Sensex, Nifty continue to trade in green

Indian equity benchmarks continued their firm trade in late morning session on account of buying in frontline blue chip counters. Traders were taking support with a survey which highlighted that a significant majority of private equity firms in India are optimistic about stronger deal activity this year, with funds looking at financial services and healthcare as the top sectors for investment. Separately, terming demonetization as a credit positive for India in the medium term, global ratings agency Moody’s Investors Service in its report, on Indian credit, said that it will strengthen countries institutional framework by reducing tax avoidance and corruption. The report added that it should also result in efficiency gains through greater formalization of economic and financial activity, which would help broaden the tax base and expand usage of the financial system. However, Moody’s estimates growth to slow down to 6.4% in the January-March quarter, from 7% in the previous three months. Meanwhile, buoyed by higher-than-expected GDP growth, Finance Minister Arun Jaitley said that a 7 percent expansion in third quarter belies exaggerated claims of note ban impact on rural economy. But, with a 7 percent growth in gross domestic product (GDP) the worst fears for the economy have been put behind. Traders were seen piling position in Auto, Industrials and Metal stocks, while selling was witnessed in Realty and Healthcare sector stocks. In scrip specific development, Wockhardt was trading in red after the drug major on Wednesday said the US health regulator had issued a warning letter to its step down subsidiary Morton Grove Pharmaceuticals Inc.

On the global front, Asian shares were trading mostly in green, as investors were encouraged by President Donald Trump’s measured tone in his first speech to Congress, which sent Wall Street stocks sharply higher. China’s newly appointed banking regulator vowed to strengthen supervision of the lending sector, underscoring Beijing’s determination to fend off financial risks and push forward with reforms this year. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,950 and 29,100 levels respectively. The market breadth on BSE was positive in the ratio of 1459:873, while 130 scrips remained unchanged.

The BSE Sensex is currently trading at 29107.29, up by 122.80 points or 0.42% after trading in a range of 29062.07 and 29133.44. 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 0.42%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Auto up by 1.24%, Industrials up by 1.18%, Metal up by 0.95%, Basic Materials up by 0.91% and Consumer Durables up by 0.81%, while Realty down by 0.71% and Healthcare down by 0.14% were the losers on BSE.

The top gainers on the Sensex were Tata Motors up by 3.62%, ICICI Bank up by 1.43%, Bajaj Auto up by 1.15%, Reliance Industries up by 0.90% and Coal India up by 0.89%.

On the flip side, Sun Pharma down by 1.22%, Dr. Reddy’s Lab down by 1.00%, NTPC down by 0.72%, Infosys down by 0.53% and Power Grid down by 0.47% were the top losers.

Meanwhile, terming demonetization as a credit positive for India in the medium term, global ratings agency Moody's Investors Service in its report, on Indian credit, has said that it will strengthen countries institutional framework by reducing tax avoidance and corruption. The report added that it should also result in efficiency gains through greater formalization of economic and financial activity, which would help broaden the tax base and expand usage of the financial system. However, Moody’s estimates growth to slow down to 6.4% in the January-March quarter, from 7% in the previous three months.

The rating agency, in its report ‘Economic Slowdown from Demonetization Wanes; Credit Implications Unfolding’, has said that the country remains resilient to economic disruption and the worst of the liquidity crunch has passed, which should support a rebound in consumption and investment. It also said that if most of the old notes are deposited into the banking system, legitimising previously undeclared incomes and wealth, the benefits to the government related to higher future tax collection will accrue from measures aimed at leveraging the information obtained when notes were deposited. It added that looking ahead it expects remonetisation to continue at a similar pace.

For the banking sector, the report stated that demonetisation has hit bank's asset quality and demand for credit. It said that this trend is likely to continue over the next few months and expect asset quality to deteriorate in the current quarter. But it has said that Indian banks have sufficient buffers to withstand the impact. It added that more positively, banks have experienced significant deposit inflows as a result of demonetization. They also expect bank deposits to increase by only around 1-2 percent, compared to before demonetization, with cash remaining the dominant means of retail transactions.

The CNX Nifty is currently trading at 8981.60, up by 35.80 points or 0.40% after trading in a range of 8969.80 and 8992.50. There were 39 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 3.50%, Tata Motors - DVR up by 2.88%, Ultratech Cement up by 2.84%, Ambuja Cement up by 1.59% and Hindalco up by 1.53%.

On the flip side, Sun Pharma down by 1.29%, BPCL down by 1.21%, Dr. Reddy’s Lab down by 1.00%, Idea Cellular down by 0.93% and NTPC down by 0.78% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 12.49 points or 0.6% to 2,104.13, FTSE Bursa Malaysia KLCI increased 14.53 points or 0.86% to 1,712.22, Jakarta Composite increased 52.77 points or 0.98% to 5,415.83, Hang Seng increased 96.15 points or 0.4% to 23,872.64 and Nikkei 225 increased 191.63 points or 0.99% to 19,585.17.

On the other hand, Taiwan Weighted decreased 4.05 points or 0.04% to 9,670.73 and Shanghai Composite decreased 0.28 points or 0.01% to 3,246.65.