Benchmarks trade in tight band in noon deals

Key domestic benchmarks are trading in tight band with a gain of over half a percent in early noon trades led by rally in banks on the back of overnight steps taken by Reserve Bank of India (RBI) to ease liquidity. Though, markets pared some of its early gains as the rupee remained under pressure with the currency quoting at 63.42 versus Tuesday’s close of 63.25/26. Concerns over continued fund outflow too were dampening the sentiments. Foreign institutional investors sold Rs 14.2 billion of cash shares on August 20, while domestic institutions were net buyers of Rs 10.66 billion of shares. Global cues too remained choppy with European counterparts made mixed opening, while most of the Asian equity indices were trading in the red at this point of time as investors remained cautious ahead of the release of US Federal Reserve minutes that may provide some clues about the future of the bank's stimulus programme.

Back home, on the sectoral front, banking witnessed the maximum gain in trade followed by realty and capital goods, while software, technology and fast moving consumer goods remained the top losers on the BSE sectoral space. The broader indices were trading with strong traction, while the overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1270: 693; while 144 shares remained unchanged.

The BSE Sensex is currently trading at 18374.07, up by 128.03 points or 0.70% after trading in a range of 18567.70 and 18323.32. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading in green; the BSE Mid cap and Small cap indices were trading higher by 1.04% each.

The top gaining sectoral indices on the BSE were, Bankex up by 4.17%, Realty up by 2.31%, Capital Goods up by 2.27%, Consumer Durables up by 2.01% and Power up by 1.45%. While, IT down by 1.58%, Teck down by 1.47%, FMCG down by 0.39% and Health Care down by 0.14% were the top losers indices on the BSE.

The top gainers on the Sensex were, BHEL up by 5.91%, HDFC Bank up by 4.92%, Tata Power up by 3.26%, SBI up by 3.03% and  Jindal Steel up by 3.01%. On the flip side, Infosys down by 2.40%, TCS down by 1.46%, Sun Pharma down by 1.42%, Bharti Airtel down by 1.16% and Sterlite Inds down by 1.08% were the top losers on the Sensex.

Meanwhile, amid domestic currency deprecating below 64 to a dollar, global rating agency Standard & Poor's (S&P) has maintained negative outlook (BBB- sovereign credit ratings) for the country and said that high capital outflows and depreciating rupee is adversely impacting investors’ confidence. Present, S&P BBB- is the lowest investment grade and a downgrade would push the country’s sovereign rating to junk status, making overseas borrowings by Indian corporates costlier.

S&P said that the recent measures announced by the government to restrict capital outflow has increased uncertainties among foreign and domestic investors and if uncertainty continues, business financing conditions could deteriorate further and investment growth could slow further. S&P added that investments into the country continue to be stifled by inadequate infrastructure, rigidities in labour and product markets, and red tape, among other issues. Further, the rating agency said that its future credit rating action would depend upon the response of policymakers to the latest economic developments. Meanwhile, India's long term growth prospects could weaken on a sustained basis, with negative implications for the sovereign credit fundamentals.

Earlier, the Reserve Bank of India (RBI) on August 14 announced stern measures, including curbs on Indian firms investing abroad and on outward remittances by resident Indians in order to check the sliding rupee. A sliding rupee, which is mainly on account of widening Current Account Deficit (CAD), will make imports costlier and fuel subsidy bill. Conversely, the country’s CAD had touched a record high of $88.2 billion or 4.8 percent of GDP in FY13.

The CNX Nifty is currently trading at 5,444.60, up by 43.15 points or 0.80% after trading in a range of 5,504.10 and 5,432.55. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were Indusin bank up by 10.67%, BHEL up by 6.46%, PNB up by 5.13%, HDFC Bank up by 4.88% and DLF up by 4.81%. On the flip side, Ranbaxy down by 6.30%, SesaGoa down by 2.38%, Infosys down by 2.37%, ACC down by 1.92% and Ambuja Cement down by 1.69% were the major losers on the index.

Most of the Asian equity indices were trading red; Straits Times down by 0.46%, KLSE Composite down by 0.06%, Shanghai Composite down by 0.17% and Hang Seng down by 0.72%. While, Nikkei 225 was up by 0.21% and Jakarta Composite up by 1.67%

Most of the European markets were trading in red; Germany’s DAX lost 8.18 points and the United Kingdom’s FTSE 100 dropped 19.73 points, while France’s CAC 40 was up 17.20 points.