Sensex, Nifty turn positive in late morning deals

Indian equity benchmarks cut all of their losses during late morning deals to turn positive, with both Sensex and Nifty trading above their neutral lines. Key indices were trading in green terrain, despite negative cues from other Asian markets. Traders got relief, after the Corporate Affairs Ministry has revised the definition of small companies under the Companies Act by increasing their thresholds for paid-up capital from 'not exceeding Rs 50 lakh' to 'not exceeding Rs two crore' and turnover from 'not exceeding Rs two crore' to 'not exceeding Rs 20 crore'. A Ministry release said the step, in line with the government's vision, is expected to benefit more than two lakh companies in terms of lesser compliances, lesser filing fees and lesser penalties in the event of any defaults.

On the global front, Asian markets were trading mostly in red, even after Thailand's central bank left its key interest rate unchanged at a record low on Wednesday as uncertainties surrounding the economic outlook remained high. The Monetary Policy Committee of Bank of Thailand unanimously decided to retain the interest rate at 0.50 percent. The bank had reduced the rate by 25 basis points in May 2020. The committee reiterated that it stands ready to use additional appropriate monetary policy tools if necessary.

The BSE Sensex is currently trading at 50292.57, up by 36.82 points or 0.07% after trading in a range of 49926.45 and 50314.06. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.42%, while Small cap index was up by 1.41%.

The top gaining sectoral indices on the BSE were Realty up by 2.55%, Power up by 2.29%, Metal up by 2.15%, Capital Goods up by 1.89% and Industrials up by 1.79%, while Telecom down by 0.33%, Bankex down by 0.23% and TECK down by 0.10% were the only losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 4.88%, ONGC up by 4.50%, Bajaj Finance up by 2.71%, NTPC up by 1.80% and Maruti Suzuki up by 1.35%. On the flip side, Indusind Bank down by 1.97%, Asian Paints down by 1.09%, Bharti Airtel down by 0.89%, ICICI Bank down by 0.87% and HDFC Bank down by 0.83% were the top losers.

Meanwhile, with a view to enhance the quality and effectiveness of non-banking financial companies (NBFCs) and banks internal audit system, the Reserve Bank of India (RBI) has unveiled the risk-based internal audit (RBIA) system for select NBFCs and urban co-operative banks (UCBs). It said all the deposit-taking NBFCs and the ones with an asset size of over Rs 5,000 crore, and UCBs with assets of over Rs 500 crore will have to migrate to the new system. Currently, all the entities supervised by the RBI have their own approaches on internal audit, resulting in certain inconsistencies, risks and gaps in the system.

The central bank added that the NBFCs and UCBs face risks similar to the ones for scheduled commercial banks which require an alignment of processes. It said the RBIA is an audit methodology that links an organisation's overall risk management framework. It provides an assurance to the board of directors and the senior management on the quality and effectiveness of the organisation's internal controls, risk management and governance-related systems and processes. The internal audit function is an integral part of sound corporate governance and is considered as the third line of defence. The RBI said a shift to a framework which focuses on evaluation of the risk management systems and control procedures in various areas of operations, in addition to transaction testing, will help in anticipating areas of potential risks and mitigating such risks.

RBIA should undertake an independent risk assessment for the purpose of formulating a risk-based audit plan, which considers the inherent business risks emanating from an activity/location and the effectiveness of the control systems for monitoring such inherent risks. The entities have to implement the RBIA framework by March 31, 2022, and have been asked to constitute a committee of senior executives with the responsibility of formulating a suitable action plan. The panel may address transitional and change management issues and should report progress periodically to the board and senior management.

The CNX Nifty is currently trading at 14828.80, up by 38.85 points or 0.26% after trading in a range of 14714.75 and 14829.80. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 4.99%, ONGC up by 4.45%, Coal India up by 3.72%, Hindalco up by 2.97% and Bajaj Finance up by 2.93%. On the flip side, Indusind Bank down by 1.79%, Asian Paints down by 1.13%, Titan Company down by 0.91%, Bharti Airtel down by 0.86% and Tech Mahindra down by 0.78% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 425.04 points or 1.45% to 28,882.42, Nikkei 225 slipped 272.79 points or 0.95% to 28,373.71, Taiwan Weighted dropped 73.45 points or 0.47% to 15,697.87, KOSPI fell 59.26 points or 1.89% to 3,070.42, Shanghai Composite declined 35.86 points or 1.02% to 3,481.45 and Straits Times trembled 26.75 points or 0.91% to 2,900.72. On the flip side, Jakarta Composite soared 38.04 points or 0.63% to 6,115.79.