Domestic markets regain green terrain on supportive global cues

Indian equity markets turned positive in early noon deals as investors shrugged off Reserve Bank of India’s (RBI) status quo on policy rates and increase in trade deficit. Major support came in from supportive global cues as most of the Asian equity indices were trading in green at this point of time with Japanese Nikkei share average jumping by over 2.70 per cent and recovered the 13,000-mark on Monday, as recently battered stocks such as exporters bounced on bargain hunting. Firm opening in European markets too buttressed the investors’ sentiment. Back home, buying in index heavyweight like Reliance Industries (RIL) and Bharti Airtel also supported the up-move. Shares of RIL extended gains triggered by partner Niko Resources providing clarity on the companies’ recent gas and condensate discovery at key KG-D6 block in India, while Bharti Airtel rose after the company said that it has completed the allotment of 19.98 crore new shares, representing 5% equity stake in the company, to Qatar Foundation Endowment, in one of the largest private equity (PE) transactions in India.

However, gains remain capped after shares of rate sensitive sectors mainly realty, infrastructure and banking remained under pressure after the RBI kept key policy rates unchanged at its mid-quarter policy review today. Sentiments also got dented after India’s trade deficit for the month of May stood at $20.14 billion as against 17.8 billion (m-o-m). Meanwhile, the country’s exports stands at $24.51 billion, while imports were at $44.65 billion for the month of May.

On the sectoral front, healthcare witnessed the maximum gain in trade followed by consumer durables and technology, while realty, metal and power remained the top losers on the BSE sectoral space. The broader indices too were trading near their neutral lines, while the market breadth was favoring negative trend; there were 951 shares on the gaining side against 1071 shares on the losing side, while 103 shares remain unchanged.

The BSE Sensex is currently trading at 19,221.43, up by 43.50 points or 0.23% after trading in a range of 19,257.76 and 19,084.68. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.09% and Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were, Health Care up by 0.76%, Consumer Durables up by 0.62%, TECk up by 0.44%, Capital Goods up by 0.42% and Auto up by 0.37%, while Realty down by 1.16%, Metal down by 0.64%, Power down by 0.45%, PSU down by 0.33%, and Bankex down by 0.32% were the top losers on the BSE.

The top gainers on the Sensex were Sun Pharma up by 3.22%, Mahindra & Mahindra up by 2.94%, Bharti Airtel up by 2.87%, BHEL up by 2.27%, and HDFC up by 1.74%.

On the flip side, Hindalco Industries was down by 1.74%, Tata Motors was down by 1.57%, Sterlite Industries was down by 1.51%, Dr Reddys Lab was down by 1.20% and Gail India was down by 0.93% were the top losers on the Sensex.

Meanwhile, in order to put stronger checks against possible cleansing of funds through capital markets, the Securities and Exchange Board of India (SEBI) is finalising new anti-money laundering guidelines covering entities including brokers, merchant bankers and mutual funds among others. New SEBI guidelines are expected to be ready within a few weeks and will replace SEBI's existing Anti Money Laundering and Combating the Financing of Terrorism (AML/CFT) standards, which first came into effect about 10 years ago and saw the last major amendments in late 2010.

As per the SEBI, changes and additional safeguards are necessary to tackle the new challenges of technological and market advances and to harmonise the guidelines with new standards set by global bodies like FATF (Financial Action Task Force). Further, the regulatory body may also consult the practices followed by its peers in some other countries to understand the best regulatory framework for AML/CFT regulations.

Meanwhile, SEBI is of the view that that a strong defence mechanism already exists in the Indian capital market regulatory system to check illegal activities, a review has become necessary to consolidate the various initiatives undertaken by it. Steps taken to check money laundering and terror financing activities in the capital market include mandatory requirement of PAN (Permanent Account Number), strict KYC (Know Your Client) regime, and in-person verification of clients.

The CNX Nifty is currently trading at 5,819.25 up by 10.85 points or 0.19% after trading in a range of 5,829.80 and 5,770.25. There were 25 stocks advancing against 25 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 3.09%, Bharti Airtel up by 2.85%, M&M up by 2.84%, BHEL up by 2.53%, and Hero MotoCorp up by 1.76%. On the flip side, Ranbaxy down by 1.84, Hindalco Industries down by 1.83%, Sesa Goa down by 1.69%, Tata Motors down by 1.53% and NMDC down by 1.50% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng surged 1.15%, Jakarta Composite jumped 0.15%, KLSE Composite increased 0.52%, Nikkei 225 soared 2.73, Straits Times added 0.74% and Taiwan Weighted was up by 0.69%.

On the flip side, KOSPI Composite was down by 0.32% and Shanghai Composite down by 0.28%.

European markets got off to a positive start; with CAC 40 up by 0.48%, DAX up by 0.85% and FTSE 100 up by 0.74%.