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Benchmarks trade marginally in green in morning deals
Jan-17-2019

Indian equity benchmarks made an optimistic start and are trading marginally in green in morning deals following positive cues from global markets. Traders took encouragement as a working group of the Commerce and Industry Ministry came out with a blueprint suggesting a host of long and short-term measures to increase the size of India's economy to $5 trillion by 2025. It added that India’s potential to achieve a $5 trillion GDP by 2024-25 is within the realm of possibility. Some support also came with report that in a bid to improve the ease of doing business, the Reserve Bank of India (RBI) announced a new framework for external commercial borrowings (ECB) and rupee denominated bonds. Indian borrowers can now raise funds from offshore markets for at least three years without any ceiling on the amount.

On the global front, Asian markets are trading mostly in green at this point of time as upbeat bank earnings bolstered Wall Street, while an anticlimactic end to the latest chapter in the Brexit saga gave sterling a moment’s peace. The US markets ended higher for a second consecutive session on Wednesday, lifted by bank stocks as investors parsed the latest batch of corporate earnings.

Back home, banking sector stocks edged higher with report that the government approved a capital infusion of Rs 6,000 crore in state-owned Exim Bank to expand its business. The equity will be infused in two tranches of Rs 4,500 crore in 2018-19 and Rs 1,500 crore in 2019-20 respectively. In scrip specific developments, SBI gained on planning to sell over Rs 15,000 crore of Essar Steel’s NPAs and IOC edged higher on planning to raise additional $3 billion via bonds issue.

The BSE Sensex is currently trading at 36388.50, up by 67.21 points or 0.19% after trading in a range of 36384.72 and 36468.42. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.18%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Energy up by 0.67%, Oil & Gas up by 0.45%, Telecom up by 0.45%, Auto up by 0.43% and Consumer Durables was up by 0.41%, while IT down by 0.17%, TECK down by 0.12%, Capital Goods down by 0.09%, FMCG down by 0.05% and Industrials was down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.57%, Power Grid Corporation up by 1.14%, Reliance Industries up by 0.88%, HDFC up by 0.88% and TCS up by 0.61%. On the flip side, Yes Bank down by 1.32%, Infosys down by 0.88%, Indusind Bank down by 0.67%, Bajaj Auto down by 0.52% and Bajaj Finance down by 0.47% were the top losers.

Meanwhile, with an aim to further improve the ease of doing business in India, the Reserve Bank of India (RBI) has come out with a new policy for overseas borrowings, allowing all eligible entities to raise foreign funding under the automatic route and removing sectoral curbs. All eligible borrowers can now raise External Commercial Borowings (ECB) up to $750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits.

The Central Bank said Tracks I and II under the existing framework are merged as 'Foreign Currency denominated ECB' and Track III and Rupee Denominated Bonds framework are combined as 'Rupee Denominated ECB' to replace the current four-tiered structure. The framework is instrument-neutral. Track I, II and III denotes amount and maturity of funds raised. Further, all-in cost ceiling per annum has been pegged at benchmark rate plus 450 bps spread.

As per the new norms, the minimum average maturity period (MAMP) has been kept at three years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of MAMPs as at present, except the borrowers specifically permitted in the circular to borrow for a shorter period. However, the RBI said lending and borrowing under the ECB framework by Indian banks and their overseas branches/subsidiaries will be subject to prudential guidelines. Further, other entities raising ECB are required to follow the guidelines issued, if any, by the concerned sectoral or prudential regulator.

The list of eligible borrowers has been expanded to include all entities eligible to receive foreing direct investment (FDI). Additionally, port trusts, units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, registered societies/trusts/ cooperatives and non-government organisations can also borrow under the new framework. The negative list, for which the ECB proceeds cannot be utilised, would include real estate activities, investment in capital market, equity investment, working capital purposes except from foreign equity holder, repayment of Rupee loans except from foreign equity holder.

The CNX Nifty is currently trading at 10903.65, up by 13.35 points or 0.12% after trading in a range of 10902.25 and 10929.25. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.08%, Power Grid Corporation up by 1.30%, Mahindra & Mahindra up by 1.27%, Grasim Industries up by 1.23% and Indiabulls Housing up by 0.86%. On the flip side, Yes Bank down by 1.70%, Infosys down by 1.04%, Indusind Bank down by 0.75%, Eicher Motors down by 0.68% and Bajaj Finserv down by 0.63% were the top losers.

Asian markets are trading mostly in green; Hang Seng gained 98.33 points or 0.37% to 27,000.43, Taiwan Weighted jumped 39.47 points or 0.40% to 9,803.28, KOSPI rose 4.81 points or 0.23% to 2,110.91, Jakarta Composite added 36.84 points or 0.57% to 6,450.20 and Shanghai Composite was up by 11.77 points or 0.46% to 2,582.19.

On the flip side, Nikkei 225 slipped 6.62 points or 0.03% to 20,436.13 and Straits Times was down by 7.52 points or 0.23% to 3,221.59.
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