Benchmarks extend gains; Nifty above 10,500 mark

Indian equity benchmarks extended their gains in morning session on account of buying in frontline blue chip counters, driven by bargain hunting after last week sell-off. The rupee opened up against the greenback as it bounced from a near two-month low, propped up by local equities. Banks and exporters took to selling of the American currency. Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 1,351.70 crore on Friday, as per provisional data. Domestic Institutional Investors (DIIs) net bought equities worth Rs 588.42 crore. The sentiments were up-beat after Finance minister Arun Jaitley expressed confidence over comfortable revenue collection in 2018-19, seeking to remove doubts about any likely slippage in fiscal deficit from the revised target of 3.3% of GDP ahead of the general elections in 2019. RBI Governor Urjit Patel said that stock market bubble should not lead to a very major problem while stressing the need for regulators to be cognizant of the risks going forward. He also said transmission of RBI decisions by banks have improved now, partly aided by Demonetization. Patel said monetary policy decisions need to be forward-looking and cannot be taken on the basis of day-to-day inflation rates. He also said the GDP growth rate is showing an upward trend.

Some support also came with report that India’s external debt has remained within manageable limits as indicated by the external debt indicators, and the country is not among the world’s top debtors. India’s external debt stock stood at $495.7 billion at quarter ending September 2017. Investors took note of foreign brokerage report that retail inflation is expected to moderate and print at 5% after rising consecutively for five months, helped largely by seasonal dip in vegetable prices, while trade deficit is also likely to improve, in January. Realty stocks were buzzing after a survey by private poll highlighted that with the real estate market beginning to adjust to various reforms like Demonetization, GST and RERA, most Indian metros witnessed recovery with sales improving, while property prices corrected or maintained status-quo.

Traders were seen piling position in Healthcare, Realty and Capital Goods sector stocks. Besides, sugar stocks were buzzing after sugar prices jumped by Rs 1/kg to Rs 30.50/kg immediately after the Central government capped sales by mills for the next two months starting Thursday. However, traders are worried that unless excess stocks are taken out of the country, there would be a bigger carry-over into the next season, when record output is likely. In scrip specific development, State Bank of India (SBI) was trading in red on reporting a massive quarterly loss on the back of spike in provisions due to bad loan divergences and hardening of bond yields which led to treasury losses.

On the global front, the Asian markets were trading in green. China will boost its job creation effort and promote entrepreneurship this year, under pressure to find work for millions of unemployed people and new college graduates. 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 1907:529 while 103 scrips remained unchanged.

The BSE Sensex is currently trading at 34198.54, up by 192.78 points or 0.57% after trading in a range of 34115.12 and 34278.24. 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 1.24%, while Small cap index was up by 1.57%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.00%, Realty up by 1.95%, Capital Goods up by 1.46%, Industrials up by 1.43% and Basic Materials up by 1.20%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Sun Pharma up by 4.01%, Tata Steel up by 3.70%, ONGC up by 2.58%, Larsen & Toubro up by 1.67% and Axis Bank up by 1.41%.

On the flip side, SBI down by 2.09%, Coal India down by 0.48%, HDFC down by 0.28% and NTPC down by 0.28% were the top losers.

Meanwhile, Indian banks’ gross non-performing assets (NPAs) or bad loans fell marginally to 9.8 percent during Q2 (July-September) of FY18, as compared to 10 percent in the previous quarter. Union Minister of State for Finance Shiv Pratap Shukla has highlighted that as per RBI’s financial stability report (FSR) released on December 2017, the gross non-performing advances ratio of scheduled commercial banks (SCBs) increased from 9.6 percent to 10.2 percent between March and September 2017. Further, he noted that as per FSR, macro stress test for credit risk indicates that under the baseline scenario, the GNPA ratio of the banking sector may increase to 10.8 per cent by March 2018.

Shukla has stated that the problem of bad loans of banks has been addressed holistically through transparent and realistic recognition of NPAs, provision for expected losses and unprecedented recapitalisation, and putting in place a clean recovery system. He also pointed out that Asset Quality Review (AQR) initiated by RBI in 2015, and subsequent transparent recognition by banks revealed high NPAs, which have impacted balance-sheets of several Public Sector Banks (PSBs). Besides, he noted that under ‘Indradhanush’ roadmap announced in 2015, the government provided for Rs 70,000 crore till 2018-19 for strengthening PSBs’ balance-sheets, as a result of which despite high NPA and consequential provisioning, banks were successful in complying with capital adequacy norms.       

The minister further said that with the object of increasing credit off-take and promoting creation of jobs, in October 2017 the government announced, and has since initiated, recapitalisation of PSBs by Rs 2,11,000 crore within two financial years to make banks weakened by NPAs strong. Adding further, he said that to enable effective action in respect of defaulters, Insolvency and Bankruptcy Code, 2016 was enacted, which provides for timebound resolution of stressed assets. He added that cases have been instituted under the Code in the National Company Law Tribunal (NCLT) in respect of the 12 largest defaulters, amounting to about 25 per cent of the NPAs of the entire banking system.

The CNX Nifty is currently trading at 10508.80, up by 53.85 points or 0.52% after trading in a range of 10485.40 and 10538.10. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 4.04%, Tata Steel up by 3.53%, ONGC up by 2.80%, Aurobindo Pharma up by 2.21% and Larsen & Toubro up by 1.73%.

On the flip side, BPCL down by 2.25%, SBI down by 2.14%, HPCL down by 1.15%, HCL Tech down by 1.13% and Bharti Infratel down by 0.59% were the top losers.

The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 12.55 points or 0.69% to 1,832.37, Jakarta Composite increased 15.85 points or 0.24% to 6,521.38, Shanghai Composite increased 25.17 points or 0.8% to 3,155.02, KOSPI Index increased 28.8 points or 1.22% to 2,392.57, Taiwan Weighted increased 76.38 points or 0.74% to 10,448.13 and Hang Seng increased 210 points or 0.71% to 29,717.42.

Japan stock exchange is closed on account of National holiday.