Sensex, Nifty cut losses in late morning deals

Indian equity benchmarks continued to trade in red terrain but managed to cut most of their losses in late morning session. Negative cues from other Asian markets impacted sentiments over the street. Traders were seen taking a note of reports that the finance ministry asked departments and ministries to surrender savings, if any, for the current financial year 2020-21 by March 20. An office memorandum issued by the Budget Division of the Ministry of Finance informed all departments and ministries that the last date for accepting the surrender of savings anticipated in the Grants for 2020-21 has been fixed at March 20, 2021.

On the global front, Asian markets were trading mostly in red, even after the total value of core machine orders in Japan gained a seasonally adjusted 5.2 percent on month in December, the Cabinet Office said on Wednesday - standing at 899.6 billion yen. That beat expectations for a decline of 6.2 percent following the 1.5 percent increase in November. On a yearly basis, core machine orders jumped 11.8 percent - again exceeding expectations for a fall of 3.0 percent after tumbling 11.3 percent in the previous month.

The BSE Sensex is currently trading at 51969.92, down by 134.25 points or 0.26% after trading in a range of 51681.48 and 52078.15. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.43%, while Small cap index was up by 0.68%.

The top gaining sectoral indices on the BSE were Power up by 1.49%, PSU up by 1.48%, Utilities up by 1.29%, Capital Goods up by 1.13% and Industrials up by 1.12%, while IT down by 0.52%, Realty down by 0.51%, Healthcare down by 0.51%, FMCG down by 0.45% and TECK down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.77%, Power Grid up by 1.15%, Larsen & Toubro up by 0.97%, Axis Bank up by 0.81% and Bajaj Auto up by 0.73%. On the flip side, Nestle down by 2.85%, Bajaj Finserv down by 1.84%, Asian Paints down by 1.68%, Dr. Reddy’s Lab down by 1.62% and HDFC down by 1.59% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has come out with the draft guidelines for allowing derivatives trading in the credit default swaps (CDS) in over-the-counter (OTC) markets and on recognised stock exchanges in the country. As per the draft, the debt instruments eligible to be a reference or deliverable obligation in a CDS contract will include commercial papers, certificates of deposit and non-convertible debentures of original maturity up to one year, rated corporate bonds (listed and unlisted) and unrated rupee bonds issued by the special purpose vehicles set up by infrastructure companies.

Asset-backed securities and mortgage-backed securities and structured obligations, such as credit enhanced and guaranteed bonds, convertible bonds, and bonds with call-put options, will not be permitted as reference or deliverable obligations. The CDS refers to credit derivative contract in which protection seller commits to compensate the protection buyer for the loss in the value of an underlying debt instrument resulting from a credit event. In return, the protection buyer makes periodic payments (premium) to the protection seller until the maturity of the contract or the credit event, whichever is earlier.

As per the draft guidelines, at least one of the parties to a CDS transaction will be a market-maker or a central counterparty authorised by the RBI. The market makers for CDS will include scheduled commercial banks, NBFCs and primary dealers with a minimum net worth of Rs 500 crore, Exim Bank, NABARD, National Housing Bank and SIDBI. The user of the credit derivatives contract can be retail as well as non-retail. The non-retail users include insurance companies, pension funds, mutual funds, alternate investment funds, and foreign portfolio investors. The guidelines further said the retail users will be allowed to undertake transactions in permitted credit derivatives for hedging their underlying credit risk, while the non-retail users may undertake transactions for hedging and other purposes.

The CNX Nifty is currently trading at 15282.90, down by 30.55 points or 0.20% after trading in a range of 15201.25 and 15312.15. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 4.03%, SBI up by 3.02%, Hero MotoCorp up by 2.89%, GAIL India up by 2.18% and HDFC Life Insurance up by 2.03%. On the flip side, Nestle down by 2.74%, BPCL down by 2.69%, Bajaj Finserv down by 1.96%, Asian Paints down by 1.70% and Dr. Reddy’s Lab down by 1.69% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite lost 68.38 points or 1.09% to 6,224.02, KOSPI fell 38.57 points or 1.22% to 3,124.68, Straits Times trembled 13.59 points or 0.46% to 2,921.75 and Nikkei 225 slipped 156.92 points or 0.52% to 30,310.83. On the flip side, Hang Seng increased 199.44 points or 0.65% to 30,946.10 and Taiwan Weighted strengthened 542.08 points or 3.43% to 16,344.48.