Nifty above 15,750 mark, breadth remains strong

The benchmark indices were trading with small gains in early afternoon trade. The Nifty traded a tad above the 15,750 mark. Banks shares jumped after declining in the past three sessions.

At 12:25 IST, the barometer index, the S&P BSE Sensex, was down 60.24 points or 0.11% to 52,753.81. The Nifty 50 index added 22.40 points or 0.14% to 15,754.50.

In the broader market, the S&P BSE Mid-Cap index rose 0.63% while the S&P BSE Small-Cap index added 0.71%.

The market breadth was strong. On the BSE, 1,971 shares rose and 1,179 shares fell. A total of 132 shares were unchanged.

Volatility persisted in markets across the globe ahead of the US Fed`s decision on interest rates, which will be announced later today. Friday`s red-hot inflation data from the US has raised the market expectations of an interest rate hike by 75 basis points, the largest in 28 years.

Derivatives:

The NSE`s India VIX, a gauge of market`s expectation of volatility over the near term, fell 0.37% to 21.805. The Nifty 30 June 2022 futures were trading at 15,753.90, at a discount of 0.6 points as compared with the spot at 15,754.50.

The Nifty option chain for 30 June 2022 expiry showed maximum Call OI of 25.8 lakh contracts at the 17,000 strike price. Maximum Put OI of 32.9 lakh contracts was seen at 15,500 strike price.

Buzzing Index:

The Nifty Bank index rose 0.37% to 33,434.90.The index fell 5.06% in the past three sessions.

Among the components of the Nifty Bank index, AU Small Finance Bank (up 3.63%), State Bank of India (up 1.46%), ICICI Bank (up 1.15%), Bandhan Bank (up 0.75%), Punjab National Bank (up 0.33%) and Bank of Baroda (up 0.2% edged higher

On the other hand, Kotak Mahindra Bank (down 0.31%), HDFC Bank (down 0.27%) and Axis Bank (down 0.15%) declined.

Stocks in Spotlight:

Adani Transmission (ATL) rose 1.27% after the company said that its $700 million revolving facility is tagged as green loan by sustainalytics. This is the first of its kind certification of green loan in the transmission sector in the Asia Pacific (APAC) region.

Life Insurance Corporation of India (LIC) advanced 3.26% after the insurance company disclosed that it increased its stake in Hero MotoCorp to 11.256% from 9.163% and in Hindustan Unilever (HUL) to 5.008% from 4.995% earlier.

JSW Steel rose 0.33% after the steel maker`s standalone crude steel production for the month of May 2022 grew 31% year-on-year to 17.89 lakh tonnes as against 13.67 lakh tonnes in May 2021.

Economy:

The Reserve Bank of India (RBI) has stated that banks have to comply with regulations pertaining to financing government entities. The central bank noted that it has come across instances where banks have not been strictly complying with our extant instructions on assessment of commercial viability, ascertainment of revenue streams for debt servicing obligations and monitoring of end use of funds in respect of their financing of infrastructure/ housing projects of government owned entities. Banks have also been found to have violated the RBI`s instructions which inter alia require that in case of projects undertaken by government-owned entities, term loans should be sanctioned only for corporate bodies, the central bank said.

Due diligence should be carried out on the viability and bankability of the projects to ensure that the revenue stream from the project is sufficient to take care of the debt servicing obligations and that the repayment or servicing of debt is not from budgetary resources. Banks are requested to follow instructions in letter and spirit and are advised to carry out a review and place before their boards a comprehensive report on the status of compliance with the instructions within three months.

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