Indusind Bank down by 2.41%, Axis Bank down by 2.12%, SBI down by 1.65%, ICICI Bank down by 1.31% and ONGC down by 1.15% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has proposed allowing foreign portfolio investors (FPIs) to undertake exchange-traded rupee Interest Rate Derivatives (IRD) transactions subject to an overall ceiling of Rs 5,000 crore. IRD are contracts whose value is derived from one or more interest rates, prices of interest rate instruments, or interest rate indices. The proposed Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2020 are aimed at encouraging higher non-resident participation, enhance the role of domestic market makers in the offshore market, improve transparency, and achieve better regulatory oversight.

The draft regulations suggested that FPIs may transact in permitted exchange-traded IRDs subject to the conditions that, at any point in time ‘the net long position of FPIs, collectively, and across all exchanges, in exchange-traded IRDs shall not exceed Rs 5,000 crore’. Also, the net short position of an FPI on exchange-traded IRDs should not exceed its long position in government securities and other rupee debt securities. The RBI has sought comment on the Draft Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2020 by October 15.

The draft further said for the purpose of offering Rupee IRD contracts to a user, the market-maker (entities which provide bid and offer prices to users in order to provide liquidity to the market) should classify the user either as a retail user or as a non-retail user. Non-retail users, as per the draft, are entities regulated by RBI, SEBI, IRDAI or PFRDA; resident companies with a minimum net worth of Rs 500 crore; and non-residents, other than individuals. It added ‘any user who is not eligible to be classified as a non-retail user shall be classified as a retail user’.

The CNX Nifty is currently trading at 11533.25, up by 11.45 points or 0.10% after trading in a range of 11516.75 and 11570.35. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 4.78%, Tata Motors up by 2.83%, Bajaj Auto up by 2.78%, Britannia up by 2.35% and Hindalco up by 1.73%. On the flip side, Indusind Bank down by 2.47%, Axis Bank down by 2.04%, SBI down by 1.80%, Zee Entertainment down by 1.56% and ICICI Bank down by 1.47% were the top losers.

Asian markets were trading mostly higher; Taiwan Weighted strengthened 152.65 points or 1.19% to 12,998.30, Nikkei 225 surged 33.93 points or 0.14% to 23,488.82, Straits Times advanced 11.00 points or 0.44% to 2,496.83 and KOSPI rose 0.77 points or 0.03% to 2,444.35. On the flip side, Shanghai Composite declined 7.75 points or 0.24% to 3,287.93, Jakarta Composite lost 37.74 points or 0.74% to 5,063.13 and Hang Seng decreased 60.44 points or 0.24% to 24,672.32.