Bulls roared again on Wednesday as equity benchmarks posted biggest second-day rally in seven years with the Sensex rising 500 points intraday, driven by banks after the Reserve Bank of India changed rules that determine banks' regulatory capital, and positive global cues. It was in addition to 777-point rally in previous session on hopes of rate cut. The 30-share BSE Sensex surged 463.63 points or 1.95 percent to 24242.98 and the 50-share NSE Nifty climbed 146.55 points or 2.03 percent to 7368.85. The broader markets too traded in line with benchmarks as the BSE Midcap index gained 1.9 percent and Smallcap rose 2.2 percent. About three shares advanced for every share declining on the BSE. Ajay Srivastava of Dimensions Consulting said the current bounceback may have some more legs to go but till economic fundamentals solidly change, investors must be cautious to not over invest. He also said the RBI's move yesterday to tweak capital norms will help banks shore up capital but this may be a followed by another NPA (non-performing assets) hit in the fourth quarter. Street was expecting some rate cut from the RBI after the Union Budget provided sufficient space but the RBI on Tuesday relaxed capital rules for banks to help meet Basel-III norms that will provide additional capital to banking sector. It is a big relief to banks that have been struggling with higher NPA issue. As per the new rules, banks will be allowed to recognise part of their real estate assets, foreign currency assets and deferred tax assets as capital with suitable hair cut. This measure is a big positive particularly for State Bank of India because the bank never had revaluation reserves on balance sheet, Ravikant Bhat of IDBI Capital said, adding other beneficiary could be Corporation Bank. PS Jayakumar, MD & CEO of Bank of Baroda says the Reserve Bank’s new amendments on balance sheet items will help in improving common equity Tier 1 (CET I) by 1.1 percent while Anshula Kant, CFO of State Bank of India (SBI) says that the bank should get upward of 100 basis points (bps) of capital [adequacy ratio]. State Bank of India rallied 11.5 percent followed by ICICI Bank, Punjab National Bank and Bank of Baroda with 7 percent upside. Bank Nifty surged 4.7 percent.
3:30 pm Market Closing: It was a stellar rally in the market on Wednesday, continuing for the second consecutive session. The rally was largely led by banks, especially due to change in rules that determine banks' regulatory capital, which would be big boost to PSU banks that have been struggling with NPA issues. Bank Nifty jumped more than 4 percent. The 30-share BSE Sensex surged 463.63 points or 1.95 percent to 24242.98 and the 50-share NSE Nifty climbed 146.55 points or 2.03 percent to 7368.85. About three shares advanced for every share declining on the BSE. SBI was the biggest gainer on Sensex, up 12.39 percent followed by Hindalco, ICICI Bank, Adani Ports, Hero Motocorp, PNB and Bank of Baroda with 5-7 percent upside while M&M, Coal India, Sun Pharma, ITC and Bajaj Auto were down 1-5 percent. 3:20 pm PF: Amid widespread concerns, Finance Minister Arun Jaitley today said in Lok Sabha that the issue related to the proposal to tax PF will be addressed by him during the discussion on Budget. "We are seized of the problem. I will address it during the Budget discussion," Jaitley said. He was responding when TMC members raised the issue soon after the question House with Saugata Roy demanding that Jaitley, who was in the House, make an immediate announcement. TMC leader Sudip Bandhyopadhyaya said the Budget proposal to tax the EPF has caused nation-wide concern. 2:58 pm Market Update: The Sensex rose 414.52 points or 1.74 percent to 24193.87 and the Nifty climbed 135.50 points or 1.88 percent to 7357.80. About 1923 shares have advanced against 670 declining shares on the BSE. 2:40 pm Buzzing: HCL Technologies shares gained more than 2 percent on five year next–generation IT outsourcing services contract from Sweden-based Husqvarna AB. HCL has been providing application management services to Husqvarna and with this deal, HCL will now provide end-to-end integrated infrastructure and applications services, covering data centre services, network services, security services, applications operations and support services," says the IT company in its filing. Husqvarna AB manufactures outdoor power products including robot mowers, garden tractors, chainsaws and trimmers. "HCL's engagement with Husqvarna is nearly three years old and Husqvarna is marquee customer for the company in Nordics region," it says. 2:30 pm Europe Update: European markets traded higher today, tracking gains in the US and Asia overnight. FTSE, CAC and DAX gained 0.5-1 percent. Markets in Asia were higher, with Japan's Nikkei 225 index leading the way after a strong finish on Wall Street overnight. Giving European markets another reason to be cheerful, major US indexes rose on Tuesday, with the Dow Jones industrial average up 2.11 percent, S&P 500 adding 2.39 percent, and the Nasdaq composite gaining 2.89 percent. 2:15 pm Tata Steel expansion: Tata Steel has received final environment clearance for its Rs 1,877 crore expansion project to be carried out at Jamshedpur Steel Works in Jharkhand. "The Environment Ministry has considered the application based on the recommendations of the Expert Appraisal Committee (Industry-I) and decided to grant environment clearance (EC) to the proposal for expansion of crude steel production at Tata Steel Works," a senior government official said. The EC, which was issued yesterday, has been given to the company subject to strict compliance to specific and general conditions, the official added. Among conditions specified, the official said the company has been asked to take prior permission from the State Forest Department on likely impact of the expansion of the proposed steel plant on the reserve forests. Also read - Govt orders rebidding for Rs 10,050 cr Zojila tunnel in J&K 2:00 pm Market Check Equity benchmarks remained strong in afternoon trade, backed by banks, oil, infra and select auto stocks. The Sensex rallied 429.50 points or 1.81 percent to 24208.85 and the Nifty climbed 141.35 points or 1.96 percent to 7363.65. State Bank of India was the biggest gainer on Sensex, up 9 percent after the RBI on Tuesday relaxed capital rules for banks to help meet Basel-III norms. As per the new rules, banks will be allowed to recognise part of their real estate assets, foreign currency assets and deferred tax assets as capital with suitable hair cut. This measure is a big positive particularly for State Bank of India because the bank never had revaluation reserves on balance sheet, Ravikant Bhat of IDBI Capital said, adding other beneficiary could be Corporation Bank. ICICI Bank, Axis Bank, Adani Ports, Hero Motocorp, NTPC, Hindalco and BHEL rallied 4-6 percent. The market continued to be strong as about three shares advanced for every share declining on the Bombay Stock Exchange.
