Benchmarks edge higher in late morning trade

Volatility continued on street as benchmarks after slipping into the red, regained in positive terrain to hit fresh intraday high in late morning trade on back of buying witnessed in pharmaceutical stocks. Sentiments remained up-beat on report that indirect tax collections grew at 4.1 percent in the April-August period of this fiscal total collection of indirect taxes stood at about Rs 1,67,000 crore during the first five months of the 2012-13 fiscal. Moreover, some support also came in with the Reserve Bank of India’s assurance that it will take actions, including open market operations, to ensure adequate liquidity support in the system. Meanwhile, foreign institutional investors (FII) bought shares worth Rs 382 crore on September 25, 2013, while domestic institutional investors (DII) sold shares worth Rs 473 crore.

Sentiments also got some support as the rupee gained ground due to dollar sale by custodian banks. The partially convertible rupee was trading at 62.26 per dollar against the yesterday’s close of 62.44 on the Interbank Foreign Exchange. However, the gains on the upside remained capped as global cues remained sluggish with the US markets once again ending modestly in red, extending their weakness for one more day on lingering concerns about the possibility of a government shutdown at the end of the month. Moreover, sluggishness in Asian equity benchmarks too dampening the sentiments as most of the regional counters were trading in the red at this point of time in absence of any positive trigger.

Back home, traders were buying, Health Care, Capital Goods and Auto while selling were seen in Oil & Gas, Realty and PSU on the BSE. Two-wheeler stocks were mostly higher on expectations of pick up in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. The festive season starts with the Durga Puja in October. The festival is followed by Dussehra and Diwali. BSE Sensex and NSE Nifty were comfortably trading near their psychological 5,850 and 19,850 levels respectively.

The market breadth on BSE remains positive with advances to declines in the ratio of 845:635. The BSE Sensex is currently trading at 19896.25, up by 40.01 points or 0.20% after trading in a range of 19918.72 and 19826.99. There were 17 stocks advancing against 13 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.09% and Small cap index gained 0.51%.

The gaining sectoral indices on the BSE were, Health Care up by 0.98%, Capital Goods up by 0.90%, Auto up by 0.46%, IT up by 0.41% and Metal up by 0.30%, while Oil & Gas down by 0.91%, Realty down by 0.73%, PSU down by 0.47%, Power down by 0.28% and FMCG down by 0.25% were the losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 3.18%, Sun Pharma up by 2.61%, HDFC up by 1.86%, Wipro up by 1.76% and Sesa Goa up by 1.59% and On the flip side, Jindal Steel was down by 2.26%, NTPC was down by 1.44%, ONGC was down by 1.29%, Bharti Airtel was down by 0.86%, and Gail India was down by 0.85% were the top losers on the Sensex.

Meanwhile, In order to ease tight liquidity situation ahead of the festival season, the Reserve Bank of India (RBI) plans to take measures such as bond purchases to support the flow of credit to productive sectors of the economy. Currently, central bank injects about Rs 1.5 lakh crore into the system daily through the liquidity adjustment facility (LAF), marginal standing facility (MSF) and the export credit refinance facility.

Inorder to restore adequate supply of money for credit flows, central bank has started a calibrated unwinding of exceptional steps taken since July. The RBI, has lowered the minimum maturity period for banks from three years to one year for the borrowings made on or before November 30, 2013 for the purpose of availing of the swap facility. However, foreign currency borrowing by banks beyond 50 percent of their tier I capital shall be of a minimum maturity of three years.

The RBI said that present liquidity tightening condition in the market is mainly due to the prospective effects of banks' half-yearly account closure, seasonal pick-up in credit demand, festival-related demand for currency and sluggish deposit growth. Liquidity has also tightened due to uncertainties about the government's borrowing programme for the second half of 2013-14. The government has revealed that it would borrow Rs 2.35 lakh crore from the market in the second half of the current fiscal of the total Rs 5.79 lakh crore projected in the Budget. The government borrowing stood at Rs 3.44 lakh crore in the first half of FY14.

The CNX Nifty is currently trading at 5,886.35 up by 12.50 points or 0.21% after trading in a range of 5,894.15 and 5,864.10. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Sun Pharmaceuticals up by 2.69%, JP Associate up by 2.01%, BHEL up by 1.89%, Ambuja Cement up by 1.83% and HDFC up by 1.81%. On the flip side, Jindal Steel down by 2.27%, NTPC down by 1.61%, ONGC down by 1.43%, SBI down by 1.14% and Power Grid down by 1.14% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 32.35 points or 1.47% to 2,166.17, Hang Seng decreased 101.31 points or 0.44% to 23,108.32, KLSE Composite shed 6.76 points or 0.38% to 1,777.30 and Taiwan Weighted was down by 74.93 points or 0.90% to 8,208.97.

On the flip side, Jakarta Composite surged 46.73 points or 1.06% to 4,453.50, Nikkei 225 rose 110.81 points or 0.74% to 14,729.56 and Seoul Composite was up by 7.51 points or 0.38% to 2,005.57.