Benchmarks make positive start; Nifty regains 8,800 mark

Extending their previous session’s rally, Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals with Sensex and Nifty recapturing their crucial 28,400 and 8,800 levels respectively. Traders took some encouragement with a Ficci survey that India's economy is likely to expand 7.8 percent during the current financial year on the back of good monsoons. The estimated median GVA (gross value added) growth for Q1 FY17 has been put at 7.6 percent. Sentiments also got some support with report that foreign institutional investors were net buyers in equities worth Rs 391 crore on Tuesday, as per provisional stock exchange data.

On the global front, the Asian markets were exhibiting mixed trend at this point of time, with some indices losing quarter to half a percent in early deals, while the Japanese market has advanced again as the yen held near its weakest level since July.

Back home, the market breadth indicating the overall health of the market was strong, with 1213 shares gaining and 511 shares declining, while a total of 95 shares were unchanged. On the sectoral front, stocks related to auto space remained on buyers’ radar after the Minister for Road Transport and Highways Nitin Gadkari has said that the draft vehicle scrapping policy would offer a combined benefit of Rs 14,000 crore to the Centre and states and drive the auto industry growth by 22 percent.

The BSE Sensex is currently trading at 28481.64, up by 138.63 points or 0.49% after trading in a range of 28363.10 and 28488.87. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.54%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were Auto up by 1.27%, Industrials up by 1.01%, Basic Materials up by 0.90%, Bankex up by 0.88% and Consumer Durables was up by 0.88%, while IT was down by 0.11% remained the lone losing index on BSE.

The top gainers on the Sensex were Tata Motors up by 2.77%, Hero MotoCorp up by 2.05%, Asian Paints up by 1.69%, Bajaj Auto up by 1.67% and HDFC up by 1.14%. On the flip side, TCS down by 0.95%, NTPC down by 0.90%, ONGC down by 0.85% and Infosys down by 0.43% were the top losers.

Meanwhile, in order to deal with the problem of stressed assets and get back to a position from where public sector banks (PSBs) can start generating internal accruals, Reserve Bank of India (RBI) has made a strong case for providing more capital to PSBs. RBI Deputy Governor N S Vishwanathan has said that Indian banks got into stress before implementation of Basel III and revised IFRS which provide protection against system level stresses.

The Deputy Governor said the government of India has supported entire AQR (asset quality review) exercise and they also provided requisite capital for the PSBs. He further said that provision coverage ratio (PCR) has witnessed a decline in the last few months. PCR means the difference between gross Non-performing Assets (NPA) and the net NPA that has to be covered if net NPA is zero which means assets are fully provided for. At one point of time, it used to be 70 percent. As banks are able to generate profit they will be able to do that.

Last month, the government infused capital of Rs 22,915 crore in 13 lenders including State Bank of India (SBI), which will get Rs 7,575 crore, Indian Overseas Bank Rs 3,101 crore and Punjab National Bank Rs 2,816 crore to revive loan growth that hit a two-decade low and to shore up cash-strapped PSBs. This is the first tranche of capital infusion for the current fiscal and more funds would be provided in future depending on the performance of PSBs. The infusion will boost the government's shareholdings in the banks, which have been under-capitalised compared with their private peers because of restrictions on their ability to sell equity to raise money.

The average Capital Adequacy Ratio (CAR) or the ratio of a bank's capital to its risk, for PSBs stood at 11.6 percent as of March 31, lower than 13.2 percent for banking system as a whole. Basel-III regulations provide for bank to have a minimum capital ratio of 9 percent by March 31, 2019.

The CNX Nifty is currently trading at 8800.80, up by 56.45 points or 0.65% after trading in a range of 8754.05 and 8801.40. There were 41 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 3.01%, Tata Motors up by 2.63%, Hero MotoCorp up by 2.45%, Kotak Mahindra Bank up by 2.21% and HCL Tech up by 1.98%. On the flip side, NTPC down by 0.99%, ONGC down by 0.83%, Bosch down by 0.76%, TCS down by 0.72% and BPCL down by 0.68% were the top losers.

Asian markets were trading mixed; Hang Seng rose 4.82 points or 0.02% to 23,020.93, Jakarta Composite increased 7.44 points or 0.14% to 5,369.75, Shanghai Composite gained 8.9 points or 0.29% to 3,083.58 and Nikkei 225 was up by 164.63 points or 0.98% to 16,889.99.

On the flip side, Taiwan Weighted decreased 22.35 points or 0.25% to 9,088.21, KOSPI Index slipped 4.61 points or 0.23% to 2,035.13 and FTSE Bursa Malaysia KLCI was down by 3.54 points or 0.21% to 1,678.06.