Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued their firm trade in late morning session on account of buying in frontline blue chip counters as sentiment was buoyed after the BJP’s victory in the UP Assembly elections. The rupee opened higher against the dollar amid renewed selling of the US currency by banks and exporters. Foreign Portfolio Investors stood net buyers in the domestic equity market on Friday, as they bought shares worth Rs 1,937.16 crore on March 10 with gross purchases and gross sales of Rs 755.56 crore and Rs 652.67 crore, respectively. Traders took support from the stunning victory of BJP in UP Assembly polls and market experts believe benchmark equity indices may hit new highs on hopes of further economic reforms. The development has raised the chances of increased foreign inflow amid steady rupee, as predictability and stability of the government may help in sustaining high PE Indian equities. Some support also came with industrial production bouncing back into expansion in January, kicking off the financial year’s last quarter on a positive note albeit amid expectations that it will bear the brunt of demonetization. The Index of Industrial Production (IIP) rose 2.7% in January from a year ago, the second fastest monthly growth this financial year behind 5.7% recorded in November. Industrial production had contracted 0.1% in December, the first full month after demonetization, which was announced on November 8. Separately, the government’s revenue collection during April-February of current fiscal year has shown a healthy growth, indirect tax collection surged by 22.2 percent at Rs 7.72 lakh crore on the back of robust collection in excise duty mop-up, while that of direct tax the rise was 10.7 percent to Rs 6.17 lakh crore led by increase in personal income tax. Traders were seen piling position in Capital Goods, Bankex and Realty stocks, while selling was witnessed in Telecom sector stocks. In scrip specific development, Alkem Laboratories was trading in red as US health regulator has inspected its Baddi plant and issued three observations on account of violation of good manufacturing norms.

On the global front, Asian shares were trading mostly in green, with data out of China supporting Shanghai. China’s factory output and fixed-asset investment grew more strongly than expected in the first two months of the year, but retail sales disappointed after the government reduced a tax break on small cars. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,050 and 29,400 levels respectively. The market breadth on BSE was positive in the ratio of 1694:654, while 150 scrips remained unchanged.

The BSE Sensex is currently trading at 29425.72, up by 479.49 points or 1.66% after trading in a range of 29356.05 and 29561.93. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.27%, while Small cap index was up by 1.17%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.87%, Bankex up by 2.18%, Realty up by 2.07%, Industrials up by 1.82%, Basic Materials up by 1.78%, while Telecom down by 0.21% was the only loser on BSE.

The top gainers on the Sensex were ICICI Bank up by 5.41%, Larsen & Toubro up by 4.13%, HDFC up by 3.37%, ITC up by 2.37% and Asian Paints up by 2.15%.

On the flip side, Coal India down by 5.24%, Bharti Airtel down by 0.81% and GAIL India down by 0.28% were the top losers.

Meanwhile, in a meeting to deliberate on options for resolution of stressed assets in the banking sector, the Finance Minister Arun Jaitley discussed options on resolution of bad loans with RBI Governor Urjit Patel and other top officials in finance ministry. The meeting discussed the concept of Private Asset Management Company (PAMC) and National Asset Management Company (NAMC) for resolution of stressed assets. While, the RBI was not in favour of giving more time to big ticket loan defaulters, the Department of Financial Services made a presentation on strengthening tools to manage NPAs and resolution of stressed assets.

The meeting which was attended by RBI Deputy Governor Viral Acharya and S S Mundra, besides Chief Economic Advisor Arvind Subramanian, Principal Economic Advisor Sanjiv Sanyal, Financial Services Secretary Anjuly Chib Duggal and Corporate Affairs Secretary Tapan Ray, also discussed RBI's various schemes for tackling bad loans, including Scheme for Sustainable Structuring of Stressed Assets (S4A), Corporate debt restructuring (CDR), Joint Lenders Forum (JLR) and Strategic Debt restructuring (SDR).

CEA Subramanian had earlier suggested setting up a state-owned asset reconstruction company or a bad bank to deal with the problem of non-performing loans, but creation of a 'bad bank' to hold bad loans seemed not on top of alternatives in the meeting. Stressed assets make up 16.6 per cent of all loans in India, worst among the world's major economies. Gross non-performing assets or bad loans of public sector banks (PSBs) were pegged at over Rs 6 lakh crore at the end of December 2016.

The CNX Nifty is currently trading at 9081.95, up by 147.40 points or 1.65% after trading in a range of 9060.50 and 9122.75. There were 46 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 5.45%, Larsen & Toubro up by 4.23%, Ultratech Cement up by 3.57%, BHEL up by 3.48% and HDFC up by 3.29%.

On the flip side, Coal India down by 5.22%, Bharti Airtel down by 0.93%, Bosch down by 0.28%, Idea Cellular down by 0.14% and GAIL India down by 0.09% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.38 points or 0.02% to 1,722.30, Shanghai Composite increased 3.64 points or 0.11% to 3,240.67, Hang Seng increased 10.75 points or 0.05% to 23,840.42, KOSPI Index increased 13.65 points or 0.64% to 2,131.24 and Jakarta Composite increased 33.05 points or 0.61% to 5,442.43.

On the other hand, Taiwan Weighted increased 55.64 points or 0.57% to 9,752.98 and Nikkei 225 decreased 11.75 points or 0.06% to 19,622.00.