Benchmarks trade firm in late morning session; IT stocks lead the gains

Indian equity markets were trading from strength to strength in the late morning session on the back of bargain hunting and short covering in index heavyweights, after witnessing the correction in the past two trading sessions. Amid across the board buying, stocks from Information Technology, Fast Moving Consumer Goods and Consumer Durable counters enticed maximum gains. Thus, with support of mostly positive Asian shares, benchmark indices, Sensex and Nifty were gaining over a percent and were marching close to crucial 19400 and 5,850 levels respectively. On the global front, Asian shares were trading mostly positive, buoyed by more impressive jobs data from the United States but Tokyo struggled in the morning after the dollar fell back below the 100 yen mark in New York. Closer home, the overall market breadth on BSE is in the favour of advances, which have thumped declines in the ratio of 1027: 773; while 122 shares remained unchanged.

The BSE Sensex is currently trading at 19373.82, up by 196.06 points or 1.02% after trading in a range of 19387.84 and 19245.01.  The broader indices too have added some ground; the BSE Mid cap and Small cap indexes were trading higher by 0.60% and 0.26% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.85%, FMCG up by 1.84%, Consumer Durables up by 1.80%, Teck up by 1.67%, and Realty up by 1.31%, while there were no losers on the sectoral space.

Out of the 30 stocks on the Sensex, 23 stocks were trading higher, while 6 were in red and one remained unchanged. The top gainers on the Sensex were Tata Power up by 3.33%, ITC up by 2.73%, L&T up by 2.39%, Hindalco Industries up by 1.97% and Bharti Airtel up by 1.94%. On the flip side,  Bajaj Auto down by 1.23%, BHEL down by 1.18%, Sterlite Industries was down by 0.83%, ONGC was down by 0.51% and ICICI Bank was down by 0.23% 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. With 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 5,832.40 up by 61.50 points or 1.07% after trading in a range of 5,835.65 and 5,787.70.

Of the 50 stocks on the Nifty, 42 stocks were advancing, while 8 were declining. The top gainers of the Nifty were HCL Tech up by 3.36%, Tata Power up by 3.33%, ACC up by 3.14%, ITC up by 2.85% and Bank of Baroda up by 2.79%.

On the flip side, BHEL down by 2.85%, Bajaj-Auto down by 0.99%, Sesa Goa down by 0.63%, ONGC down by 0.43% and Power Grid down by 0.37% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 1.05%, Hang Seng surged 1.53%, Jakarta Composite increased 0.92%, KLSE Composite jumped 0.17%, Straits Times soared 0.85% and KOSPI Composite added 0.79%.On the flip side, Nikkei 225 was down by 0.26% and Taiwan Weighted was down by 0.22%.