Indian markets advance as software majors lead rally

Key benchmarks held early gains and were comfortably placed in late morning session on back of positive cues from global peers while buying activity picked up after a sharp correction in previous session. Sentiments got some support on fresh buying by funds in select stocks and covering-up of short positions by speculators, amid a mixed trend in the Asian region following overnight gains on the US market. On the global front, Asian counters too supported the sentiments with all the regional peers, barring Japanese Nikkei, trading in the green, supporting the investors’ confidence. Though, gains in China remained capped amid concerns about the country’s economic outlook, after reports this week showed slowing expansion in the country’s manufacturing and non-manufacturing sectors

Back home, the traders were seen piling up positions in FMCG, IT and Teck while selling was seen in Metal, PSU and Bankex sector. In scrip specific developments, stock such Infosys, TCS, Wipro and HCL Technology edged higher on government’s notification that allows SEZs and units operating in them to not pay service tax - instead of paying the tax and then claiming refunds. In scrip specific actions, Piramal Enterprises soared after the billionaire Ajay Piramal said he will purchase a 10 per cent stake in Shriram Capital, the holding company of Shriram Group's financial services business and an aspirant for a banking licence, for a consideration expected to be between Rs 650 crore and Rs 700 crore.

Meanwhile, the NSE Nifty and BSE Sensex were trading just above their psychological 5,800 and 19,200 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in ratio of 859: 694. The BSE Sensex is currently trading at 19280.99, up by 103.23 points or 0.54% after trading in a range of 19354.76 and 19245.01. There were 17 stocks advancing against 13 declines on the index. The broader indices were trading on mixed note; the BSE Mid cap index was down by 0.01% and Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were, FMCG up by 1.37%, IT up by 1.33%, Teck up by 1.19%, Oil & Gas up by 0.81% and Health Care up by 0.76%, while Metal down by 0.94%, PSU down by 0.68%, Bankex down by 0.51%, Realty down by 0.36%, and Auto down by 0.32% were the top losers on the BSE. The top gainers on the Sensex were Tata Power up by 2.97%, ITC up by 2.02%, L&T up by 1.88%, RIL up by 1.72% and Bharti Airtel up by 1.58%. On the flip side, Sterlite Industries was down by 2.61%, BHEL was down by 2.13%, ICICI Bank was down by 1.42%, Bajaj Auto was down by 1.35% and  Jindal Steel was down by 1.20% were the top losers on the Sensex.

Meanwhile, in a big sigh of relief to the non-banking financial companies (NBFCs), the Reserve Bank of India (RBI) has put on hold implementing a key directive issued last week with a proposal to have a minimum gap of six months between two successive issuances of privately-placed non-convertible debentures (NCDs) and said that it may not be operationalised immediately.

The RBI said that it is keeping the proposal on hold and will take decision on this in due course. At present, there is no restriction for NBFCs to raise funds through NCDs, which has resulted into inadequate resource planning, and higher transaction cost. Further, the central bank asked all NBFCs to prepare a policy for resource planning which should cover the planning horizon and the periodicity of private placement and get it approved from their boards by September 30.   It is expected that the move will benefit large NBFCs given their dependence on the bond market.

Last week, the apex bank issued a circular, which stated that private placement of debt should not have more than 49 investors; minimum subscription from single investor should be Rs 25 lakh and also stipulated the time frame between two NCD issuances. One of the main objectives of the restriction between two NCD issues was to promote discipline in resource planning and raising. However, the move was likely to increase borrowing costs for NBFCs and potentially create assets liability tenure mismatches.  

The CNX Nifty is currently trading at 5,803.00 up by 32.10 points or 0.56% after trading in a range of 5,831.50 and 5,787.70. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were Tata Power up by 2.97%, HCL Tech up by 2.47%, ACC up by 2.47%, Lupin up by 2.29% and ITC up by 2.10%. On the flip side, BHEL down by 2.46%, Sesa Goa down by 2.12%, IDFC down by 1.73%, ICICI Bank down by 1.41% and PNB down by 1.38% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 22.02 points or 1.10% to 2,016.29, Hang Seng surged 305.26 points or 1.52% to 20,452.57, Jakarta Composite increased 41.91 points or 0.92% to 4,619.07, KLSE Composite jumped 2.95 points or 0.17% to 1,772.16, Straits Times soared 27.46 points or 0.88% to 3,157.07, KOSPI Composite added 6.24 points or 0.33% to 1,830.70 and

On the flip side, Nikkei 225 was down by 62.98 points or 0.45% to 13,992.58 and Taiwan Weighted was down by 5.85 points or 0.13% to 7,900.92.