Benchmarks continue to trade in green; Telecom, Metal lead

Indian equity benchmarks continued their firm trade in morning session on account of buying in front line blue chip counters. The rupee gained against the US dollar in early session today on increased selling of the American currency by exporters and banks. Sentiments remained up-beat with credit rating agency Fitch’s statement that India has the potential to grow at an average of 6.7% per annum over the next five years and will be the fastest growing large economies. It added that even though this rate of growth is lower than the potential and what policymakers have been aspiring for, it is ahead of the 5.5% growth estimated for China and Indonesia, who are joined at the second fastest rank.  PSU banking were buzzing as India’s biggest state-owned banks are likely to get Rs 80,000 crore of fresh capital this fiscal year after the government sought Parliament’s nod for additional spending toward the infusion. Major beneficiaries may include State Bank of India, Bank of Baroda, Canara Bank and Indian Bank. Separately, according to global ratings firm Moody’s, Indian government’s decision to pump Rs 2.1 lakh crore in the ailing public sector banks through various channels is expected to help narrow the gap between the capital profiles of Indian public and private sector banks. Moody’s expects that the package will facilitate the two key policy initiatives of non-performing loan (NPL) resolution and Basel III implementation.

Meanwhile, investors took note that with four months left to implement reforms to make doing business easier, India is targeting 90 measures including quicker construction permits, simpler registration of new companies and Aadhaar-based identification of directors to achieve a higher ranking in the World Bank’s annual listing. However, aviation companies like InterGlobe Aviation, SpiceJet and Jet Airways were trading under pressure on report that flyers in India should brace for a fare hike this year. Rising fuel prices and an increase in cost of operations due to the Goods and Services Tax (GST) could result in airlines raising fares by about 13%. The cost of operations for carriers has gone up 27% after GST was introduced in July.

Traders were seen piling up position in Telecom, Metal and Realty stocks, while selling was witnessed in Oil & Gas and Energy sector stocks. In scrip specific development, Indian Overseas Bank (IOB) was trading firm on receiving approval to utilize share premium account to write off the accumulated losses. The approval is to utilize the balance available in the Share Premium account amounting to Rs 7,650.06 crore as at March 31, 2017 to write off the accumulated losses of the Bank aggregating to Rs 6,978.94 crore as at March 31, 2017 to present a true and fair view of the financial position of the Bank and to take the same into account during current Financial Year 2017-18. Orbit Exports was trading in green after touching 52-week high as the company is going to consider buyback of its equity shares.

On the global front, the Asian markets were trading in green, as US jobs data pointed to firm economic growth although the greenback was soft as the specter of benign inflation capped domestic bond yields. Japanese Economy Minister Toshimitsu Motegi said that the government had put policies in place needed for companies to raise wages. Motegi added that he is confident that the government’s plan to offer tax breaks would encourage companies to raise wages at annual negotiations with labor unions this spring. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,100 and 10,500 levels respectively. The market breadth on BSE was positive in the ratio of 1733:749, while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 34145.43, up by 175.79 points or 0.52% after trading in a range of 34020.84 and 34175.21. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Telecom up by 2.47%, Metal up by 1.44%, Realty up by 1.16%, Basic Materials up by 1.16% and Consumer Durables up by 1.10%, while Oil & Gas down by 0.28% and Energy down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.91%, Adani Ports & Special Economic Zone up by 2.38%, Tata Steel up by 1.85%, TCS up by 1.49% and Maruti Suzuki up by 1.39%.

On the flip side, ONGC down by 0.68%, Tata Motors - DVR down by 0.55%, ICICI Bank down by 0.43%, Kotak Mahindra Bank down by 0.21% and Dr. Reddy’s Lab down by 0.13% were the top losers.

Meanwhile, expressing optimism over India’s medium-term economic prospects, global ratings agency, Fitch Ratings in its latest report has stated that the country has the potential to grow at an average of 6.7 percent per annum over the next five years and will be the fastest growing large economies. It added that even though this rate of growth is lower than the potential and what policymakers have been aspiring for, it is ahead of the 5.5 percent growth estimated for China and Indonesia, who are joined at the second fastest rank.

The report titled ‘Global Economic Outlook (GEO) forecast’ has said that demographic factors, where India is among the youngest countries in the world with a maximum number of people in the working age group, and investment rates will be aiding the country. It also said that the country is set to witness a continued robust growth in the working-age population in the next five years, bolstering growth potential, and added that Indonesia, Mexico, Turkey and Brazil will also benefit from a similar trend.

Fitch Ratings said India has an ‘impressive rate of capital accumulation per worker’ which helps in maintaining the economic growth and also in upping the living standards. However, it said going by total factor productivity, which captures improvements in the efficiency of the production process, India has some catching-up to do. It added that trend total factor productivity in India is expected to increase after recent ambitious structural reforms such as the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code.

The CNX Nifty is currently trading at 10548.75, up by 43.95 points or 0.42% after trading in a range of 10522.30 and 10562.80. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 3.88%, Adani Ports & Special Economic Zone up by 2.33%, Tata Steel up by 2.08%, TCS up by 1.39% and Vedanta up by 1.37%.

On the flip side, HPCL down by 1.06%, ONGC down by 0.78%, BPCL down by 0.59%, Indian Oil down by 0.59% and ICICI Bank down by 0.46% were the top losers.

The Asian markets were trading in green; Jakarta Composite increased 5.83 points or 0.09% to 6,298.15, Shanghai Composite increased 8.01 points or 0.24% to 3,393.72, FTSE Bursa Malaysia KLCI increased 10.6 points or 0.59% to 1,814.05, Taiwan Weighted increased 17.56 points or 0.16% to 10,866.19, KOSPI Index increased 27.01 points or 1.1% to 2,493.47, Hang Seng increased 55.51 points or 0.18% to 30,791.99 and Nikkei 225 increased 147.76 points or 0.63% to 23,654.09.