Benchmarks trade in fine fettle in early deals

Extending previous session’s jubilation, Indian equity benchmarks made a positive start and are trading in fine fettle in early deals on Tuesday with traders continued getting strength with the assembly election results announced yesterday. Moreover, traders shifted focus on global development, as the US House votes on the tax bill later in the day that would cut corporate individual tax rates. Market participants shrugged off report that the government seeking Parliament’s approval to spend a net additional Rs 333.8 billion ($ 5.21 billion) in new spending in the fiscal year to March 2018. The additional spending will be on top of an approved spending of $ 334.9 billion in the annual Budget. Also, investors ignored India Ratings’ report where it has warned that the farm debt waivers announced by the five large states together will widen the combined fiscal deficit of the states by Rs 1,07,700 crore or 0.65 percent of GDP this financial year.

On the global front, Asian markets exhibiting mixed trend at this point of time on hopes that that US legislators are on the brink of passing sweeping tax cuts. The US markets extended their gains to the new week and ended higher in the last session.

Back home, stocks related to tourism and hotel space remained in focus, as the Union Tourism Minister K J Alphons has said that there was no adverse impact of the Goods and Services Tax (GST) rollout on foreign tourist arrivals (FTAs) in the country. The pharma stocks remained buzzing, as the National drug pricing regulator NPPA has said it had notified prices of 65 essential formulations, including those used for the treatment of diabetes, infections, pain and high blood pressure.

The BSE Sensex is currently trading at 33704.86, up by 103.18 points or 0.31% after trading in a range of 33666.62 and 33746.73. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.70%, while Small cap index was up by 1.03%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.59%, Metal up by 1.26%, Auto up by 1.19%, Basic Materials up by 1.13% and Consumer Discretionary Goods & Services up by 1.10%, while Telecom down by 0.07%, IT down by 0.04% and TECK was down by 0.02% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.60%, Hero MotoCorp up by 1.53%, ONGC up by 1.29%, Tata Motors - DVR up by 1.24% and Coal India up by 1.21%. On the flip side, Bharti Airtel down by 0.68%, Indusind Bank down by 0.57%, Infosys down by 0.38%, HDFC down by 0.19% and Kotak Mahindra Bank down by 0.15% were the top losers.

Meanwhile, the global credit rating agency, Moody’s Investors Service and its Indian arm ICRA in a joint report have kept a stable outlook for the Indian power sector over the next 12-18 months, reflecting their expectation of stable industry conditions and government policy initiatives. The report added that this will likely lead to improvements in the financial position of state-owned electricity distribution companies. Moody's also said that the government's debt restructuring of the financially weak distribution utilities under the Ujwal Discom Assurance Yojana (UDAY) will gradually improve the financial conditions of state-owned discoms, thereby alleviating off-taker risk, which is a key negative factor for the credit quality of power generators.

The report stated that India (rated Baa2 stable by Moody's) will see a change in its energy mix towards renewable, as the country adds more capacity and moves towards its commitments under the Paris Agreement on climate change. However, the growth in renewable generation capacity will put pressure on conventional power generation, although most power producers are protected by availability based power purchase agreements. ICRA said the rise in India's share of renewable energy - especially in solar and wind generated electricity - in the overall capacity addition will be aided by improved tariff competitiveness, a supportive regulatory framework and strong policy support. While the medium to long-term outlook for renewable energy is positive, in the near-term, capacity additions in the wind energy sector will likely be adversely affected, due to the transition in the tariff regime to a bid-based from a feed-in-based framework.

The rating agency also said, the upward pressure on the module price level, aggressive bidding and the possible risk of anti-dumping duties being imposed could impact fresh bidding for solar projects. Also, thermal IPPs will see costs rise for power generation, because of capital expenditure requirements to comply with the tightened emission control norms required by the ministry of environment and forests, and also to ensure the operating flexibility to accommodate the increasing share of renewable energy. It added that timely approval of pass-through for such increases in cost will be critical for thermal IPPs with long term power purchase agreements (PPAs). It further said while the stressed thermal assets remain significant (60,000 MW), due to factors such as tariff non-viability, lack of long-term PPAs, uncertainty on domestic gas availability and cost overruns.

The CNX Nifty is currently trading at 10419.35, up by 30.60 points or 0.29% after trading in a range of 10406.00 and 10431.50. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.98%, Eicher Motors up by 1.97%, Vedanta up by 1.86%, Aurobindo Pharma up by 1.62% and Tata Motors up by 1.50%. On the flip side, GAIL India down by 0.83%, HCL Tech. down by 0.79%, Bharti Airtel down by 0.66%, Bajaj Finance down by 0.58% and Indusind Bank down by 0.57% were the top losers.

Asian markets are trading mixed; Shanghai Composite increased 17.44 points or 0.53% to 3,285.36, Jakarta Composite gained 31.58 points or 0.51% to 6,165.54 and Hang Seng was up by 240.66 points or 0.83% to 29,291.07.

On the flip side, Taiwan Weighted decreased 24.48 points or 0.23% to 10,482.04, FTSE Bursa Malaysia KLCI shed 12.26 points or 0.7% to 1,739.38, Nikkei 225 slipped 2.53 points or 0.01% to 22,899.24 and KOSPI Index was down by 6.62 points or 0.27% to 2,475.26.