Bourses remain firm near highs of the day

Indian equity markets were continuing their bull-run with major bourses firming up strength-to-strength, trading near their intraday highs in the noon session. Across the board buying was supporting the markets amid positive global sentiments, after Hurricane Irma hit Florida with less force than expected and North Korea failed to conduct another nuclear missile test over the weekend. While Nifty has reclaimed the 10050 level, Sensex was comfortably trading above 32000 mark, there was jubilation all over the floor and domestic traders were getting some support with report that direct tax collections in the first five months of the current fiscal grew by 17.5% to Rs 2.24 lakh crore. There was additional encouragement with the reports that government was expecting a double-digit improvement in India’s rank in the global index on ease of doing business, likely to be announced by the World Bank next month, based on the feedback shared by the multinational organization.

On the sectoral front, while all the sectoral indices were maintaining their lead, there was buzz in the PSU banking stocks since morning after a report from credit rating agency Fitch Ratings said that the government will have to pump in additional capital into public sector banks to aid effective bad loan resolution and if it is to raise loan growth.

In scrip specific development, Tata Steel has surged after the steelmaker finally concluded separation of the British Steel Pension Scheme (BSPS) from Tata Steel UK, with the latter receiving all approvals for its Regulated Apportionment Agreement (RAA) from the pensions regulator.

The BSE Sensex is currently trading at 32060.26, up by 178.10 points or 0.56% after trading in a range of 31950.24 and 32079.09. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices too were trading in green; the BSE Mid cap index was up by 0.79%, while Small cap index added 0.87%.

The top gaining sectoral indices on the BSE were Realty up by 1.60%, Healthcare up by 1.31%, Oil & Gas up by 1.27%, Basic Materials up by 1.22% and Metal up by 1.09%.

The top gainers on the Sensex were Tata Steel up by 3.81%, Sun Pharma Inds. up by 2.19%, Hindustan Unilever up by 1.84%, Asian Paints up by 1.29% and Kotak Mahindra Bank up by 1.22%. On the flip side, ONGC down by 0.83%, Coal India down by 0.64%, Wipro down by 0.63%, Hero MotoCorp down by 0.53% and Bajaj Auto down by 0.42% were the top losers.

Meanwhile, the global rating agency ARC Ratings, in its latest report has affirmed the ‘BBB+’ rating to India and maintained a stable outlook on expectation of a strong economic growth. The rating agency also affirmed its ‘A-’ foreign currency and ‘A’ local currency country ceilings for the country. It has said that a solid outlook for economic dynamism continues to drive the sovereign ratings and added that India continues to enjoy solid economic performance and a strong medium term growth outlook, with real GDP growing 7.1% in FY2017. The report also highlighted that this performance clearly exceeds the average performance of peers and is exceptional in the context of expectations for moderate global growth plagued by downside risks associated with increased protectionism, political uncertainty and geopolitical risks.

The rating action comes even as the first quarter Gross Domestic Product (GDP) growth slowed to a three-year low of 5.7%. As per the report, lower growth is due to the short-term negative side effects of note ban, and GST implementation as well as the effects of the further deterioration of the twin balance sheet problem that affects the economy. Besides, the report added that the rating action is also supported by a comfortable external position marked by low external debt of nearly 20% of GDP, an unblemished debt repayments record, external liquidity from large diaspora and favourable demographics that fuel demand.

ARC Ratings further said that the key risks to the ratings are weak government finances, characterised by low revenue yield and extreme inefficiencies in the government sector, a large government debt and sizeable fiscal deficits, serving as the main credit constraints. It also warned that twin balance sheet problem, with weaknesses in the banks given the high non-performing assets (NPAs) and insufficient capital levels, combined with high corporate sector leverage (50% of GDP) are the major impediments to higher growth.

The CNX Nifty is currently trading at 10060.15, up by 54.10 points or 0.54% after trading in a range of 10028.05 and 10063.80. There were 37 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.88%, Tata Steel up by 3.66%, ACC up by 3.06%, Bank Of Baroda up by 2.98% and Sun Pharma Inds. up by 2.49%. On the flip side, Indusind Bank down by 2.19%, Tech Mahindra down by 1.30%, Indiabulls Housing down by 0.89%, Coal India down by 0.66% and ONGC down by 0.64% were the top losers.

The Asian markets were trading mostly in green, FTSE Bursa Malaysia KLCI increased by 2.04 points or 0.11% to 1,784.78, Jakarta Composite was higher by 4.07 points or 0.07% to 5,875.95, KOSPI Index gained 6.39 points or 0.27% to 2,365.47, Taiwan Weighted was up by 38.19 points or 0.36% to 10,610.35 and Nikkei 225 surged by 230.85 points or 1.18% to 19,776.62.

On the other hand, Hang Seng was down by 7.91 points or 0.03% to 27,947.22 and Shanghai Composite was tad lower by 0.34 points or 0.01% to 3,376.08.