Sensex, Nifty hold their gains despite weak WPI data

Indian equity benchmarks continued their bullish trend in late afternoon session, holding their earlier gains amid higher opening in European markets. The markets continued soaring, as investors remained optimistic with Niti Aayog Vice Chairman Arvind Panagariya’s statement that the resolution of bad loans in the banking system is on right track and will open the door to rapid credit expansion and growth. Heavy buying in Basic Materials, Realty and Metal stocks also contributed to the rally. Traders shrugged off July Wholesale Price Index (WPI) based inflation data. According to the data released by the Ministry of Commerce & Industry, the wholesale price index (WPI) inflation advanced to 1.88% in the month of July against 0.90% in the month of June.

On the global front, European markets were trading in green after senior US officials sought to play down risks of a military conflict with North Korea. Asian markets were also trading in green. Back home, in scrip specific development, DLF traded jubilantly after the company reported over two-fold jump in its standalone net profit at Rs 184.69 crore for the quarter ended June 30, 2017 as compared to Rs 67.46 crore for the same quarter in the previous year. The total standalone income of the company increased by 18.98% at Rs 1080.08 crore for Q1FY18 as compared Rs 907.76 crore for the corresponding quarter previous year.

The BSE Sensex is currently trading at 31495.43, up by 281.84 points or 0.90% after trading in a range of 31298.90 and 31526.40. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 2.40%, while Small cap index was up by 2.41%.

The top gaining sectoral indices on the BSE were Realty up by 5.71%, Metal up by 3.42%, Basic Materials up by 2.75%, Power up by 2.50% and Consumer Durables up by 2.36%, while IT down by 0.24% and TECK down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Cipla up by 4.81%, Tata Steel up by 3.75%, Sun Pharma up by 3.70%, Hero MotoCorp up by 3.19% and Adani Ports & SEZ up by 2.89%. On the flip side, Kotak Mahindra Bank down by 0.99%, Bharti Airtel down by 0.90%, Infosys down by 0.75%, Wipro down by 0.62% and SBI down by 0.34% were the top losers.

Meanwhile, the outgoing Vice Chairman of Niti Aayog, Arvind Panagariya has applauded the measures taken for the resolution of bad loans in the banking system and has said that resolution of bad loans in the banking system is on 'right track' and will ‘open the door’ to rapid credit expansion and growth. He said that “Now we are on absolutely right track. Once we solve the NPAs issue, it will open up also the door to faster credit expansion. If this is done, this problem of twin balance sheet issue (over-leveraged companies and bad-loan-encumbered banks) will get addressed at the result of this.” He added that banks will now be better equipped to lend and on the sides of borrowers there will be greater appetite.

Panagariya termed the non-performing assets (NPAs) or bad loans problem as a ‘legacy issue’, and said that even after three years of the NDA government taking charge, it has not gone away. As part of its strategy to rein in the unacceptable level of NPAs, Reserve Bank of India recently identified 12 accounts for Insolvency and Bankruptcy Code (IBC) proceedings with each of them having over Rs 5,000 crore of outstanding loans, accounting for 25 per cent of total NPAs of banks.

He further talking on the issue of merger of a weak bank with a strong bank said that consolidation of public sector banks (PSBs) is necessary, also because the pool of talented people who have the specialisation of running the banking business is limited one. The finance ministry has sought help of NITI Aayog and global consultancy firms to examine the possibility of next round of consolidation of PSU banks with an aim to create a few lenders of global size and scale.

The CNX Nifty is currently trading at 9801.20, up by 90.40 points or 0.93% after trading in a range of 9752.10 and 9811.40. There were 37 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Cipla up by 5.17%, Tata Power up by 4.38%, Vedanta up by 3.98%, Tata Steel up by 3.95% and Sun Pharma up by 3.47%. On the flip side, BPCL down by 2.09%, Bosch down by 2.09%, Kotak Mahindra Bank down by 1.11%, Bharti Airtel down by 0.86% and Infosys down by 0.74% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 4.66 points or 0.26% to 1,771.62, KOSPI Index increased 14.51 points or 0.63% to 2,334.22, Shanghai Composite increased 28.82 points or 0.9% to 3,237.36, Jakarta Composite increased 43.53 points or 0.75% to 5,809.67 and Hang Seng increased 366.72 points or 1.36% to 27,250.23. On the flip side, Nikkei 225 decreased 192.64 points or 0.98% to 19,537.10 and Taiwan Weighted decreased 104.29 points or 1.01% to 10,225.28.

European markets were trading in green; UK’s FTSE 100 increased 38.36 points or 0.52% to 7,348.32, France’s CAC increased 44.37 points or 0.88% to 5,105.29 and Germany’s DAX increased 119.04 points or 0.99% to 12,133.10.