Post Session: Quick Review

Thursday turned out to be a fabulous day of trade for Indian equity benchmarks and ended the session on a firm note, due to sustained buying which took support with Fed Chair Janet Yellen, who in her second day of economic testimony before Congress, offered no additional insight on the timing of the central bank’s next rate hike. Investors closely watched GST Council meet scheduled on February 18 and assembly elections in five states that will end on March 8. The performance of Prime Minister Narendra Modi’s party in ongoing state elections will determine if the trickle of foreign money returning to Indian stocks turns into a gush. The equity benchmarks made a positive start and traded marginally in green in early deals taking some encouragement with report that India’s exports continued to grow for the fifth straight month, expanding by 4.32 percent to $22.11 billion in January against $21.19 billion in the same month of 2016. Imports also rose, by 10.70 percent to $31.95 billion, during the month under review. Improved demand from the United States, European Union and Japan helped increase India’s exports for the fifth month in a row in January, indicating that demonetization has not hit exports as much as feared. Hectic buying activity was witnessed in realty stocks on reports that private equity investments in the real estate sector increased by 26 percent during 2016 and touched a nine-year high of nearly Rs 40,000 crore. Some buying activity was also witnessed in Oil & Gas sector, as the Cabinet Committee of Economic Affairs has approved the award of 31 contract areas under the Discovered Small Field (DSF) Bid Round 2016. Some support also came on account of buying in Information Technology (IT) counters. Tata Consultancy Services (TCS) said its board would consider a share buyback plan at a meeting next week. With bleak growth targets, IT companies need not hoard their piles of cash. Infosys is sitting on $4.5 billion dollars while TCS, Wipro and HCL Tech have cash piles of $5.69 billion, $4.88 billion and $1.9 billion respectively.

On the global front, Asian markets closed mixed, as markets tread cautiously on growing prospects for a Fed rate hike in March. Japan’s stock exchange closed in red with Toshiba shares down amid mounting troubles over efforts to restructure operations after a massive write-down related to its US nuclear unit. China stocks posted modest gains as higher commodity prices and infrastructure spending continued to boost shares of firms in the materials sector. European markets were trading under pressure as investors focused on a new series of corporate earnings reports.

Back home, State Bank of India (SBI) and three of its listed associates closed in green with Cabinet approval for a proposal to merge the five subsidiaries with the parent, which will create a mammoth bank with 23,000 branches. SBI, State Bank of Bikaner & Jaipur (SBBJ), State Bank of Travancore (SBT) and State Bank of Mysore (SBM) ended in green, while the rest two associate banks - State Bank of Patiala and State Bank of Hyderabad - are unlisted.

The BSE Sensex ended at 28301.27, up by 145.71 points or 0.52% after trading in a range of 28146.19 and 28327.84. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.25%, while Small cap index was up by 1.35%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.14%, IT up by 2.04%, Metal up by 2.00%, Consumer Durables up by 1.66% and TECK up by 1.64%, while FMCG down by 0.92% was the sole loser on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 4.26%, Infosys up by 3.02%, Maruti Suzuki up by 2.74%, Tata Steel up by 2.37% and GAIL India up by 2.06%. (Provisional)

On the flip side, ITC down by 2.52%, Larsen & Toubro down by 1.09%, ICICI Bank down by 0.91%, Asian Paints down by 0.91% and Coal India down by 0.64% were the top losers. (Provisional)

Meanwhile, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained stable outlook on large public sector banks and private sector banks supported by high levels of capital. On the same time it retained its negative outlook on mid-sized and smaller state-run banks due to limited access to capital and large non-performing assets.

Ind-Ra in its report ‘Indian Banks Outlook for FY18’ said that there is an increasing divide between the large and smaller PSBs, with the former having some access to growth capital, better market valuation, and also some non-core assets to divest while the latter would only receive bailout capital if required and would need to ration their capital consumption over next two years.

It said that while the large public sector banks with better access to capital and private sector banks with their robust capitalisation will navigate another year of low growth and high credit costs with a stable outlook, mid-sized and smaller state-run banks will find it increasingly difficult to grow given increasing capital requirements and large funding gaps impeding their ability to compete on spreads.

The rating agency however said that long term ratings of all public sector banks remain resilient on expectations of continued government support. The report also said that Indian banks will need Rs 91,000 crore in Tier-I capital until March 2019 to grow at a bare minimum pace of 8 to 9 per cent compound annual growth rate (CAGR)  ) including a residual Rs 20,000 crore from the government’s bank recapitalisation programme 'Indradhanush'. Impaired assets in the banking sector are expected to peak at 12.5 per cent to 13 per cent by the financial year 2017-18 and 2018-19, which is likely to be at 12% by the end of financial year 2016-17. The rating agency also maintained a stable outlook on the non-bank finance company (NBFC) sector and on the major NBFCs rated by it for the financial year 2017-18.

The CNX Nifty ended at 8777.80, up by 53.10 points or 0.61% after trading in a range of 8719.60 and 8783.95. There were 37 stocks advancing against 14 stocks declining on the index. (Provisional)

The top gainers on Nifty were Aurobindo Pharma up by 4.27%, Sun Pharma up by 4.27%, Infosys up by 3.08%, Maruti Suzuki up by 2.85% and Eicher Motors up by 2.58%.  (Provisional)

On the flip side, ITC down by 2.60%, Bharti Infratel down by 1.78%, Asian Paints down by 1.19%, Larsen & Toubro down by 1.01% and Bosch down by 0.98% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 27.74 points or 0.38% to 7,274.67, Germany’s DAX decreased 22.91 points or 0.19% to 11,771.02 and France’s CAC decreased 14.44 points or 0.29% to 4,910.42.

Asian equity markets ended mixed on Thursday as upbeat US data coupled with Fed Chair Janet Yellen's hawkish tone in her latest remarks on Capitol Hill helped spur expectations of a faster pace of Fed rate-hike in 2017. US retail sales rose more than expected in January and consumer prices rose at their fastest pace in nearly four years, boosting prospects of an interest rate hike as early as March. Chinese stocks ended up as higher commodity prices and media reports of a pick-up in spending on railways and other infrastructure this year boosted material stocks. Meanwhile, Japanese shares retreated as the dollar slipped against rivals, including the Japanese yen.