Benchmarks edge higher ahead of key data

Benchmarks edged higher after a positive start on back on global cues while investors await April-November fiscal deficit reading due later in the day. However, sentiments remained cautious on Reserve Bank of India (RBI) Governor Raghuram Rajan’s statement that the challenge of containing inflation is limiting the central bank’s ability to boost economic growth.

On the global front, Asian markets were trading mostly in green at this point of time. However, the mood was cautious due to some of the markets in the region being closed for New Year’s Eve. Back home, traders were buying, Oil & Gas, Realty and Power while selling was seen in Bankex on the BSE. The banking sector remained under pressure after the Reserve Bank of India (RBI) has stated that risks to the banking sector have increased during the past six months due to rising bad loans and has proposed tightening banks' exposure limit for single borrower and single groups.

The market breadth on BSE remains positive with advances to declines in the ratio of 1095: 620. BSE Sensex and NSE Nifty were comfortably trading near their psychological 21,100 and 6,300 levels respectively. The BSE Sensex is currently trading at 21200.71 up by 57.70 points or 0.27% after trading in a range of 21230.88 and 21122.68. There were 23 stocks advancing against 7 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.53% and Small cap index gained 0.51%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 0.72%, Realty up by 0.54%, Power up by 0.54%, Auto up by 0.54% and Healthcare up by 0.47%, while Bankex down by 0.11% were the only loser on the sectoral index.

The top gainers on the Sensex were Tata Power up by 2.64%, RIL up by 0.99%, Coal India up by 0.95%, Tata Motors up by 0.85% and  Bajaj Auto up by 0.77%. On the flip side, HDFC Bank was down by 0.92%, Mahindra & Mahindra was down by 0.15%, HDFC was down by 0.14%, Wipro was down by 0.02% and  Axis Bank was down by 0.01% were the top losers on the Sensex.

Meanwhile, The Reserve Bank of India (RBI) has allowed banks to sanction loans of up to Rs 1 lakh against pledge of gold ornaments and jewellery. Earlier in May, the central bank had imposed restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs and mutual funds. Meanwhile, the banks were asked to ensure that the amount of loan granted to any customer against gold ornaments, gold jewellery and gold coins weighing up to 50 grams should be within the board-approved limit.

Further, the RBI noted that the period of the loan should not exceed 12 months from the date of sanction and the interest will be charged to the account monthly but will become due for payment along with principal only at the maturity. Further, the RBI has decided to permit bullet repayment of loans extended against pledge of gold ornaments and jewellery for other than agricultural purposes. Bullet repayment refers to the lump sum payment for the entire loan amount paid at the time of maturity.

The central bank further notified that banks will recognize interest income on such loans in their profit and loss account only on collection and prescribed a minimum margin to be maintained for such loans. Banks should fix the loan limit taking into account the market value of the security such as gold ornaments, expected price fluctuations, interest that will accrue during the tenure of the loan etc. The RBI cautioned the banks that the account would be classified as non-performing asset (sub-standard category) even before the due date of repayment, if the prescribed margin is not maintained.

The CNX Nifty is currently trading at 6,307.50 up by 16.40 points or 0.26% after trading in a range of 6,317.30 and 6,287.30. There were 41 stocks advancing against 9 stock declines on the index. 

The top gainers of the Nifty were IDFC up by 2.19%, Tata Power up by 2.14%, BPCL up by 1.48%, NMDC up by 1.47% and JP Associates up by 1.14%. On the flip side, HDFC Bank down by 0.97%, Kotak Bank down by 0.57%, BHEL down by 0.39%, AXIS Bank down by 0.11% and HDFC down by 0.11% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite surged 18.26 points or 0.87% to 2,115.79, Hang Seng added 61.52 points or 0.26% to 23,306.39 and Straits Times was up by 10.50 points or 0.33% to 3,163.79. On the flip side, KLSE Composite declined 7.19 points or 0.37% to 1,865.33 and Taiwan Weighted was down by 11.02 points or 0.13% to 8,612.41.

However, markets in South Korea, Japan and Indonesia are closed for New Year’s Eve.