Benchmarks recoups on short-covering

Indian benchmarks have edged higher amid volatile trading session in late morning trade, on the back of short-covering witnessed in metal and mining stocks on hopes of growth recovery in China after country’s services sector growth showed some resilience. Sentiments were getting some support from FICCI's survey that India’s manufacturing sector is likely to witness a 'slight upturn' in the second quarter on the back of government’s efforts to remove bottlenecks by clearing large projects and a better export outlook. The rupee today appreciated by 20 paise to 60.90 against the dollar in early trade at the Interbank Foreign Exchange, mainly due to dollar selling by exporters.

On the global front, Asian equity indices were exhibiting mixed trend at this point of time with Japanese Nikkei declining by about a percent as yen traded near its strongest close in a month. Back home, traders were seen piling up positions in IT, FMCG and Teck, while selling was seen in Capital Goods, Power and Realty sector. Meanwhile, the NSE Nifty and BSE Sensex were trading near the psychological 5,650 and 19,100 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in the ratio of 727:825.

The BSE Sensex is currently trading at 19178.28, up by 14.26 points or 0.07% after trading in a range of 19233.28 and 19141.68. There were 17 stocks advancing against 13 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.49% and Small cap index lost 0.02%.

The few gaining sectoral indices on the BSE were, IT up by 0.61%, FMCG up by 0.59%, Teck up by 0.40%, Metal up by 0.34% and Health Care up by 0.16%, while Capital Goods down by 2.85%, Power down by 1.88%, Realty down by 1.54%, Bankex down by 0.57% and Consumer Durables down by 0.29% were the top losers on the BSE.

The top gainers on the Sensex were Coal India up by 3.01%, Jindal Steel up by 2.09%, Mahindra & Mahindra up by 2.07%, NTPC up by 1.69%, and TCS up by 0.92%. On the flip side, BHEL was down by 13.89%, Gail India was down by 1.97%, L&T was down by 1.68%, Bajaj Auto was down by 1.59% and Tata Power was down by 1.48% were the top losers on the Sensex.

Meanwhile, in a bid to easily raise debt from the overseas markets, several state-owned companies have approached Finance Ministry seeking relaxation in External Commercial Borrowings (ECB) norms, which apart from helping them to raise debt, would also help the government tide over forex problems. According to the latest data, Indian companies raised $1.13 billion from overseas markets through external commercial borrowings and foreign currency convertible bonds in April, down 77.8 percent from a month earlier.

While, the government is making all efforts to make it easier for PSUs to issue quasi-sovereign bonds to enhance foreign investment into the country and will be holding a meeting on August 12 and 13 to see what can be done to relax the ECB norms for corporates, including PSUs. The ECB borrowing is considered safe and is a better source of funding for the current account deficit (CAD) gap as it is long-term finance. In the previous fiscal, country’s CAD had widened to a record high of 4.8 percent of the GDP and has became a cause of concern for the country as it impacts the economic macro-economic indicators like exchange rate, inflation and growth.

Domestic currency weakness has became a major concern, as the rupee depreciated over 13 percent since April-end, touching a record low of 61.21 to a dollar, mainly on account of widening CAD concerns and worries of tapering down of bond purchases by the US Federal Reserve. Though, the RBI and government are considering a host of measures to stabilise the rupee and attract foreign fund inflows.

The CNX Nifty is currently trading at 5,679.50 up by 1.60 points or 0.03% after trading in a range of 5,691.05 and 5,661.50. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were Ranbaxy up by 3.39%, Coal India up by 2.99%, Ambuja Cements up by 2.86%, Jindal Steel up by 2.14% and M&M up by 2.14%. On the flip side, BHEL down by 14.27%, Asian Paints down by 3.71%, DLF down by 2.22%, Grasim down by 1.91% and Jaiprakash Associates down by 1.85% were the major losers on the index.

The Asian equity indices were trading in mixed; Shanghai Composite rose 3.02 points or 0.15% to 2,032.44, Hang Seng increased 42.04 points or 0.19% to 22,233.01, KLSE Composite added 2.56 points or 0.14% to 1,785.07 and Taiwan Weighted was up by 30.71 points or 0.38% to 8,130.59. 

On the flip side, Nikkei 225 declined 180.66 points or 1.26% to 14,297.56, Straits Times dropped 19.55 points or 0.60% to 3,234.58 and Seoul Composite was down by 6.36 points or 0.35% to 1,917.37.