Markets manage to keep head above water

Key Indian benchmarks managed to keep their head above water in late morning session, with Sensex and Nifty posting minor gains of above 0.1%. Investors got some support with finance ministry’s statement that the government is committed to growth revival by increasing public investment while maintaining fiscal deficit target of 3.2 per cent for the current fiscal. Firm broader indices along with buying in Realty, Industrials and Capital Goods stocks, were adding some optimism on the street. Traders got some relief with the Commerce & Industry Minister Suresh Prabhu’s statement that the government is working on a strategy to boost share of services in total exports from the country, highlighting the importance of services sector in improving the condition of exports. However, gains remained capped as the statistics from FICCI’s quarterly survey on manufacturing suggests slightly less optimistic outlook for the manufacturing sector in the Q3 (October- December 2017-18) as the percentage of respondents reporting higher production in third quarter has fallen in comparison to the previous quarter.

On the global front, Asian markets were trading mixed, amid cautious trades following the negative lead overnight from Wall Street and as investors awaited the final votes on the US tax reform bill. Back home, in scrip specific development, Amara Raja Batteries (ARBL) gained after the company commissioned its Two-Wheeler Battery Plant at the Amara Raja Growth Corridor in Chittoor, Andhra Pradesh.

The BSE Sensex is currently trading at 33870.90, up by 34.16 points or 0.10% after trading in a range of 33767.72 and 33956.31. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.53%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Realty up by 2.12%, Industrials up by 0.91%, Capital Goods up by 0.87%, Consumer Durables up by 0.74% and Healthcare up by 0.72%, while Bankex down by 0.14%, Power down by 0.04% and Energy down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.95%, ONGC up by 1.84%, Tata Motors - DVR up by 1.72%, Tata Motors up by 1.37% and Larsen & Toubro up by 1.32%. On the flip side, Dr. Reddy’s Lab down by 1.38%, Tata Steel down by 1.24%, Adani Ports & SEZ down by 0.87%, Power Grid Corporation down by 0.86% and TCS down by 0.82% were the top losers.

Meanwhile, global rating agency, Moody's Investors Service in its Credit Outlook article, has stated that capital raising by a number of public sector banks (PSBs), including Punjab National Bank (PNB) and Union Bank of India (UBI), is credit positive, as it will improve their loss absorbing capabilities. Apart from this, it noted that the capital raising by PSBs’ signals improved access to the equity capital markets and reduces their dependence on capital infusion from the government.

According to the report, the inability of most of these banks to access the equity capital markets has also been a key constraint on their capital levels. It also observed that the share prices of most PSBs that they rate improved substantially after the Union government unveiled Rs 2.11 lakh crore recapitalisation plan over two years for the country’s 21 PSBs. It also mentioned that recently, Punjab National Bank and Union Bank of India raised Rs 5,000 crore and Rs 2,000 crore through qualified institutional placement to fund expansion plan. Besides, Syndicate Bank raised Rs 1,150 crore.

On a pro forma basis, the rating agency has said that the capital raise will add about 100 basis points to PNBs Common Equity Tier 1 (CET1) ratio, which was 8.1 per cent as of September 2017. It added that UBI and Syndicate each will add 60-70 basis points to their CET1 ratios, which were 7 percent and 7.2 percent, respectively, as of September 2017.

The CNX Nifty is currently trading at 10477.30, up by 14.10 points or 0.13% after trading in a range of 10440.75 and 10494.45. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Lupin up by 2.33%, ONGC up by 1.81%, Hero MotoCorp up by 1.68%, GAIL India up by 1.55% and Tata Motors up by 1.25%. On the flip side, Dr. Reddy’s Lab down by 1.49%, Tata Steel down by 1.25%, HPCL down by 1.16%, Adani Ports & SEZ down by 0.91% and Kotak Mahindra Bank down by 0.90% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI increased 12.24 points or 0.7% to 1,749.19, Nikkei 225 increased 20 points or 0.09% to 22,888.00 and Taiwan Weighted increased 37.18 points or 0.36% to 10,504.52.

On the flip side, Jakarta Composite decreased 68.08 points or 1.1% to 6,099.59, Shanghai Composite decreased 10.99 points or 0.33% to 3,285.55, Hang Seng decreased 8.51 points or 0.03% to 29,245.15 and KOSPI Index decreased 4.93 points or 0.2% to 2,473.60.