Benchmarks ekes out slender gains

Indian equity benchmarks ended the choppy day of trade with slender gains on Thursday, as initial optimism fizzled out in second half and market pared most of their gains. Markets started the session on positive note with traders taking encouragement with private report stating that India’s GDP growth is expected to be around 7.1% this fiscal following a likely pick up in industrial production as firms resort to restocking post GST especially ahead of festive season. Some support also came with report that industry body ASSOCHAM has sought from the government slew of tax relief for companies against whom insolvency proceedings have been initiated. It added that the resolution plans approved after factoring in these reliefs/concessions will result in quick revival of assets, freeing up liquidity for banks for further lending, increased economic activity, job creation, increased contribution to the exchequer and will have multiplier effect on the associated economy.

However, markets took U-turn in noon deals and pared most of their initial gains after the sharp rise seen in CPI based inflation, the latest data released by the government has shown that the WPI inflation rate too registered significant increase in August month. Surge in prices of foods articles, vegetable and  fuel products mainly pulled the country’s WPI higher to 3.24% in August against 1.09% increase in the same month a year ago and 1.88% recorded in the previous month. Sentiments also remained dampened on report that India has been placed at a low 103 rank, the lowest among BRICS economies, on the WEF’s Global Human Capital Index, which has been topped by Norway. India also ranks among the lowest in the world when it comes to the employment gender gap.

On the global front, European markets were trading mostly in red, as investors assessed geopolitical developments and looked ahead to the Bank of England’s latest policy decision. Asian markets ended mostly in red terrain, following a burst of Chinese data which was largely weaker than markets expected. China’s fixed-asset investment, factory output and retail sales all grew less than expected, reinforcing views that the world's second-largest economy is gradually beginning to lose steam in the face of rising borrowing costs.

Back home, CRISIL Ratings said that banks have only recognized two-thirds of their stressed loans as non-performing assets, and estimated the bad loan ratio to rise by 1% point to 10.5% by March 2018. The agency estimates the total amount of stressed loans, which includes NPAs and standard assets that are under pressure currently and could deteriorate into NPAs, to be at Rs 11.5 trillion or 14% of the system.

On the sectoral front, oil marketing companies - Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) remained on buyers’ radar after Oil Minister Dharmendra Pradhan said that the government doesn’t plan to intervene to check fuel prices that have soared to the highest in three years. Select stocks related to railways remained buzzing in today’s trade after Prime Minister Narendra Modi and Japan PM Shinzo Abe laid the foundation for 508-km bullet train project.

Finally, the BSE Sensex rose 55.52 points or 0.17% to 32,241.93, while the CNX Nifty was up by 7.30 points or 0.07% to 10,086.60.

The BSE Sensex touched a high and a low of 32,328.61 and 32,186.84, respectively and there were 13 stocks on gaining side as against 18 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.57%, while Small cap index was up by 0.64%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.11%, Industrials up by 0.89%, Power up by 0.83%, Bankex up by 0.45% and Auto was up by 0.31%, while Metal down by 0.67%, Realty down by 0.47%, Energy down by 0.39%, Oil & Gas down by 0.31% and Telecom was down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.24%, Axis Bank up by 4.20%, Tata Motors - DVR up by 3.97%, Tata Motors up by 3.62% and Adani Ports & SEZ up by 3.44%. On the flip side, Wipro down by 4.10%, Kotak Mahindra Bank down by 1.17%, ONGC down by 1.12%, Mahindra & Mahindra down by 1.06% and Bharti Airtel down by 0.70% were the top losers.

Meanwhile, NITI Ayog chief executive officer (CEO) Amitabh Kant has said that the Reserve Bank of India (RBI) should go for a ten-fold increase in the deposit and advances caps on accounts opened through OTP based e-KYC. He believes that such a liberalisation in the caps will help expand the digital payments journey. Besides, he said that the limit on savings account can be increased to around Rs 10 lakh from the existing Rs 1 lakh and that for loan accounts can be raised to Rs 6 lakh from the current limit of Rs 60,000.

Besides, the RBI had allowed for the one time password (OTP) based electronic know your customer (e-KYC) of accounts to bring customers on board faster as part of the financial inclusion agenda, but set certain caps on the transactions which go through such accounts. Identifying this as an obstacle in the growth of the cashless agenda, Kant said that more reforms are needed on this with priority and also suggested for the need to allow the OTP-based eKYC for credit cards as well.  He also urged the RBI to allow for digital signatures on loan documents, and stated that the central bank is yet to come up with an express notification on it despite the Government of India taking a decision to allow it. 

Apart from that, NITI Aayog CEO has pointed out that there is also the challenge of allowing digitally signed mandates for repayment of loans which needs to be looked into. He said that they have several areas of regulatory action and there is a need to push for reforms in a bigger way. Adding further, he said that the banks also need to great up to the changes and should look at disbursing loans within five minutes of an application being made through the use of the digital technologies and richer databases. He also pointed out that paperless loan applications also help reduce the bank's ongoing NPA issues. He added that there are 29 crore bank accounts opened under the Prine Minuster’s Jan Dhan Yoajana till August.

The CNX Nifty traded in a range of 10,126.50 and 10,070.35. There were 23 stocks in green as against 28 stocks in red on the index.

The top gainers on Nifty were Tata Motors - DVR up by 4.50%, Axis Bank up by 4.04%, Sun Pharma up by 3.96%, Adani Ports & SEZ up by 3.85% and Tata Motors up by 3.63%. On the flip side, Wipro down by 4.28%, Vedanta down by 2.19%, GAIL India down by 1.78%, Indusind Bank down by 1.20% and Asian Paints down by 1.11% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 27.48 points or 0.22% to 12,526.09 and France’s CAC was down by 0.81 points or 0.02% to 5,216.78, while UK’s FTSE 100 was up by 4.09 points or 0.06% to 7,383.79.

Asian equity markets ended mostly lower on Thursday after a raft of Chinese data came in below estimates. Investors also awaited the release of US inflation data later in the day for clues on the possible timing of the Federal Reserve's next rate rise. Chinese shares eased from a 20-month high after the release of weaker-than-expected data. Reports showed China's industrial output grew an annual 6.0 percent in August, the National Bureau of Statistics said - missing forecasts for an increase of 6.6 percent and down from 6.4 percent in July. Retail sales rose 10.1 percent - again missing expectations for 10.5 percent growth, while fixed asset investment advanced an annual 6.7 percent - shy of forecasts for 6.8 percent. Further, Japanese shares ended lower as the dollar held steady against the yen and data showed Japan's industrial output declined as initially estimated in July. Sentiments also turned sour after North Korea threatened to use nuclear weapons to ‘sink’ Japan and reduce the United States to ‘ashes and darkness’ for supporting a new round of sanctions by the United Nations.