Markets continue to rally, Sensex holds 34,000 mark

Key Indian benchmarks continued to rally in late morning session, with Sensex holding its crucial psychological level of 34,000, backed by positive Asian cues. Traders remained optimistic with Securities and Exchange Board of India’s (SEBI) decision to relax entry norms for Foreign Portfolio Investors (FPIs) willing to invest in the Indian markets. Besides, SEBI would allow listing of security receipts issued by an asset reconstruction company (ARC) on stock exchange platform. Some support also came with the private report stating that consumer confidence in India is likely to remain high over the next six months with a very optimistic outlook. All the sectoral indices expect Metal and Oil & Gas were showing optimism with notable gains, while the broader indices also rallied by around 0.80 per cent each. On the sectoral front, pharma stocks were trading higher, amid credit rating agency, Crisil’s latest report that revenue of domestic pharma companies is seen growing at 9 per cent per annum over the next three fiscal years ending 2020.

On the global front, Asian markets were trading mostly in green, amid a recovery in global economic growth following the modest gains overnight on Wall Street. Back home, in scrip specific development, Aarti Industries traded higher after the company signed Rs 10,000 crore multi-year exclusive supply contract with a leading global chemical conglomerate (customer).

The BSE Sensex is currently trading at 34028.61, up by 180.58 points or 0.53% after trading in a range of 33889.39 and 34030.38. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.83%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Telecom up by 1.90%, Power up by 1.04%, Industrials up by 1.00%, Auto up by 0.91% and FMCG up by 0.86%, while Metal down by 0.13% and Oil & Gas down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 2.12%, Asian Paints up by 1.90%, Tata Motors up by 1.70%, Sun Pharma up by 1.31% and TCS up by 1.30%. On the flip side, Wipro down by 0.60%, Mahindra & Mahindra down by 0.39%, HDFC Bank down by 0.12% and Dr. Reddy’s Lab down by 0.07% were the top losers.

Meanwhile, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its latest report has stated that credit growth is likely to be below 8 percent during the financial year 2018, despite government's thrust on loan expansion. As per the report, the reason behind it is slowdown in Indian economy together with high stress level in the banking sector. However, it pointed out that credit growth would be slightly better than the five decade low growth of 5.1 percent in non-food credit recorded in the FY17 as compared to 10.7 percent a year ago.

The report also expects that credit growth this year would be largely driven by the retail segment and farm loan. It also noted that expansion could also be contributed by some segments of the industry related to infrastructure if they pick up in the second half of the current fiscal. Adding further, it said that there could be some uptick in lending towards the micro, small and medium enterprises (MSME) sector with the government asking banks to increase their exposure to the sector as they are one of the largest employers.  It also explained that one of the objectives of the government's Rs 2.11 lakh crore recapitalisation plan for public sector banks, is to enable banks to enhance lending to industry especially MSME by strengthening balance sheets of NPA-ridden public sector banks (PSBs). It added that Non-performing assets of PSBs have increased to Rs 7.33 lakh crore as of June 2017, from Rs 2.78 lakh crore in March 2015.

ASSOCHAM has further said that notably, the corporate sector is not getting loans from banks as lenders have become risk averse due to mounting NPAs. It also said that to make matter worse, companies with good ratings are tapping market as rates are cheaper in the bond markets. It observed that only segments which are witnessing healthy growth are personal and agriculture credit with jump of over 10 percent. Besides, it finds out that this situation is going to continue more or less the same for the rest of the financial year limiting credit growth between 8 and 9 percent for the entire fiscal even after taking into account acceleration during second half of the financial year referred as busy credit season, and proposed strengthening of balance sheets of PSBs.

The CNX Nifty is currently trading at 10526.55, up by 48.65 points or 0.46% after trading in a range of 10488.65 and 10527.10. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.47%, Asian Paints up by 2.07%, Tata Motors up by 2.01%, TCS up by 1.51% and Axis Bank up by 1.47%. On the flip side, HPCL down by 0.86%, GAIL India down by 0.82%, Hindalco down by 0.73%, Zee Entertainment down by 0.66% and Wipro down by 0.65% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 1.28 points or 0.07% to 1,780.38, Shanghai Composite increased 1.36 points or 0.04% to 3,297.74, Hang Seng increased 47.75 points or 0.16% to 29,911.46, Jakarta Composite increased 49.02 points or 0.78% to 6,363.07 and Taiwan Weighted increased 75.22 points or 0.71% to 10,642.86.

On the flip side, Nikkei 225 decreased 17.74 points or 0.08% to 22,766.24.