Benchmarks extend gains; Nifty surpasses 7,800 mark

Indian equity markets added gains and are now trading with gains of around one and half a percent  in the late afternoon session on account of buying in frontline blue chip counters.  The sentiments remained up-beat after International Monetary Fund (IMF) stated that near-term growth prospects remain favourable in India but some macroeconomic imbalances still exist.  Traders were seen piling position in Realty, Metal and Capital goods sector stocks. In scrip specific development, hectic buying activity was witnessed in real estate stocks like DLF, Unitech, Sobha, Puravankara Projects and India Bulls Real Estate due to rising hopes of a rate cut. On the global front, the Asian markets traded in green, while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,800 and 25,700 levels respectively. The market breadth on BSE was positive in the ratio of 1708:811 while 102 scrips remained unchanged.

The BSE Sensex is currently trading at 25783.94, up by 330.38 points or 1.30% after trading in a range of 25555.77 and 25825.79. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.30%, while Small cap index up by 1.34%.

The gaining sectoral indices on the BSE were Realty up by 5.10%, Metal up by 2.47%, Capital Goods up by 2.00%, Power up by 1.99% and Bankex up by 1.97%.

The top gainers on the Sensex were Vedanta up by 5.01%, Tata Steel up by 4.92%, HDFC up by 3.92%, Tata Motors up by 3.87% and Hindalco up by 3.28%.

On the flip side, Lupin down by 0.74%, Hero MotoCorp down by 0.40% and TCS down by 0.20% were the top losers.

Meanwhile, rating agency Fitch Ratings has affirmed the ratings on nine Indian banks. The Long-Term Issuer Default Ratings (IDR) on State Bank of India, Bank of Baroda, Bank of Baroda (New Zealand), Punjab National Bank, Canara Bank, IDBI Bank, ICICI Bank and Axis Bank has been affirmed at ‘BBB-‘, while Indian Bank has been affirmed at 'BB+' stating that the outlook on the IDRs is stable.

Further, Fitch highlighted that PNB is the weakest among the state banks because of its stressed assets situation. The agency downgraded PNB’s viability rating by one notch to “BB” to reflect growing risk to the state owned bank’s capital position from its increasing stock of stressed assets. The downgrade also reflects Fitch’s expectation that capital buffers are unlikely to improve significantly even though the state is likely to inject capital into the bank in the FY16. However, Fitch siad that the outlook for Indian bank credit profiles in FY16 is more positive following the difficult year in FY15, when system-wide loans increased by 9.7%, the slowest pace in a decade. Fitch further stated that there are challenges from stressed sectors such as infrastructure and steel, high corporate leverage, and continued pressure on asset quality and capital.

According to Fitch, state owned banks which account for 85% of the total capital shortfall that Indian banks face in meeting Basel III capital requirements, and they account for close to 90% of the system’s stressed assets. Besides, the agency also stated that government’s seven-part plan to reform PSU banks could be a significant step towards increased transparency, better governance and greater accountability for the sector, provided government interference is minimized.

Additionally, on government’s capital infusion of Rs. 70,000 crore in public sector banks (PSBs) by FY19 (with Rs. 25,000 crore in FY16), Fitch said it should provide some support for the state-owned banks’ ailing balance sheets, but may not be sufficient, depending on banks’ credit growth expectations and persistent low equity valuations.

The CNX Nifty is currently trading at 7825.80, up by 108.80 points or 1.41% after trading in a range of 7754.05 and 7839.70. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Cairn India up by 5.39%, Tata Steel up by 5.08%, Vedanta up by 4.73%, Bank of Baroda up by 4.25% and Tata Motors up by 4.16%.

On the flip side, Idea Cellular down by 2.94%, BPCL down by 1.30%, Lupin down by 0.77%, Bosch down by 0.53% and Hero MotoCorp down by 0.35% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 0.31 points or 0.02% to 1,915.53, FTSE Bursa Malaysia KLCI increased 11.08 points or 0.7% to 1,601.27, Straits Times increased 25.62 points or 0.89% to 2,903.75, Jakarta Composite increased 33.53 points or 0.76% to 4,434.82, Taiwan Weighted increased 60.66 points or 0.75% to 8,095.95 and Nikkei 225 increased 86.99 points or 0.48% to 18,182.39.

Shanghai Stock Exchange was closed on account of ‘Victory Day’ holiday while Hong Kong Stock Exchange was closed on account of Anniversary day of the victory of war against Japanese.

The European markets were trading in green; UK’s FTSE 100 increased 109.15 points or 1.79% to 6,192.46, France’s CAC increased 65.74 points or 1.44% to 4,620.66 and Germany’s DAX increased 169.7 points or 1.69% to 10,217.75.