Indian equities add strength; Nifty trades above 5,300 mark

Indian equities added gains to continue its firm trade in green in the late afternoon session gyrating towards the highest points of the day. Traders were seen piling up position in FMCG, Capital Goods and Power sector while selling was witnessed in Realty, TECk and PSU sector. In the scrip specific development, shares of tyre makers MRF, Apollo Tyres, CEAT, JK Tyre & Industries, Dunlop India, Goodyear India  and Falcon Tyres were seen trading firm in green after rubber, a key input in making tyres, declined for the first time in four days. Shares of organized retailers like Shoppers Stop, Trent, Pantaloon Retail India, Provogue (India),  Koutons Retail India, Store One Retail India and V2 Retail were firm on reports that the government after the election of a new President later this month is likely to revive an order allowing foreign investors to own majority stakes in Indian supermarkets and department stores. Shares of rice exporting firms REI Agro, KRBL, LT Foods, Kohinoor Foods, Usher Agro  and Lakshmi Energy and Foods edged higher on back of the government’s decision to scrap the minimum export price (MEP) on Basmati rice.

On the global front, the Asian markets were trading on a mix note while the European markets were too trading on a mixed note. Investors globally awaited European Central Bank's policy decision later in the day. Moreover, market participants also awaited a 3 billion euro Spanish bond auction, including new 10-year bonds, which will gauge the market's response to recent measures agreed by European leaders to ease the country's funding problems. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,300 and 17,500 levels respectively. The market breadth on BSE was positive in the ratio of 1841:926 while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 17,534.13 up by 71.32 points or 0.41% after trading as high as 17,550.59 and as low as 17,423.45. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index advanced 0.98% while Small cap index surged 1.51%.

On the BSE sectoral space, FMCG up 1.03%, Capital Goods up 1.00%, Power up 0.85%, Auto up 0.63%, and Bankex up 0.58% were the major gainers, while Realty down 0.23%, TECk down 0.15%, PSU down 0.13%, IT down 0.13%  and Consumer Durables down 0.03% were the  top laggards in the space.

Cipla up 2.15%, Maruti Suzuki up 1.98%, Jindal Steel up 1.57%, ITC up 1.36% and Tata Motors up 1.23% were the major gainers on the Sensex, while ONGC down 2.20%, Bajaj Auto down 1.76%, Coal India down 0.79%, Dr Reddy’s down 0.79% and Bharti Airtel down 0.74% were the major losers in the index.

Meanwhile, India’s central bank - the Reserve Bank of India (RBI) is contemplating the proposal of easing some of the rules relating to the country’s microfinance institutions’ (MFIs) net worth, capital adequacy and provisioning needs. At a time when the MFIs are facing difficult times, the relaxation of norms by RBI would provide a huge sigh of relief to the institutions dealing in micro-finance and also help them emerge out of the crisis.

Acknowledging that the setting up of new regulatory regime has run into some bottlenecks, RBI governor D Subbarao opined that the central bank is taking efforts to resolve various challenges faced by the MFIs and would soon bring MFI operations back on track. He cited that small MFIs were unable to meet the Rs 5 crore entry point capital to be eligible to register as non banking finance company (NBFC)-MFI, underlining the difficulties faced by them in complying with the qualifying asset criterion for registering as NBFC-MFI.

Subbarao highlighted that the loss making MFIs based in Andhra Pradesh, who are suffering from large non-performing assets (NPAs) and eroded capital, are reeling under acute problems in complying with the capital and provisioning norms. Therefore banks were reluctant to make fresh loans to them as such loans do not qualify for priority sector lending.

Though micro finance institutions have RBI as their regulator but there are apprehensions over whether the central bank has the means and ability to do so. RBI Governor revealed that the central government is bringing out a law to govern the MFI and has proposed RBI as the regulator however, concerns remain whether it have the set up to oversee small MFIs without affecting the quality of supervision.

The S&P CNX Nifty is currently trading at 5,320.65, higher by 18.10 points or 0.34% after trading as high as 5,327.85 and as low as 5,288.85. There were 34 stocks advancing against 16 declines on the index.

The top gainers on the Nifty were IDFC up 2.49%, Cipla up 2.10%, Maruti up 2.09%, Jindal Steel up 1.58% and HCL Tech up 1.51%.

ONGC down 2.28%, Asian Paints down 2.08%, Dr Reddy’s Lab down 0.98%, DLF down 0.97% and Coal India down 0.71% were the major losers on the index.

In the Asian space, Shanghai Composite plunged 1.17%, Jakarta Composite eased 0.25%, KLSE Composite shed 0.15%, Nikkei 225 dropped 0.27% and Taiwan Weighted declined 0.47%.

On the other hand Hang Seng rose 0.50%, Straits Times Index ascended 0.54% and KOSPI Composite Index inched up 0.06%.

The European markets were trading on a mixed note with, France’s CAC 40 shed 0.06%, Germany’s DAX added 0.33% and the United Kingdom’s FTSE 100 inched up 0.17%.