Benchmarks trim early gains; Sensex still up by 183 points

Benchmarks pared their initial gains, but were still quoting higher in the late morning trade after a gap-up opening. However, sentiments improved after the central bank announced steps to support the beaten-down bond market and to prop up the battered rupee. Investors are keenly awaiting the release of the Federal Open Market Committee’s July meeting minutes today for hints as to when the stimulus withdrawal will begin.

On the global front, Most of the Asian equity indices were trading in the red. Back home, traders were buying, Banking, Consumer Durables and Capital Goods stocks, while selling was seen in IT, Teck and Health Care on the BSE. Bank stocks rallied after the RBI relaxed some rules that will help banks deal with the notional or mark-to-market loss in their government bond portfolios due to a recent sharp fall in bond prices. Meanwhile, the benchmarks NSE Nifty and BSE Sensex were trading near the psychological 5,450 and 18,400 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in the ratio of 1169:383.

The BSE Sensex is currently trading at 18429.58, up by 183.54 points or 1.01% after trading in a range of 18567.70 and 18378.73. There were 19 stocks advancing against 11 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.44% and Small cap index up by 1.31%..

The few gaining sectoral indices on the BSE were, Bankex up by 5.01%, Consumer Durables up by 2.20%, Capital Goods up by 2.06%, Realty up by 1.92%, and Power up by 1.58%, while IT down by 0.84%, Teck down by 0.67%, Health Care down by 0.21% and Metal down by 0.17% were the top losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 6.80%, HDFC Bank up by 5.49%, SBI up by 4.23%, HDFC up by 3.40% and ICICI Bank up by 3.16%. On the flip side, Infosys was down by 1.77%, Coal India was down by 1.71%, Sun Pharma was down by 1.41%, Dr Reddys Lab was down by 1.13% and TCS was down by 1.12% were the top losers on the Sensex.

Meanwhile, as per industry body Assocham, the Reserve Bank of India's (RBI) recent measures like short-term restrictions on capital outflows to curb the volatility in the rupee along with combination of transient and targeted monetary measures are likely to boost the country's growth prospects considerably by January next year. At present, domestic currency is under pressure on account of high current account deficit (CAD) depreciating to a record low of 64 per dollar and the recent measures taken by the central bank to restrain capital outflows, along with measures from government to attract capital inflows, will eventually buffer the Rupee.

Last week, RBI announced stern measures, including curbs on Indian firms investing abroad and a reduction of outward remittances, to restrict capital outflow of foreign currency. It has reduced the limit for overseas direct investment (ODI) to 100 percent from 400 percent of net worth by domestic companies, other than oil PSUs, under the automatic route. However, Oil India and ONGC Videsh were exempt from this limitation. Further, RBI reduced the limit for remittances made by resident individuals to $75,000 from $2 lakh a year under the liberalised remittances scheme (LRS).

On the other hand, the government has been liberalizing the foreign investment policy to attract maximum FDI into the country. The government has approved 100 percent foreign direct investment (FDI) in the sector. Recently, it has also taken several policy decisions including allowing FDI in multi-brand retail and civil aviation sectors and seeking legislative approval for increasing FDI cap in insurance and pension sectors.  The CNX Nifty is currently trading at 5,465.75 up by 64.30 points or 1.19% after trading in a range of 5,504.10 and 5,447.25. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were IndusInd Bank up by 11.41%, BHEL up by 6.81%, PNB up by 6.73%, Axis Bank up by 6.34% and HDFC Bank up by 5.46%. On the flip side, Ranbaxy down by 3.33%, Coal India down by 1.96%, Ambuja Cements down by 1.63%, Infosys down by 1.62% and Cairn down by 1.16% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dropped 4.16 points or 0.20% to 2,068.44, Hang Seng declined 212.63 points or 0.97% to 21,757.66, KLSE Composite slipped 0.74 points or 0.04% to 1,744.68, Straits Times shed 9.53 points or 0.30% to 3,119.70 and Seoul Composite was down by 17.70 points or 0.95% to 1,869.88.

On the flip side, Nikkei 225 up by 60.24 points or 0.45% to 13,458.78 and Jakarta Composite was up by 44.05 points or 1.06% to 4,219.04.