Benchmarks extend gains in morning session

Indian equity benchmarks extended their firm trade in morning session on account of buying in frontline blue chip counters. The rupee set aside its spate of declines and opened higher against the US dollar, buoyed by a rise in local equities. Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 2,335.34 crore on Thursday. Domestic Institutional Investors (DIIs) net bought equities worth Rs 1,059.42 crore. The sentiment remained upbeat with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India will emerge as a model for the rest of the world once it completes economic, political and social transitions. It added that India is the only country in the World which chose to undertake these three transitions simultaneously. Metal counters were buzzing after India Ratings and Research (Ind-Ra) revised the outlook on the steel sector to stable for FY19 from negative in FY18, led by demand growth in domestic and global markets. While it expects stressed steel assets to meet incremental demand over next 18-24 months, the ratings firm felt steel players would gain from improved sales realizations driven by improvement in operational and financial performance in FY19.

Meanwhile, select microfinance stocks were buzzing after CRISIL highlighted that loan portfolios of microfinance institutions (MFIs) comprising small finance banks as well as non-bank MFIs are showing a distinct improvement and stability in asset quality since June 2017. The report has three pointers that indicate this positive change. First, asset quality has improved, as evidenced by reducing portfolio delinquencies. Then, cumulative collection efficiencies have risen to over 99 per cent for disbursements since April 2017. Moreover, high degree of investor support reflected in the significant equity and debt raised post demonetization.

Traders were seen buying in Metal, Healthcare and Basic Material sector stocks. In scrip specific development, Balaji Amines, Navin Fluorine International, Aarti Industries and Ester Industries were trading in green on report that Ministry of Commerce has recommended anti-dumping duty on import of dimethylacetamide. These companies manufacture dimethylacetamide. Besides, Yash Papers was trading firm on entering into MoU with UP State Government for Rs 73.44 crore for expansion of its Paper Unit III from existing installed capacity of 70 MT to 100 MT and Tableware Unit capacity from existing installed capacity 11.50 MT to 23.00 MT in the coming years.

On the global front, Asian markets were trading mostly in green. Japan’s factory output is expected to have dropped for the first time in four months in January, but strong global demand and corporate profits will likely continue to support firms’ production activity. A private poll showed that Industrial production likely slipped 4.2 percent in January from the previous month. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 33,900 and 10,400 levels respectively. The market breadth on BSE was positive in the ratio of 1669:567, while 106 scrips remained unchanged.

The BSE Sensex is currently trading at 33970.02, up by 150.52 points or 0.45% after trading in a range of 33832.00 and 33985.78. 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 1.12%, while Small cap index was up by 1.15%.

The top gaining sectoral indices on the BSE were Metal up by 2.10%, Healthcare up by 1.84%, Basic Materials up by 1.62%, Telecom up by 1.10% and Bankex up by 0.99%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Sun Pharma up by 4.02%, Tata Steel up by 3.54%, Yes Bank up by 2.34%, Dr. Reddy’s Lab up by 1.68% and Bharti Airtel up by 1.68%.

On the flip side, Mahindra & Mahindra down by 0.82%, Asian Paints down by 0.75%, Hero MotoCorp down by 0.60%, TCS down by 0.55% and Coal India down by 0.43% were the top losers.

Meanwhile, Fitch Ratings in its latest report has stated that the Reserve Bank of India’s (RBI) new norms for overhauling the mechanism to deal with the bad debt, is likely to push up banks’ credit costs and weaken earnings in the near term. However, it believed that stronger regulatory efforts to deal with the problem of mounting bad loans in Indian banking system along with planned recapitalisation of state banks, could help support a recovery in the sector over the medium term.

The US-based agency has stated that regulators appear increasingly impatient with the slow resolution of NPL stock, which has prolonged the non-performing loan (NPL) cycle. It also noted that the new framework gives banks less discretion over the reporting and resolution of bad assets and attempts to address the complexities involved in resolving the stressed loans of large borrowers. Under the new framework for NPL resolution, it observed that banks will need to report defaults by large borrowers weekly, indicating a more invasive approach to tracking bad assets.

According to the report, the new framework’s overall focus is on recognising and quickly resolving bad loans. The agency also asserted that it is likely to result in a rise in NPLs, as banks are forced to reclassify stressed accounts previously recorded as special mention loans or restructured loans. It added that more accounts are also likely to be pushed toward insolvency courts and into liquidation, particularly since the new guidelines require all of a borrower’s lenders to agree on a resolution plan to keep it away from the courts.

The CNX Nifty is currently trading at 10433.55, up by 50.85 points or 0.49% after trading in a range of 10396.65 and 10440.65. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 4.26%, Aurobindo Pharma up by 3.88%, Tata Steel up by 3.62%, Yes Bank up by 2.44% and Vedanta up by 2.39%.

On the flip side, GAIL India down by 1.89%, Mahindra & Mahindra down by 1.07%, Asian Paints down by 1.07%, Eicher Motors down by 0.95% and TCS down by 0.86% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 2.71 points or 0.15% to 1,857.78, KOSPI Index increased 24.8 points or 1.03% to 2,439.08, Jakarta Composite increased 43.14 points or 0.65% to 6,636.20, Taiwan Weighted increased 98.37 points or 0.92% to 10,760.75, Nikkei 225 increased 106.24 points or 0.49% to 21,842.68 and Hang Seng increased 263.83 points or 0.85% to 31,229.51.

On the other hand, Shanghai Composite decreased 0.22 points or 0.01% to 3,268.33.