Benchmarks cheer Iran nuclear deal; nifty above 6000 mark

Benchmarks continue to trade stronger in late morning trade on account of strong global cues. Investor’s sentiments got boosted as the rupee was trading strong in morning trade due to dollar sale by exporters and banks. The Indian currency was trading at Rs 62.48 compared with Friday's close of Rs 62.83 per dollar. Sentiments were also remained jubilant on E&Y’s report that India has emerged as the most attractive investment destination surpassing neighbouring China and the US, due to relaxation in FDI norms to boost investor sentiments. Some support also came in from rally in pharma and realty sector, as the Cabinet is expected to take a decision on relaxing FDI norms for the housing sector and reducing foreign direct investment cap to 49 percent in critical areas of the pharma segment.

Global cues too remained euphoric with the US markets making a positive closing of the passing week with S&P 500 reaching new record closing high above 1,800 on upbeat economic reports. Moreover, all the Asian equity markets were trading higher at this point of time with investors rejoicing the news that Iran reached an agreement with the Western powers after five days of talks in Geneva and agreed to limit its nuclear program. Back home, traders were buying, Bankex, Capital Goods and Realty on the BSE. Shares of oil and gas companies including oil marketing companies are trading higher by up to 4% on the bourses as global oil prices have declined following the deal with Iran.

The market breadth on BSE remains positive with advances to declines in the ratio of 1254:439. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,500 and 6,000 levels respectively.

The BSE Sensex is currently trading a 20508.49, up by 291.10 points or 1.44% after trading in a range of 20543.54 and 20326.66. There were 29 stocks advancing against 1 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.11% and Small cap index gained 1.14%.

The top gaining sectoral indices on the BSE were, Bankex up by 2.79%, Capital Goods up by 2.13%, Realty up by 2.03%, FMCG up by 1.49%, and PSU up by 1.48%, while there were no losers on the sectoral index.

The top gainers on the Sensex were ICICI Bank up by 3.96%, L&T up by 2.71%, Hero MotoCorp up by 2.34%, Tata Motors up by 2.28%, and HDFC Bank up by 2.14%  while, Infosys down by 0.22% was the only loser on the Sensex.

Meanwhile, concerned over the prevailing high interest rates scenario in the economy impacting the infrastructure development of the country, the government has written to the Reserve Bank of India (RBI) seeking changes in the rules of infrastructure financing including the treatment of non-performing loans to the sector.

Considering infrastructure development a most critical prerequisite to revive the economic growth, the ministry has urged the central bank that refinancing of delayed projects on case to case basis should be allowed without treating them as restructured loans that require higher provisioning. Refinancing particularly for infrastructure projects is a globally accepted practice due to their long gestation period, however, the refinancing in the country is still on hold owing to the stringent RBI norms.

As per the RBI’s new infrastructure lending norms, restructured accounts classified as non-performing advances when upgraded to standard category, will attract a higher provision in the first year from the date of upgradation. The provision on restructured standard advances has been increased to 5 percent from 2.75 percent in respect of new restructured standard accounts with effect from June 1, 2013. Infrastructure lending exerts a lot of pressure on the banks as large infrastructure and industrial projects usually have a moratorium period in their loans in which the borrower does not make interest or principal payment.

At present, there are around 378 stalled projects worth around Rs 17.23 lakh crore stuck due to delays in various clearances. Meanwhile in order to expedite the implementation of infra projects, the government has been taking various measures. Recently, it has set up Cabinet Committee on Investment (CCI) to accord fast track clearances to large projects. Till now, the CCI had cleared 209 projects worth Rs 3.84 lakh crore.

The CNX Nifty is currently trading at 6,085.80 up by 90.35 points or 1.51% after trading in a range of 6,095.60 and 6,035.95. There were 49 stocks advancing against 1 stock decline on the index.

The top gainers of the Nifty were ICICI Bank up by 4.03%, JP Associate up by 3.23%, AXIS Bank up by 3.03%, BPCL up by 2.93% and L&T up by 2.86%, while Infosys down by 0.25% was the only loser on the index.

The Asian equity indices were trading in green; Shanghai Composite was up by 7.31 points or 0.33% to 2,203.68, Hang Seng added 41.77 points or 0.18% to 23,738.05, Jakarta Composite was up by 5.31 points or 0.12% to 4,323.27, KLSE Composite added 11.02 points or 0.61% to 1,805.54, Nikkei 225 gained 175.77 points or 1.14% to 15,557.49, Straits Times was up by 9.49 points or 0.30% to 3,182.34, Seoul Composite gained 12.79 points or 0.93% to 2,024.80 and Taiwan Weighted gained 88.93 points or 1.10% to 8,205.71.