Markets continue to trade in green in noon session

Benchmark equity indices continued to trade in green in noon session led by gains in frontline blue chip stocks such as Power Grid Corpn, Bharti Airtel, Hero MotoCorp and Cipla among others. Sentiments got some support with Fitch Ratings’ latest statement that it expects India's GDP growth trend higher than China's in the medium term despite demonetization. It added that in India it expects GDP growth to accelerate in FY2018 on the back of reform implementation, monetary easing of the past year and infrastructure spending. Some support also came after RBI Governor Urjit Patel said that all necessary actions are being taken to 'ease the genuine pain of citizens' who are honest and who have been hurt. Liquidity in the banking system has increased and the intent is to normalise things as soon as possible. However, depreciation in rupee value against dollar weighed on the sentiments. The rupee weakened by 30 paise to trade at 68.76 against the US dollar in early trade at the Interbank Foreign Exchange market on month-end demand for the American currency from importers. In scrip specific development, ICICI Bank, SBI and Bank of Baroda fell around 2 percent after the RBI decided to soak up additional liquidity in the system generated by a government ban on larger notes.

On the global front, Asian markets were trading mostly in green following the modest gains on Wall Street on Friday, though weakness in crude oil prices weighed on energy stocks. The U.S. dollar retreated against its major peers, including the Japanese yen. 

The BSE Sensex is currently trading at 26383.96, up by 67.62 points or 0.26% after trading in a range of 26183.22 and 26405.72. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.98%, while Small cap index was up by 1.03%.

The top gaining sectoral indices on the BSE were Power up by 1.78%, Oil & Gas up by 1.45%, Metal up by 1.03%, PSU up by 1.00% and Auto up by 0.93%, while Bankex down by 0.35%, Consumer Durables down by 0.35% and IT down by 0.28% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid Corpn. up by 3.20%, Bharti Airtel up by 3.04%, Hero MotoCorp up by 2.07%, NTPC up by 1.89% and Cipla up by 1.73%. On the flip side, SBI down by 1.67%, ICICI Bank down by 1.62%, Wipro down by 1.19%, TCS down by 1.17% and HDFC down by 1.08% were the top losers.

Meanwhile, amid the larger debate and different views on impact of demonetization on economy, the global rating agency ‘Fitch Ratings' has said that despite demonetization it expects India's GDP growth trend higher than China's in the medium term. It has projected Indian economy to accelerate in FY2018 on the back of reform implementation, monetary easing of the past year and infrastructure spending, while it said that in China a continued increase in leverage in the broader economy is more and more becoming a burden for growth. 

The rating agency has said that the long-term impact of demonetization will depend on the time taken to ease the shortage in currency notes. It also noted that the move will have a negative impact on growth in the short run but for the fiscal year as a whole decline would be relatively moderate. On the positive side, it said that the demonetization may improve the fiscal position to the extent more earnings would be declared and a transfer is possible from the RBI to the government of the seigniorage (profit from the difference between the face value of the currency and cost of production) earned from unchanged notes.

In October 2016, Fitch forecasted India’s GDP growth of 7.4 per cent for the current fiscal, adding that the growth would accelerate to eight per cent only by 2018-2019, on account of a lagged impact of monetary easing. For China, it had forecasted real GDP growth of 6.4 per cent in 2017, down from a projected 6.7 per cent in 2016, due to the impact of recent macro-prudential tightening measures targeting the housing market.

The CNX Nifty is currently trading at 8138.50, up by 24.20 points or 0.30% after trading in a range of 8066.50 and 8145.90. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 3.01%, Idea Cellular up by 2.92%, BPCL up by 2.74%, Power Grid Corpn. up by 2.73% and Hero MotoCorp up by 2.29%. On the flip side, Bank of Baroda down by 2.00%, ICICI Bank down by 1.77%, SBI down by 1.71%, Wipro down by 1.24% and TCS down by 1.15% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.86 points or 0.05% to 1,628.12, KOSPI Index gained 3.67 points or 0.19% to 1,978.13, Shanghai Composite increased 20.92 points or 0.64% to 3,282.86, Taiwan Weighted added 63.17 points or 0.69% to 9,222.24 and Hang Seng was up by 213.25 points or 0.94% to 22,936.70. On the flip side, Nikkei 225 decreased 24.33 points or 0.13% to 18,356.89 and Jakarta Composite was down by 10.6 points or 0.21% to 5,111.50.