Benchmarks hit historic highs on govt package to boost economy

Indian equity benchmarks have made a fabulous opening and are trading jubilantly, scaling new highs with Sensex and Nifty trading above their crucial 32,800 and 10,250 levels respectively in early deals. Sentiments remained up-beat with Union Cabinet approving a massive recapitalisation plan for public sector banks (PSBs) worth Rs. 2.11 lakh crore. Of this amount, Rs. 1.55 lakh crore would be raised through recapitalisation bonds. Another Rs. 76,000 crore would be available from budgetary support and raised through market borrowings. The whopping Rs 14 lakh crore package announced by the Union Cabinet apart from the massive recapitalisation plan for public sector banks, also include investments in key development sectors such as Rural Roads, Housing, Railways, Power, Highways and Digital Infrastructure. Traders also took some encouragement with Union Finance Minister Arun Jaitley’s statement that the Indian economy was on a strong wicket with sound macro-economic fundamentals.

Global cues too remained supportive with most of the Asian counters trading in green terrain at this point of time. Japan’s stocks opened higher, while investors also awaited the unveiling of China's new leadership line-up following the conclusion of the country's 19th Party Congress. The US markets ended at record highs in last session following the modest pullback seen in the previous one.

Back home, the IT sector stocks remained on buyers’ radar reacting to the Infy numbers, which reported a net profit of Rs 3,726 crore for the quarter ended September 30, 2017, up 7 per cent sequentially and 3.4 per cent year-on-year. But, the Nasdaq-listed company has cut its full-year revenue guidance, forecasting slower-than-industry growth. Infosys said FY18 revenue would grow at 5.5-6.5% in constant currency. Meanwhile, the market breadth indicating the overall health of the market was evenly divided, with 1012 shares gaining and 1090 shares declining, while a total of 83 shares were unchanged.

The BSE Sensex is currently trading at 32888.77, up by 281.43 points or 0.86% after trading in a range of 32836.68 and 33117.33. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.14%, while Small cap index was down by 0.01%.

The top gaining sectoral indices on the BSE were PSU up by 5.52%, Bankex up by 2.78%, Capital Goods up by 1.89%, Industrials up by 1.07% and Utilities was up by 0.78%, while Consumer Durables down by 0.81%, Realty down by 0.17%, Metal down by 0.17% and Telecom was down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 19.57%, ICICI Bank up by 7.41%, Larsen & Toubro up by 3.32%, Axis Bank up by 1.79% and Wipro up by 1.42%. On the flip side, HDFC Bank down by 3.06%, Kotak Mahindra Bank down by 2.35%, HDFC down by 2.19%, Bharti Airtel down by 0.83% and Tata Steel down by 0.54% were the top losers.

Meanwhile, in a bid to boost flagging economic growth and increase bank credit flow, the Union Cabinet has given green signal to massive recapitalisation plan for public sector banks (PSBs) worth Rs 2.11 lakh crore. For bank recapitalisation, Rs 1.35 lakh crore will be raised through recap bonds and Rs 76,000 crore via budgetary support and equity issuance. Describing this as a ‘bold step’, Finance Minister Arun Jaitley has said that it's time to create stronger banks to catalyse stalled private investment in the country. He said the capital infusion would be done over the next two fiscal and added that it would be accompanied by series of banking reforms which would be spelt out in the next few months. He also said the recapitalisation of state banks would be followed by a series of reforms.

Jaitley further said that banks would get Rs 18,000 crore under the Indradhanush plan. Under Indradhanush roadmap introduced in 2015, the government had announced to infuse Rs 70,000 crore in state-run banks over four years to meet their capital requirement in line with global risk norms, known as Basel-III. In line with the plan, public sector banks were given Rs 25,000 crore in 2015-16, and similar amount has been earmarked for the following years. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.

Besides, the Cabinet also approved the biggest ever highway project to develop and expand approximately 83,000 km of roads at an investment of Rs 6.9 lakh crore by 2022. The project also includes the new 28,400 km Bharatmala highway programme connecting border areas, improving international, port and coastal connectivity and developing highway corridors connecting key economic and commercial hubs. The proposal is aimed at pushing economic activity and generating at least 32 crore man-days across the country in the next five years.

The CNX Nifty is currently trading at 10262.15, up by 54.45 points or 0.53% after trading in a range of 10248.50 and 10340.55. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were SBI up by 19.47%, ICICI Bank up by 7.54%, Larsen & Toubro up by 3.02%, Ultratech Cement up by 2.50% and Bharti Infratel up by 2.03%. On the flip side, Indiabulls Housing down by 3.94%, Yes Bank down by 3.51%, Indusind Bank down by 3.30%, HDFC Bank down by 3.06% and Bajaj Finance down by 2.62% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted rose 2.42 points or 0.02% to 10,746.20, Shanghai Composite gained 4.04 points or 0.12% to 3,392.29, KOSPI Index increased 5.01 points or 0.2% to 2,495.50, Nikkei 225 added 12.57 points or 0.06% to 21,817.74, Jakarta Composite surged 29.63 points or 0.5% to 5,981.71 and Hang Seng was up by 205.62 points or 0.73% to 28,360.59. However, FTSE Bursa Malaysia KLCI was down by 0.24 points or 0.01% to 1,735.90.