Benchmarks continue to trade in green in late morning

After a firm start, Indian equity benchmarks have pared initial gains, though continued to trade above neutral line a day after March series F&O expiry. Sentiments remained up-beat owing to positive global cues and rising rupee. Sentiments also got some support on hopes that Reserve Bank of India will keep rates unchanged, and general elections due by May would act as the next key catalysts for markets. Persistent foreign capital inflows also aided the sentiments.

Global cues too remained up-beat with most of the Asian equity indices trading higher tracking positive data from the US. The world's largest economy grew at 2.6%, faster than estimated earlier in the fourth quarter, as per data released recently. Back home, traders were buying, IT, Realty and Teck stocks, while selling was seen in FMCG, Capital Goods and Consumer Durables. Rally in Stocks related to exports and imports too supported the sentiments with Reserve Bank of India (RBI) relaxing some of the restrictions related to hedging of currency risk of probable exposures of exporters and importers. This will give them greater operational flexibility.

The market breadth on BSE remains positive with advances to declines in the ratio of 1271:724. BSE Sensex and NSE Nifty were comfortably trading near their psychological 22,200 and 6,650 levels respectively. The BSE Sensex is currently trading at 22243.50 up by 29.13 points or 0.13% after trading in a range of 22363.97 and 22224.36. There were 21 stocks advancing against 9 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.96% and Small cap index up by 0.73%.

The top gaining sectoral indices on the BSE were, IT up by 1.00%, Realty up by 0.96%, Teck up by 0.92%, Oil & Gas up by 0.88% and Metal up by 0.87%. While FMCG down by 0.78%, Capital Goods down by 0.75% and Consumer Durables down by 0.11% were the top losers on the sectoral index.

The top gainers on the Sensex were SBI up by 2.53%, Hindalco up by 2.40%, Tata Power up by 1.75%, SSLT up by 1.64%, Dr Reddys Lab up by 1.50%. On the flip side, HDFC was down by 1.85%, ITC was down by 1.31%, L&T was down by 1.25% , Hindustan Unilever was down by 0.93% and  HDFC Bank was down by 0.77% were the top losers on the Sensex.

Meanwhile, Giving some respite to the Indian banks, the Reserve Bank of India (RBI) extended deadline for banks to implement global capital norms, Basel III, by a year to March 2019 amid concerns over the asset quality and profitability of the banks.

The RBI notified that prevailing slowdown in Indian industries has been putting pressure on the asset quality and thus impacting performance/profitability of the banks. Therefore, RBI decided to extend time for banks to raise capital within the internationally agreed timeline for full implementation of the Basel III capital regulations. Indian banks will now align full implementation of Basel III norms closer to the internationally agreed date of 1 January 2019.

The central bank has also revised certain aspects of guidelines like Minimum Common Equity Tier 1, Capital conservation buffer (CCB) and loss absorption features of non-equity capital instruments. However, the central bank issued more strict norms for Indian banks as compared to Basel Committee on Banking Supervision (BCBS). Under Basel III, total capital (Tier 1 and Tier 2) of a bank in India must be at least 9 per cent of risk weighted assets (RWAs) while, the BCBS requirement is minimum 8 per cent of RWAs.

The RBI suggested Indian banks that capital requirements are substantially lower during the initial years as compared to later years for full implementation of Basel III Guidelines and therefore banks should consider this aspect carefully while undertaking their capital planning exercise. Referring to the dividend distribution, the RBI recommended that the dividend on common shares and perpetual non-cumulative preference shares (PNCPS) will be paid out of current year's profit only. If the coupon payment on perpetual debt instrument (PDI) would lead to result in losses in the current year, then declaration should be precluded to that extent. Coupons on perpetual debt instruments should not be paid out of retained earnings or reserves. 

The CNX Nifty is currently trading at 6,660.65 up by 18.90 points or 0.28% after trading in a range of 6,684.95 and 6,650.25. There were 36 stocks advancing against 14 declines on the index.

The top gainers of the Nifty were PNB up by 3.55%, IDFC up by 3.06%, Indusind Bank up by 2.84%, Ultra Cement up by 2.83% and SBI up by 2.67%. On the flip side, HDFC down by 1.83%, ITC down by 1.38%, Jindal Steel down by 1.28%, L&T down by 1.22% and HUL down by 0.94% were the top losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 7.56 points or 0.37% to 2,054.15, Hang Seng increased by 299.52 points or 1.37% to 22,133.97, Jakarta Composite soared 37.23 points or 0.79% to 4,760.29, Nikkei 225 surged by 13.67 points or 0.32% to 5,142.90, Straits Times added 16.85 points or 0.53% to 3,179.02 and KOSPI Composite was up by 0.07 points to 1,978.41. On the flip side, KLSE Composite declined by 4.82 points or 0.26% to 1,842.05 and Taiwan Weighted was down by 20.31 points or 0.22% to 8,760.08.