Benchmarks trade slightly in green in early deals

Indian equity benchmarks have made a decent opening and are trading slightly in green in early deals, as sentiments remained up-beat with Prime Minister Narendra Modi reviewing the progress of the government’s agenda to curb black-money and tax evasion as well as the roll out of the Goods and Services Tax (GST). Also, Finance Minister Arun Jaitley has said the whole debate over the political cost of economic reforms has dissipated with the benefits reaching the deprived sections of society. However, gains remained capped with a United Nations (UN) report stating that India is expected to clock 7.1 percent growth this year before edging up to 7.5 percent in 2018. UN report warned that the country faces heightened risks related to the concentration of bad loans in the public sector banks. Traders also remained cautious with global rating agency Fitch Ratings retaining India's 'BBB-' sovereign rating, saying that weak public finances continue to constrain the country's ratings, however it said the outlook on ratings is stable.

On the global front, Asian markets were trading mostly in green at this point of time, as strong earnings and manufacturing data boosted risk appetite, while expectations that the Federal Reserve will signal a June rate increase later in the session lifted the dollar. The US markets after a lackluster trade ended marginally in green in the last session.

Back home, stocks related to infrastructure sector remained buzzing, as the railway minister Suresh Prabhu has said that India plans to auction one of its largest Public Private Partnership (PPP) projects that entail redeveloping 25 of the country’s most prominent railway stations at a minimum investment of Rs 30,000 crore. The market breadth indicating the overall health of the market was strong, with 1209 shares gaining and 834 shares declining, while a total of 93 shares were unchanged.

The BSE Sensex is currently trading at 29942.07, up by 20.89 points or 0.07% after trading in a range of 29905.19 and 30020.59. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.39%, while Small cap index was up by 0.35%.

The top gaining sectoral indices on the BSE were Realty up by 2.43%, Power up by 1.26%, Utilities up by 1.12%, Basic Materials up by 0.80% and Oil & Gas up by 0.67%, while FMCG down by 0.24%, Bankex down by 0.14% and Healthcare down by 0.06% were the few losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 3.41%, NTPC up by 1.23%, Coal India up by 0.58%, Hero MotoCorp up by 0.57% and TCS up by 0.56%. On the flip side, Sun Pharma down by 0.77%, ITC down by 0.57%, Axis Bank down by 0.39%, Maruti Suzuki down by 0.33% and Lupin down by 0.31% were the top losers.

Meanwhile, citing weak fiscal position and difficult business environment, global ratings agency, Fitch Ratings has retained ‘BBB-’ ratings - the lowest investment grade - with a stable outlook for India. The agency forecast real gross domestic product (GDP) growth to accelerate to 7.7% in both 2016-17 and 2017-18, compared with 7.1% in 2015-16. It also expects India’s current-account balance to narrow to -0.9% in FY17, and foreign reserves to build up to 8.4 months of current external payments.

The ratings agency indicated that its India’s sovereign ratings balance a strong medium-term growth outlook and favourable external balances with a weak fiscal position and difficult business environment. However, the business environment is likely to gradually improve with the implementation and continued broadening of the structural reform agenda. It said that the stable outlook reflects the assessment that upside and downside risks to the ratings are broadly balanced.

It also noted that it’s “not likely” that the Indian government’s budgeted Rs 70,000-crore capital injection into public-sector banks, struggling with huge stressed assets, in the four years through 2018-19 will be sufficient. “India is not immune to external shocks, but the country’s strong external finances make it less vulnerable than many of its peers, but weak public finances continue to constrain India’s ratings.

Fitch expects structural reforms to increase growth, along with higher real disposable income supported by implementation of the seventh pay commission recommendations and an average monsoon. It further added that the impact of the reform programme on investment and real GDP growth will depend on how it is implemented and the extent to which government continues its strong drive to improve the still-weak business environment.

The CNX Nifty is currently trading at 9320.50, up by 6.70 points or 0.07% after trading in a range of 9313.10 and 9346.30. There were 32 stocks advancing against 18 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Power Grid Corporation up by 3.25%, Ultratech Cement up by 2.42%, Bharti Infratel up by 1.61%, BPCL up by 1.51% and NTPC up by 1.45%. On the flip side, Sun Pharma down by 0.94%, ITC down by 0.86%, Axis Bank down by 0.54%, Tata Power down by 0.48% and Aurobindo Pharma down by 0.47% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.95 points or 0.05% to 1,779.42, Taiwan Weighted gained 10.64 points or 0.11% to 9,951.91 and KOSPI Index increased 14.23 points or 0.65% to 2,219.67.

On the flip side, Shanghai Composite decreased 10.31 points or 0.33% to 3,133.40 and Jakarta Composite was down by 0.95 points or 0.02% to 5,674.86.