Key indices add gains; Tata Steel top gainer

Going from strength to strength, the local equity indices gathered further ground in early afternoon trade, with gains of nearby three quarter of a percent, as buying momentum in the equities persisted. The sentiments on the street got encouragement 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. He highlighted India’s development process, outlined country’s experiences since Independence and laid out a future vision for achieving a New India by 2022. The markets also got comfort with CRISIL’s report stating that asset quality of microfinance institutions (MFI), including small finance banks, has come out of the impact of demonetisation and stabilised since June 2017. Moreover, firm trend in Asian markets on positive cues from Wall Street too helped to lift sentiments. The frontline gauges were trading comfortably above the crucial 10,450 (Nifty) and 34,050 (Sensex) marks. The broader markets were too trading firm broadly in-line with the benchmark indices. In scrip specific development, Federal Bank surged by over 4% after receiving an approval for acquisition of a significant minority stake of up to 26% of the paid-up equity share capital of ECPL.

On the global front, Asian markets were trading in green, as comments from a Federal Reserve official eased worries about faster rate rises in the United States. Back home, the BSE Sensex is currently trading at 34061.62, up by 242.12 points or 0.72% after trading in a range of 33832.00 and 34085.75. 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 1.14%, while Small cap index was up by 1.19%.

The top gaining sectoral indices on the BSE were Metal up by 2.56%, Basic Materials up by 1.92%, Telecom up by 1.49%, Healthcare up by 1.38% and Bankex up by 0.99%, while there were no losing indices on BSE sectoral front.

The top gainers on the Sensex were Tata Steel up by 4.59%, Dr. Reddy’s Lab up by 2.72%, Yes Bank up by 2.53%, Sun Pharma up by 2.04% and Bharti Airtel up by 1.98%. On the flip side, Asian Paints down by 0.84%, Coal India down by 0.54%, Mahindra & Mahindra down by 0.29% and Hero MotoCorp down by 0.15% 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 10466.15, up by 83.45 points or 0.80% after trading in a range of 10396.65 and 10474.75. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 4.76%, UPL up by 3.30%, Vedanta up by 2.95%, Aurobindo Pharma up by 2.88% and Hindalco up by 2.63%. On the flip side, GAIL India down by 2.47%, Asian Paints down by 1.02%, Eicher Motors down by 0.97%, Coal India down by 0.43% and Mahindra & Mahindra down by 0.41% were the top losers.

All the Asian markets were trading in green; FTSE Bursa Malaysia KLCI was up by 2.71 points or 0.15% to 1,857.78, Shanghai Composite rose 18.59 points or 0.57% to 3,287.15, KOSPI Index added 37.24 points or 1.54% to 2,451.52, Jakarta Composite inched up 43.14 points or 0.65% to 6,636.20, Taiwan Weighted increased 132.17 points or 1.24% to 10,794.55, Nikkei 225 surged 156.34 points or 0.72% to 21,892.78 and Hang Seng rose 339.64 points or 1.1% to 31,305.32.