Benchmarks extend gains; trade near intra-day high levels

Indian equity benchmarks extended the early gains to continue firm trade in noon session, hovering near intra-day high levels, amid a rally in Metal, Realty and Banking stocks. Sentiments got a boost after Union Finance Minister Arun Jaitley said tax collections will go up considerably in the medium-to-long term as more people will come under the tax net due to the demonetisation of Rs 500 and Rs 1,000 currency notes. According to him, the step by the government to crack down on black money, terror financing and corruption not merely nudges the economy towards a cashless society but is a significant push in that direction. The move will establish credibility of the Indian economy in the world and will also expand the country’s GDP. Besides, value-buying in bluechip stocks and covering-up by speculators who had created short-positions in yesterday’s trade and strengthening rupee too supported the rebound. Some support also came with report that the Centre’s net tax kitty rose up to Rs 8.51 lakh crore between April and October 2016. Net direct tax collections jumped up 10.66% to Rs 3.77 lakh crore in October, while direct tax mop-up was more robust and increased 26.7% to Rs 4.85 lakh crore. Meanwhile, metal stocks gained traction, after Donald Trump in his victory speech that he would embark on a project to rebuild infrastructure in the US. He also plans to double US economic growth. Banking shares also witnessed good buying interest as the government’s latest move to curb Rs 500 and Rs 1,000 currency notes augurs well for long-term prospects for the banking industry as they could enjoy higher deposit (savings) balances and transaction volumes, lower cash handling costs and greater acceptance of digital channels.

On the global front, Asian markets were trading in green on Thursday, continuing a global rebound in share prices that followed a plunge after Donald J. Trump’s presidential victory. Japanese shares surged as the yen slumped against the US dollar. Investors also shrugged off weaker than expected core machinery orders data. Core machine orders in Japan skidded 3.3 percent on month in September, standing at 843.7 billion yen. Meanwhile, US markets recovering from the early slide posted strong gains in last session on speculation that Donald Trump will pursue business-friendly policies.

Back home, all BSE sectoral indices were trading in the green. Among them, Metal index gained the most by 5.47 per cent, followed by Realty 3.89 per cent, Banking 3.76 per cent and PSU 3.60 per cent. In scrip specific development, Power Finance Corporation gained after the company reported 10.51% rise in its net profit at Rs 1873.42 crore for the quarter under review as compared to Rs 1695.30 crore for the same quarter in the previous year. Moreover, Bosch rose after the company reported 79.20% rise in its net profit at Rs 703.74 crore for the quarter ended September 30, 2016, as compared to Rs 392.72 crore for the same quarter in the previous year.

The market breadth remained optimistic as there were 2030 shares on the gaining side against 345 shares on the losing side, while 91 shares remained unchanged.

The BSE Sensex is currently trading at 27707.49, up by 454.96 points or 1.67% after trading in a range of 27491.93 and 27743.46. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 2.27%, while Small cap index up by 2.65%.

The top gaining sectoral indices on the BSE were Metal up by 5.47%, Realty up by 3.89%, Bankex up by 3.76%, PSU up by 3.60% and Capital Goods up by 2.16%, while there were no losers on BSE sectoral space. 

The top gainers on the Sensex were Tata Steel up by 8.05%, SBI up by 7.80%, Cipla up by 6.52%, ICICI Bank up by 4.92% and Adani Ports &Special up by 4.87%. On the flip side, Asian Paints down by 1.27%, Wipro down by 0.60%, Hero MotoCorp down by 0.60%, Infosys down by 0.32% and HDFC down by 0.30% were the top losers.

Meanwhile, Finance ministry has said that Indian economy will face biggest challenge in the near term due to weak global demand, whereas in order to increase the credit supply of the state owned bank there is need to resolve the problem of bad loans. It also said that since January last year banks have passed on less than half of the 1.50 percent rate reduction benefit to consumers therefore, the transmission of monetary policy has remained incomplete. It added that exports and imports together constitute 42 percent of the GDP (gross domestic product), even at the reduced levels in 2015-16.

Ministry identified the twin balance sheet problem of stressed financial positions of some large corporates leading to stressed assets of banks which might affect private investment as a critical challenge. The gross non-performing assets (NPAs) of public sector banks (PSBs) increased sharply to 9.8 per cent in March 2016 as compared to 5.4 per cent in March 2015, which is mainly on account of cleaning up of their balance sheets. It also said that the problem of non-performing assets needs to be resolved and bank lending needs to pick up.

According to the Reserve Bank of India (RBI)’s Financial Stability Report, the proportion of leveraged companies declined sharply to 14 percent in March 2016 as compared to 19 percent in March 2015 and their share in the total debt also declined to 20.6 percent from 33.8 percent. The ministry has said that creating quality jobs is the imperative of the time therefore the government has focused its efforts on removing impediments to job creation, including addressing shortage of skills to the workforce. However, it noted that reviving the savings and investment cycle in economy is challenging.

Further, the savings rate that stood at 34.6 per cent in 2011-12, declined to 33 per cent in 2014-15. Investment rate declined to 34.2 per cent in 2014-15 as compared to 39 per cent of GDP in 2011-12 The International Monetary Fund (IMF) has estimated India to grow at 7.6 per cent in 2016-17 and 2017-18, while World Bank has projected India to maintain a robust growth of 7.6 per cent in 2016 and 7.7 per cent in the following two years.

The CNX Nifty is currently trading at 8582.45, up by 150.45 points or 1.78% after trading in a range of 8512.90 and 8598.45. There were 45 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 8.03%, Bank of Baroda up by 7.80%, SBI up by 7.40%, Hindalco up by 7.03% and Cipla up by 6.69%. On the flip side, Asian Paints down by 1.50%, Infosys down by 0.59%, Hero MotoCorp down by 0.56%, Wipro down by 0.55% and HDFC down by 0.54% were the top losers.

All the Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 0.73%, Shanghai Composite gained 1.32%, KOSPI Index soared 2.19%, Jakarta Composite jumped 1.05%, Taiwan Weighted surged 2.34%, Hang Seng added 2.05% and Nikkei 225 was up by 6.73%.