Sensex, Nifty continue northward journey

Indian key benchmarks continued their northward journey in late afternoon session and extended gains amid firm opening in European markets. The broader markets also continued their rally with gains of around a percent each. Sentiments continued to take encouragement with report that Direct Tax collections in the first five months of the current fiscal grew 17.5 percent to Rs 2.24 lakh crore, mainly on account of income tax mop-up from individuals. Besides, 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, also helped the indices to continue rally. Traders took note of ASSOCHAM-EY joint report which stated that if India has to maintain a sustained gross domestic product (GDP) growth of 9-10 percent per annum, it is crucial that the manufacturing sector grows steadily at 14-15 percent per annum over the next three decades.

On the global front, European markets were trading in green as investors enjoyed a lull in the ongoing dispute with North Korea and the worst effects of Hurricane Irma appeared to subside. Asian markets were also trading in green. Back home, in scrip specific development, Hinduja Global Solutions (HGS) traded higher after the company strengthened its presence in Indore by setting up a second delivery center. The new facility, with 45,500 square feet of space and a capacity of 700 seats, is dedicated to provide high quality customer experience for an ecommerce giant and its end-consumers. HGS has hired about 350 customer support professionals for the new center since July, 2017 and is expected to be 800+ by end-2017.

The BSE Sensex is currently trading at 32108.97, up by 226.81 points or 0.71% after trading in a range of 31950.24 and 32139.21. 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 0.90%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Realty up by 1.58%, Healthcare up by 1.40%, Oil & Gas up by 1.39%, Industrials up by 1.25% and FMCG up by 1.13%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Tata Steel up by 3.50%, Tata Motors - DVR up by 2.91%, Sun Pharma up by 2.27%, Tata Motors up by 2.22% and Hindustan Unilever up by 2.19%. On the flip side, Wipro down by 1.21%, ONGC down by 0.92%, Hero MotoCorp down by 0.59%, NTPC down by 0.53% and Power Grid Corporation down by 0.42% were the top losers.

Meanwhile, raising concerns over weak capital positions in Indian banking system, global rating agency, Fitch ratings in its latest report has said that the Public Sector banks may need around $65 billion of additional capital by March 2019 to meet the new Basel-III capital norms. However, this latest estimated amount of capital requirement is lower than previous estimation done by the rating agency at $90 billion, on account of asset rationalisation and weaker-than-expected loan growth.

Fitch ratings also expressed need to address issue to avoid negative influence of weak capital positions on Indian banks' Viability Ratings, stating that state banks have limited options to raise the capital they still require and are likely to be dependent on the state to meet core capital requirements.

The rating agency further noted weak prospects for internal capital generation, pointing that low investor confidence impedes access to the equity capital market. Besides, the report found improvement in access to the additional Tier-I (AT1) capital market in recent months, on the other hand it found that around two-thirds of the capital shortage is in the form of common equity Tier-I (CET1).

Fitch ratings is expecting release of capital from the Non-performing loan (NPL) resolution process, which is being led by the Reserve Bank of India (RBI), if recovery rates are high in line with banks and the government expectations.

The CNX Nifty is currently trading at 10073.90, up by 67.85 points or 0.68% after trading in a range of 10028.05 and 10074.80. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.43%, Tata Steel up by 3.34%, GAIL India up by 3.09%, Tata Motors - DVR up by 2.96% and Bank of Baroda up by 2.69%. On the flip side, Indusind Bank down by 2.30%, Wipro down by 1.13%, Tech Mahindra down by 0.93%, ONGC down by 0.64% and Indiabulls Housing Finance down by 0.61% were the top losers.

Asian markets were trading in green; Jakarta Composite increased 0.4 points or 0.01% to 5,872.29, Shanghai Composite increased 3.07 points or 0.09% to 3,379.49, FTSE Bursa Malaysia KLCI increased 4.41 points or 0.25% to 1,787.15, KOSPI Index increased 6.39 points or 0.27% to 2,365.47, Hang Seng increased 17.11 points or 0.06% to 27,972.24, Taiwan Weighted increased 38.19 points or 0.36% to 10,610.35 and Nikkei 225 increased 230.85 points or 1.18% to 19,776.62.

European Markets were trading mostly in green; France’s CAC increased 22.54 points or 0.44% to 5,199.25 and Germany’s DAX increased 55.64 points or 0.45% to 12,530.88. On the flip side, UK’s FTSE 100 decreased 14.56 points or 0.2% to 7,399.03.