Benchmarks trade strength to strength; Iran’s nuclear deals cheers

With no iota of profit-booking in sight, benchmark equity indices are trading strength to strength, cheering three positive factors, i.e., sanguine global peers, rupee appreciation and fall in crude oil prices post Iran nuclear deal. Speculations that falling oil prices will cool inflation after Iran agreed to limit its nuclear program in exchange for relief from some sanctions has mainly triggered massive buying activities at Dalal Street. Thus, in the steady session of trade, both Sensex and Nifty are oscillating past the crucial 20,450 and 6,050 levels respectively, with gains of over a percent. Meanwhile, broader indices too sustaining early gains are up and about with profit of close to 3/ 4 of a percent.

On the global front, Asian shares gained on Monday on prospects for a wider deal to ease crippling economic sanctions on Iran that pushed oil prices down, a positive for Asian economies heavily dependent on crude and natural gas imports.

Closer home, Rupee’s appreciation that worked well for the street, dragged Information Technology (IT) stocks lower as these firms draw lion chunk of their revenue from exports. Barring these, all the sectoral indices were trading upbeat. Nevertheless, the major gainers were Capital Goods, Banking and Fast Moving Consumer Goods counters. Additionally, while on one hand, telecom stocks, viz, Bharti Airtel and Idea Cellular rang-off after high-power ministerial panel approved the recommendation of the Telecom Commission to better regulator Telecom Regulatory Authority of India’s (TRAI) suggested reserve or base price for the auction of spectrum in the 1800 MHz and 900 MHz bands, used by GSM operators such as Bharti Airtel and Vodafone. On the other, Public Oil Marketing Companies, IOC, BPCL and HPCL rose as crude oil prices dropped after the US and five other world powers reached an historic agreement with Iran on Sunday, November 24, 2013, that would roll back Iran's nuclear program. The overall market breadth on BSE was in the favour of advances which outpaced declines in the ratio of 1278:863; while 135 shares remained unchanged.

The BSE Sensex is currently trading at 20463.39, up by 246.00 points or 1.22% after trading in a range of 20,543.54 and 20326.66. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices sustained early gains; the BSE Mid cap and Small cap indices were trading higher by 0.67% and 0.78% respectively.

The gaining sectoral indices on the BSE were Capital Goods up by 2.51%, Bankex up by 2.35%, FMCG up by 1.71%, PSU up by 1.58% and Realty up by 1.56%. While, IT down by 0.41% and Teck down by 0.34% were the only losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.48%, L&T up by 3.32%, BHEL up by 2.66%, Hero Moto Corp up by 2.65% and ONGC up by 2.52%. On the flip side, Infosys down by 1.12%, Bharti Airtel down by 1.06% and Dr Reddys Lab down by 0.28%, were the only losing indices 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 6,070.10, up by 74.65 points or 1.25% after trading in a range of 6,095.60 and 6,035.95. There were 44 stocks advancing against 6 declining on the index.

The top gainers of the Nifty were BPCL up by 4.76%, ICICI Bank up by 3.57%, JP Associates up by 3.13%, L&T up by 3.05% and Hero MotoCorp up by 2.80%. On the flip side, Infosys down by 0.96%, Bharti Airtel down by 0.91%, Dr Reddy’s down by 0.28%, Lupin down by 0.24% and TCS down by 0.13% were the major losers on the index.

The Asian equity indices were trading in green; Taiwan Weighted up by 0.87%, Seoul Composite up by 0.49%, KLSE Composite up by 0.51%, Nikkei 225 up by 1.54%, Hang Seng up by 0.07%, Jakarta Composite added 0.21%, and Straits Times up by 0.21%, while, Shanghai Composite down by 0.21% was the lone loser amongst Asian pack.