Benchmarks extend gains in morning session

Indian equity benchmarks extended their gains in morning session on account of buying in front line blue chip counters. The rupee started with a slight gain against the dollar comforted by a rally in equities. Selling of the American currency by banks and exporters also played its part. Sentiments remained up-beat with report that Direct Tax collections during the first nine-and-a-half months of the current fiscal have risen by 18.7% to Rs 6.89 lakh crore. CBDT highlighted that the collections till January 15, 2018 represent over 70% of the Rs 9.8 lakh crore revenue target from direct taxes. Separately, the Confederation of Indian Industry (CII) ahead of the GST Council meeting has called for inclusion of Petroleum and Natural Gas under GST at the earliest. Till such time as this is done, C Forms should be continued to avoid high tax incidence on these products.

Meanwhile, banking stocks were buzzing on report that loans growth for the fortnight ended January 5 hit an 18-month high of 11% and banks continued to sell down their bond holdings to lend as deposit growth remained muted at less than 5%. As per data compiled by the Reserve Bank of India, bank loan rose 11.1% to Rs 82 lakh crore. Of the Rs 8.2 lakh loan in the year, banks lent 13.3% or Rs 1.09 lakh crore worth of loans in the latest fortnight. Separately, a report enlightened that the government is considering a proposal to permit 100% FDI in private banks. Select telecom stocks were buzzing in today’s trade on report that High Court will hear Bharti Airtel, Idea Cellular and Vodafone India’s petitions for a stay order on reduced interconnect usage charge (IUC) on February 6. Telecom Regulatory Authority of India (TRAI) on September 19 decided to reduce IUC to 6 paise a minute from 14 paise, from October 1 and also decided to scrap the charge from January 2020.

Investors were eyeing the GST Council meet scheduled for the day which will consider a host of proposals to simplify procedure for filing of returns, registration of large entities and take stock of the GSTN’s readiness for e-way bill rollout from February 1. The GST Council is expected to consider a reduction in tax rates for some items, about 80 going by some reports, and the inclusion of real estate in its 24th meeting. Separately, the government is expected to sharply increase its asset-sale target for the next financial year with about 36 companies lined up for strategic disinvestment. The government has raised a record Rs 54,337.60 crore so far this year against its FY18 target of Rs 72,500 crore, of which Rs 15,000 crore is through strategic sales.

Traders were seen piling up position in Bankex, FMCG and Capital Goods stocks, while selling was witnessed in Metal, IT and Oil & Gas sector stocks. In scrip specific development, SREI Infrastructure Finance was trading in green as net profit rose 30.68% to Rs 34.29 crore in the quarter ended December 2017 as against Rs 26.24 crore during the previous quarter ended December 2016. Sales rose 2.90% to Rs 465.16 crore in the quarter ended December 2017 as against Rs 452.05 crore during the previous quarter ended December 2016. Adani Transmission was trading in green after its consolidated profit-after-tax saw an eight-fold rise at Rs 842 crore in the quarter through December 2017.

On the global front, the Asian markets were trading mostly in green, with a rally by Wall Street supporting bullish investor sentiment. A majority of economists polled believe that Bank of Japan will keep its long-term interest rate target unchanged this year, though 40 percent expect a hike, reflecting the mounting speculation as Japan’s economy continues to strengthen. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 35,400 and 10,850 levels respectively. The market breadth on BSE was positive in the ratio of 1559:951, while 106 scrips remained unchanged.

The BSE Sensex is currently trading at 35469.73, up by 387.91 points or 1.11% after trading in a range of 35338.75 and 35478.34. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index was up by 0.73%.

The top gaining sectoral indices on the BSE were Bankex up by 1.75%, FMCG up by 1.32%, Capital Goods up by 1.22%, Industrials up by 0.59% and Auto up by 0.51%, while Metal down by 1.18%, IT down by 0.59%, Oil & Gas down by 0.58%, TECK down by 0.48% and Utilities down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 3.14%, Yes Bank up by 2.85%, HDFC up by 2.71%, IndusInd Bank up by 2.29% and Larsen & Toubro up by 2.04%.

On the flip side, Infosys down by 1.31%, Tata Steel down by 1.05%, Wipro down by 0.95%, TCS down by 0.40% and Tata Motors down by 0.33% were the top losers.

Meanwhile, after allowing 100% FDI (Foreign Direct Investment) in aviation, single-brand retail, and construction, the government is now considering to hike the FDI limit in the banking sector to 100% from 74% at present. It is also considering a hike in the foreign investment cap for public sector banks (PSBs), from 20% to 49%.

The proposed changes are reportedly being discussed by the finance ministry, the Department of Industrial Policy and Promotion (DIPP) and the Indian Banks' Association (IBA). Though, there are no official announcements for the talks but the Reserve Bank of India (RBI) may have some objections to the proposals. R Gandhi, former deputy governor of the RBI has said that for foreign banks wanting to pick up full stake in the existing banking entity, the RBI would use fit and proper criterion, see track record, and also prescribe a lock-in-period on FDI. Instead of a blanket policy, the RBI could decide case by case.The RBI had in 2015 reportedly raised objections over the Union government’s proposal to increase the limit to 100% for private sector banks due to “regulatory problems”.

According to the government’s policy, foreign investors - foreign direct investment, foreign institutional investors, and non-resident Indians combined - can invest up to 74% of paid-up capital in private sector banks. Up to 49% foreign investment is allowed under the automatic route; such investments between 49 and 74% require the government’s nod under the present norms.

The CNX Nifty is currently trading at 10869.25, up by 80.70 points or 0.75% after trading in a range of 10850.20 and 10887.50. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were UPL up by 3.54%, HDFC Bank up by 3.04%, Yes Bank up by 3.02%, HDFC up by 2.86% and IndusInd Bank up by 2.34%.

On the flip side, Bharti Infratel down by 3.67%, Hindalco down by 2.80%, GAIL India down by 2.56%, Vedanta down by 1.69% and Infosys down by 1.46% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 7.37 points or 0.29% to 2,522.80, Shanghai Composite increased 12.67 points or 0.37% to 3,457.34, Jakarta Composite increased 23.63 points or 0.37% to 6,468.15, Hang Seng increased 67.6 points or 0.21% to 32,051.01, Nikkei 225 increased 84.67 points or 0.35% to 23,953.01 and Taiwan Weighted increased 97.87 points or 0.89% to 11,102.67.

On the other hand, FTSE Bursa Malaysia KLCI decreased 4.68 points or 0.26% to 1,823.95.