Indian benchmarks settle with moderate gains; Sensex ends above 29400 mark

Indian equity markets witnessed a fairly stable day of trade on Thursday as investors picked beaten down counters, including technology stocks that lost ground on disappointing quarterly results from software services exporters Infosys and TCS. Sentiments got some support with the report that a normal monsoon this year should continue to revive rural demand and allow the RBI to cut rates by 25 bps in August. According to the report, rural demand is already reviving and the autumn kharif farm income has jumped by 26 percent last year. However, overall gains remained muted ahead of the first round of the French presidential election over the weekend. Opinion polls suggest that the election will be a close call. Investors also remained nerves with Chief Economic Adviser Arvind Subramanian's statement that India's high economic growth rate last fiscal may not reflect the actual impact of demonetisation particularly on the informal sector and it may take a few months to assess its real fallout.

Meanwhile, shares of aviation companies like InterGlobe Aviation, SpiceJet and Jet Airways gained tractions after data showed that air traffic during March quarter was almost 18.6% higher than the corresponding period last year. Sugar stocks surged after the government decided to extend stock limits on sugar traders by another six months till October 2017 to check sweetener prices that are ruling at Rs 42-44 per kg. The move will enable state governments to impose stock limits and licensing requirements in respect of sugar. Furthermore, private sector banks witnessed selling pressure after lower than expected result posted by two leading private banks namely Yes Bank and IndusInd Bank, while good buying was observed in PSU banks after new NPA policy received in-principle nod as Prime Minister's Office, Finance Ministry and RBI have reached a consensus.

On the global front, Asian markets ended mostly higher on Thursday after crude oil prices rebounded from an overnight sell-off and Japan reported stronger-than-expected exports in March. Reports showed that Japan's exports rose at a faster-than-expected 12 percent pace in March, while imports jumped nearly 16 percent from a year earlier. Besides, easing tensions over North Korea too helped brighten the mood after weeks of jitters over the US response to Pyongyang's missile tests and nuclear weapons program. However, Chinese shares ended marginally higher as investors lapped up stocks that would benefit from the newly-launched Xiongan economic zone. Meanwhile, European stocks were trading mixed in early trade, amid a heavy slate of corporate earnings and cautious investor sentiment ahead of this weekend's presidential elections in France.

Back home, after getting a positive start, the local benchmarks traded in tight range for most part of the session and ended the session with moderate gains. Good buying was observed in Realty, Consumer Durables and IT counters, while selling pressure was seen in Banking, Energy and Oil & Gas counters. Finally, the NSE's 50-share broadly followed index - Nifty garnered over quarter percent to settle above the crucial 9,100 levels, while Bombay Stock Exchange's Sensitive Index - Sensex accumulated eighty-five points and closed above the psychological 29,400 mark. Moreover, the broader markets too went home with notable gains in the session. The market breadth remained optimistic, as there were 1829 shares on the gaining side against 1040 shares on the losing side, while 166 shares remained unchanged.

Finally, the BSE Sensex surged 85.82 points or 0.29% to 29422.39, while the CNX Nifty was up by 32.90 points or 0.36 % to 9,136.40.

The BSE Sensex touched a high and a low of 29453.06 and 29341.68, respectively and there were 20 stocks on gainers side as against 10 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained by 0.66%, while Small cap index was up by 1.14%.

The top gaining sectoral indices on the BSE were Realty up by 2.14%, Basic Materials up by 1.54%, Consumer Durables up by 1.23%, Consumer Disc up by 1.00% and IT up by 0.99%, while Bankex down by 0.53%, Energy down by 0.30%, Oil & Gas down by 0.25%, Power down by 0.17% and Healthcare down by 0.14% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.02%, Adani Ports & SEZ up by 1.83%, HDFC up by 1.82%, Maruti Suzuki up by 1.17% and TCS up by 1.16%. On the flip side, ICICI Bank down by 2.90%, Axis Bank down by 2.26%, Sun Pharma down by 1.28%, Power Grid down by 1.21% and NTPC down by 0.97% were the top losers.

Meanwhile, welcoming the Reserve Bank’s recent revision in the prompt corrective action (PCA) framework for the banks, domestic credit rating agency ICRA has said that it is positive for banking sector, given the operating and financial profile of some of the banks and it expects that these measures will strengthen the banking system over the medium term and allow the stronger and well managed banks to grow, noting that it will put the onus of improving the systems and procedures on weaker banks and their promoters/management.

In its latest report, ICRA said that the increasing levels of gross non-performing assets (NPAs) has adversely impacted the profitability, capitalisation and solvency levels of Indian banks, especially during the last two years, i.e. FY2016 and FY2017and it anticipates a further weakening in asset quality during FY2018 and consequently pressure on internal capital generation and increasing capital requirements under the Basel III capital adequacy framework. Besides, it noted that the capital requirement, especially for public sector banks (PSBs) is extremely large.

The RBI has brought down the net NPA levels required to include the bank under PCA framework to a level of 6 per cent now as against 10 per cent earlier, which will make mandatory for the banks to increase the provision coverage on the NPAs for remaining outside the PCA framework. ICRA pointed that the revision in PCA has increased the required overall capital levels and has also introduced the minimum core equity (CET) capital levels required to be maintained by the bank so as to avoid its inclusion under the PCA.

ICRA estimated that based on the revised PCA framework, a total of 16 PSBs out of 21 (excluding SBI associates) and two out of 16 private banks will require taking mandatory corrective actions such as raising capital levels, restricting the dividend payments, branch expansions or face restrictions on management compensation to come out of the PCA framework.

The CNX Nifty traded in a range of 9,143.90 and 9,102.65. There were 35 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were Grasim Industries up by 5.54%, Bank of Baroda up by 2.69%, Gail up by 2.64%, Indiabulls Housing Finance up by 2.39% and Adani Ports & SEZ up by 2.09%. On the flip side, Yes Bank down by 3.73%, ICICI Bank down by 2.67%, Axis Bank down by 2.25%, IOC down by 1.83% and Tata Power down by 1.58% were the top losers.

The European markets were trading mostly in green; Germany’s DAX increased 30.15 points or 0.25% to 12,046.60, France’s CAC increased 52.37 points or 1.05% to 5,056.10, while UK’s FTSE 100 decreased 5.39 points or 0.08% to 7,108.97.

Asian equity markets ended mostly in green on Thursday as the yen's strong trend paused, oil prices rebounded from an overnight selloff, and Japan reported stronger-than-expected exports in March. Reports showed that Japan's exports rose at a faster-than-expected 12 percent pace in March, while imports jumped nearly 16 percent from a year earlier. A revival of demand in China helped push exports up 16.4 percent from the year before to 1.3 trillion yen ($11 billion), while exports to the US climbed 3.5 percent to 1.35 trillion yen ($12 billion). Chinese shares ended marginally higher as investors lapped up stocks that would benefit from the newly-launched Xiongan economic zone. However, Japanese stocks ended nearly flat as investors became cautious ahead of global risk events such as the first-round of French presidential elections at the weekend and mounting tensions over North Korea.