Benchmarks hold early gains; financial companies leading the rally

Indian equity markets ruled firm in the late morning trade on Wednesday following positive global cues. Moreover, investor’s sentiments were improved with the Lok Sabha's approval to the government's proposal to strengthen the central bank's regulatory powers and hopes of more reforms announcements from the centre. In currency markets, Indian rupee recovered against US currency in the late morning session due to selling of American currency by exporters and banks. On sectoral front, non-banking financial companies’ stocks such as Shriram Transport Finance Company were trading with smart gains a day after a banking bill laying the groundwork for the issuance of new bank licenses was approved by parliament. Moreover, bill also seeks to draw foreign investment to the banking sector by increasing shareholders' voting rights. In global markets, Asian stocks were mostly on a compromise solution to avert the fiscal cliff of tax hikes and spending cuts due to take place next year in the world's biggest economy. Back home, the market breadth favoring positive trend; there were 1,526 shares on the gaining side against 1,009 shares on the losing side while 126 shares remain unchanged.

The BSE Sensex is currently trading at 19,450.47 up by 85.72 points or 0.44% after trading in a range of 19,516.02 and 19,429.08. There were 24 stocks advancing against 6 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.66% and Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were, Auto up by 1.62%, Realty up by 1.49%, Metal up by 1.36%, Health Care up by 1.11%, and Oil & Gas up by 1.03%. While, Capital Goods down by 0.29% and FMCG down by 0.05% were only losers on the index.

The top gainers on the Sensex were Tata Motors up by 2.87%, Maruti Suzuki up by 2.35%, Bajaj Auto up by 2.34%, Tata Steel up by 1.92% and ONGC up by 1.85%.

On the flip side, HDFC was down by 1.68%, ICICI Bank was down by 0.85%, L&T was down by 0.51%, ITC was down by 0.46% and NTPC was down by 0.45% were the top losers on the Sensex.

Meanwhile, clearing the floor for the Reserve Bank of India (RBI) to start the process to issue new banking licences and widened the window for foreign investments into the banking sector, the Lower House of Parliament cleared the Banking Laws (Amendment) Bill, 2011, after Finance Minister P Chidambaram agreed to drop the controversial clause allowing banks to trade in futures and keeping the sector outside the purview of Competition Commission.

The banking Bill, 2011 was passed by the Lower House after two short adjournments, by the voice vote after amendments proposed by the Left Parties were rejected by the House. Further, the Bill would now be taken up in the Rajya Sabha.

The banking bill will raise the voting rights of investors in private sector banks to 26 percent, from 10 percent, encourage foreign investment and will increase the financial inclusion by opening new banks. The Bill will allow the RBI to replace the boards of private sector banks and increase the cap on voting rights of private investors in public sector banks to 10 percent, from 1 percent.

Moreover, changes to the Bill would pave the way for RBI to issue new bank licences. The central bank had been insisting the enabling legislation be put in place before applications were invited for new bank licences.

The S&P CNX Nifty is currently trading at 5,920.55 up by 23.75 points or 0.40% after trading in a range of 5,939.40 and 5,917.00. There were 39 stocks advancing against 10 declines and one remains unchanged on the index.

The top gainers of the Nifty were Tata Motors up by 2.43%, Maruti Suzuki up by 2.38%, Bajaj-Auto up by 2.34%, IDFC up by 2.15% and Ambuja Cement up by 2.01%.

On the flip side, HDFC down by 1.84%, ICICI Bank down by 0.93%, Axis Bank down by 0.85%, L&T down by 0.59%, and PowerGrid down by 0.56%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite gained 0.01%, Hang Seng rose 0.84%, KLSE Composite added 0.17%, Straits Times was up by 0.30%, Nikkei 225 surged 2.39% and Taiwan Weighted was up by 0.44%.

On the flip side, and Jakarta Composite slipped 0.54%.

KOSPI Composite remained closed today.