Benchmarks rejoice RBI measures

Benchmarks continued to trade firm in late morning session as rupee recovered significantly against the dollar after country's new central bank governor unveiled fresh measures to shore up the rupee and aid overseas inflows. The Reserve Bank of India (RBI) has decided to offer banks a window to swap fresh foreign currency non-resident (banks) dollar funds. These are mobilised for a minimum tenor of three years and at a fixed rate of 3.5 per cent per annum. RBI’s move follows banks’ request to consider a special concessional window to swap FCNR deposits.RBI has also decided to raise the current overseas borrowing limit of the unimpaired tier-I capital. The market sentiment was also boosted after the Lok Sabha passed the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, on September 4, 2013, an important economic legislation that will pave the way for foreign investment in the sector.

Most of the Asian equity benchmarks were trading in the green at this point of time with South Korea’s Kospi Composite surging by a percentage point as Samsung Electronics, which accounts for 18 per cent of the index’s weighting, rose 1.9 per cent after unveiling its smartwatch. Back home, traders were buying, Banking, Consumer Durables, and Realty while selling were seen in IT and Teck on the BSE. Bank stocks jumped after Rajan said that RBI will shortly issue the necessary circular to completely free bank branching for domestic scheduled commercial banks in every part of the country and also said that there is need to reduce the requirement for banks to invest in government securities in a calibrated way so as to ensure the flow of credit to the productive sectors of the economy. 

Meanwhile, the benchmarks NSE Nifty and BSE Sensex were trading near the psychological 5,550 and 18,900 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in the ratio of 1082: 392.

The BSE Sensex is currently trading at 18976.01, up by 408.46 points or 2.20% after trading in a range of 19117.52 and 18857.60. There were 24 stocks advancing against 6 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.48% and Small cap index up by 1.05%.

The top gaining sectoral indices on the BSE were, Bankex up by 6.60%, Consumer Durables up by 3.82%, Realty up by 3.62%, FMCG up by 3.54% and PSU up by 2.66%, while IT down by 2.14% and Teck down by 1.31% were the only losers on the sectoral index.

The top gainers on the Sensex were ICICI Bank up by 7.23%, HDFC Bank up by 5.23%, ITC up by 5.00% ,HDFC up by 4.56%, and SBI up by 4.08%. On the flip side, Infosys was down by 2.54%, TCS was down by 2.51%, Wipro was down by 0.58%, Gail India was down by 0.58% and Tata Steel was down by 0.33% were the top losers on the Sensex.

Meanwhile, India's garment exports grew by 19 percent year-on-year to $1.27 billion in July on the back of rising demand in developed economies such as the US. Indian garment export to the US has witnessed a growth of 3.7 percent during the first five months of 2013. During April-July 2013-14, Indian garments exports grew by 13 percent to $4.84 billion.

The US and European markets represent around 65 percent share in the country's total garment exports. Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said that demand for Indian products is still not increasing in the EU markets due to the prevailing slowdown. During 2012-13, apparel exports declined by 6 percent to $12.92 billion. Referring to the rupee depreciation, A Sakthivel said that now buyers are asking for discounts on account of deprecating rupee. Indian exporters with high import content of products are also facing huge problem as they have to pay more now which is impacting their profits, he added. Ready-made garment products have almost 25-35 percent import content.

By adding further, AEPC chairman said that the Reserve Bank of India (RBI) should include export sector in the priority sector lending for all banks, which will help exporters in getting easy and affordable credit.

The CNX Nifty is currently trading at 5,586.75 up by 138.65 points or 2.54% after trading in a range of 5,625.75 and 5,553.75. There were 42 stocks advancing against 8 declines on the index.The top gainers of the Nifty were IndusInd Bank up by 10.36%, Axis Bank up by 9.51%, Kotak Mahindra Bank up by 9.11%, ICICI Bank up by 7.36% and HDFC Bank up by 6.06%. On the flip side, Infosys down by 2.82%, TCS down by 2.76%, HCL Tech down by 1.42%, M&M down by 0.81% and GAIL down by 0.74% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng surged 274.22 points or 1.23% to 22,600.44, Jakarta Composite rose 32.05 points or 0.79% to 4,105.51, KLSE Composite gained 6.33 points or 0.37% to 1,723.09, Straits Times strengthened 33.97 points or 1.13% to 3,049.39, Seoul Composite added 19.33 points or 1.00% to 1,952.36,  Nikkei 225 was up by 82.82 points or 0.59% to 14,136.69  and Taiwan Weighted was up by 68.52 points or 0.85% to 8,146.27.

On the flip side, Shanghai Composite slipped 1.59 points or 0.07% to 2,126.03