Benchmark trim gains; trade continues in green

Indian equities trimmed gains but continue to trade in green hovering near the lowest point of the day in the late afternoon session, on account of selling in frontline counters. Though, the sentiments remain optimistic since the start of the trade after exit polls placed BJP ahead in state election assembly. Investors turned a bit cautious after Moody Investors Service, while retaining its stable outlook of India’s lowest investment grading, warned that the country could be downgraded if the government adopts policies that harm fiscal and growth scenario. Traders were seen piling position in Banking, Capital Goods and Realty stocks, while selling was witnessed in Health Care, IT and FMCG sector stocks. In scrip specific development, Jubilant Life Sciences was locked at lower circuit limit after it received a warning from the US Food and Drug Administration over manufacturing practices at one of its US facilities.

On the global front, the Asian markets were trading in red barring KLSE Composite, while the European markets too were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,200 and 20,900 levels respectively. The market breadth on BSE was positive in the ratio of 1170:1137 while 161 scrips remained unchanged.

The BSE Sensex is currently trading at 20951.34, up by 242.63 points or 1.17% after trading in a range of 21,165.60 and 20938.98. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices too trimmed portion of their gains; the BSE Mid cap and Small cap indexes gained by 0.23% and 0.30% respectively.

The gaining sectoral indices on the BSE were Bankex up by 4.03%, Capital Goods up by 2.99%, Realty up by 1.70%, PSU up by 1.19% and Oil & Gas up by 1.09%. While, Health Care down by 1.44% IT down by 0.57%, FMCG down by 0.43% and TECK down 0.39%, were the only losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 6.18%, HDFC Bank up by 4.48%, L&T up by 4.04%, BHEL up by 3.23% and Maruti Suzuki up by 2.85%.

On the flip side, Sun Pharma down by 2.05%, Dr. Reddy’s Lab down 1.98%, SSLT down by 1.05%, ITC down by 0.93% and NTPC down by 0.86%.

Meanwhile, in a bid to boost returns on pension funds and to develop the domestic bond markets, the government has eased the pension fund investments norms. The move will allow a portion of the country`s $80 billion in employee pensions to be invested in a wider array of debt. Marking the first overhaul of investment rules in a decade, Labour Ministry’s new rules will give more flexibility for Fund managers handling money on behalf of the Employees’ Provident Fund Organisation (EPFO) to invest in a range of financial instruments including corporate bonds. Further the relaxed rules will also let pension fund managers decide on strategic asset allocation and ranges, further it is expected to increase returns by 10 to 20 percent annually on the investments. Meanwhile, EPFO board will approve the changes in Labour Ministry new rules before they become official.

As per the new guidelines, the government will allow up to 5 percent of total pension funds to be invested in money markets, including treasury bills. It will also relax rules on corporate bond investments, allowing up to 55 percent of pension funds to be invested in debt issues by companies, banks and state-run financial firms, as against present 30 percent of funds in debt of these companies. Furthermore, the government will also allow up to 55 percent of the pension funds to be invested in a newly merged category comprising government and state bonds. Currently, managers have to deploy 25 percent of EPFO funds into government bonds and 15 percent into state bonds. Meanwhile, the government has not yet allowed the pension funds to be invested in equities due to high risk. 

Currently, the EPFO oversees the pensions of around 85 million public and private sector employees across India and has permitted fund managers handling its funds to invest only in government bonds and higher-rated corporate bonds.  In order to boost Indian pension sector, the government has recently cleared pension Bill which has opened up Indian pension fund management to foreign players, with foreign direct investment (FDI) limit of 26%.

The CNX Nifty is currently trading at 6,235.90, up by 74.95 points or 1.22% after trading in a range of 6,300.55 and 6,235.05. There were 35 stocks advancing against 15 declining stocks on the index.

The top gainers of the Nifty were ICICI Bank up by 6.03%, IDFC up by 6.02%, HDFC Bank up by 4.32%, L&T up by 4.00% and Axis Bank up 3.62%.

On the flip side, Sun Pharma down by 2.46%, Dr. Reddy’s Lab down by 2.03%, SSLT down by 1.43%, Lupin down by 1.42% and Ranbaxy Laboratories down by 1.29% were the major losers on the index.

Most of the Asian equity indices were trading in red; Nikkei 225 down by 1.50%, Straits Times down by 1.08%, Hang Seng down by 0.07%, Seoul Composite down by 0.10%, Jakarta Composite down by 0.90%, Taiwan Weighted down by 0.50% and Shanghai Composite down 0.21%. While, KLSE Composite up by 0.09% was the sole gainer on BSE.  

The European markets were trading in red; France’s CAC 40 was down 0.06%, Germany’s DAX dropped 0.04% and UK’s FTSE 100 inched lower 0.08%.