Benchmarks trade in green in early deals on Thursday

Indian equity benchmarks are trading in green terrain with a gain of around one third of a percent amid mixed global cues after the US Federal Reserve announced its first interest rate hike of the year and sees 2 more rate hikes in 2018. Traders are taking encouragement with report that private equity (PE) investments witnessed a two-fold jump in February with transactions worth $1.3 billion taking the deal tally for the first two months of this year to $2.3 billion. There were 62 PE deals worth $1,330 million, while in the corresponding period last year there were 45 such transactions worth $588 million. Meanwhile, the Union Cabinet has given its approval for revision of the agreement between India and Qatar for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.

Global cues remained mixed with Asian markets trading mostly in green at this point of time after the U.S. Federal Reserve raised rates by 25 basis points to a range of 1.5 percent to 1.75 percent on Wednesday, as was widely expected. However, The US markets closed lower on Wednesday after the Federal Reserve upgraded its economic outlook and increased interest rates.

Back home, banking stocks remained in limelight after S&P Global Ratings’ report stated that the banking sector could witness a turnaround in fiscal 2019-20. The report added that the banking sector’s performance will get a boost from economic expansion and believes its deep protracted credit down cycle is nearing, with a turnaround by fiscal 2020. In addition, government’s and RBI’s significant steps are aiding the recovery. In scrip specific developments, Aurionpro Solutions soars on bagging Rajasthan Government’s prestigious Smart City project, while Genus Power advanced on bagging order worth Rs 125 crore.

The BSE Sensex is currently trading at 33242.77, up by 106.59 points or 0.32% after trading in a range of 33107.32 and 33275.79. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.01%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Energy up by 0.76%, Consumer Durables up by 0.67%, FMCG up by 0.43%, Oil & Gas up by 0.40% and Healthcare up by 0.37%, while Power down by 0.44%, Utilities down by 0.24%, Realty down by 0.12%, PSU down by 0.10% and Bankex down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.65%, Sun Pharma up by 1.56%, Reliance Industries up by 1.13%, Tata Motors up by 0.79% and ITC up by 0.73%. On the flip side, Wipro down by 1.47%, Adani Ports down by 0.84%, Tata Steel down by 0.75%, NTPC down by 0.71% and ICICI Bank down by 0.69% were the top losers.

Meanwhile, while pointing out the need to take more corrective steps to strengthen internal control system in public sector banks (PSBs), S&P Global Ratings in its latest report has said that Indian banking sector could witness a turnaround in the fiscal year 2019-20 (FY20). It also said that government has taken steps by splitting the post of Chairman and Managing Director but more need to be done. It added that the recent Rs 13,000 crore fraud at the Punjab National Bank (PNB) highlights the inherent weaknesses in the governance and transparency standards in the Indian banking system, especially among PSBs.

In a report titled ‘Will the global economic recovery lift banks in major emerging markets’, S&P expects the strengthened legal framework to accelerate recovery rates only in the next credit cycle. As banks clean up their balance sheets and provide for these weak loans, it expects the public sector banking to report losses for another year. It added that the large proposed recapitalisation of the public sector banking will help the banks make large haircuts on delinquent loans while still meeting the regulatory capital requirements.

Observing that the Indian PSBs are saddled with 13-15% of weak loans, though the reported non-performing assets (NPAs) are at 10.2% as of September 2017, the US-based agency said it expects Indian banks to accelerate bad loan recognition of the weak loans in the next few quarters. The resolution of these non-performing loans (NPLs) will gain momentum in fiscal 2018 under the new bankruptcy code. It added that fiscal 2019, akin to fiscal 2018, will be the year of rise in provisioning.

On India’s economy front, the report said that gross domestic product (GDP) growth is expected to increase to 7.6% in FY19 and 7.8% in FY20 as against 6.8% in FY18. As per the report, the fading impact of demonetisation and Goods and Services Tax (GST) implementation hurdles and continuing global recovery provide the stimuli to the country's trade and GDP growth. It further said that the banking sector's performance will get a boost from economic expansion and believes its deep protracted credit down cycle is nearing, with a turnaround by FY20.

The CNX Nifty is currently trading at 10186.30, up by 31.05 points or 0.31% after trading in a range of 10147.40 and 10207.85. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.71%, Sun Pharma up by 1.60%, Zee Entertainment up by 1.54%, Indiabulls Housing up by 1.44% and Bharti Infratel up by 1.41%. On the flip side, BPCL down by 2.31%, HPCL down by 1.50%, Wipro down by 1.39%, NTPC down by 1.03% and Indian Oil Corporation down by 0.84% were the top losers.

Asian markets are trading mostly in green; Taiwan Weighted rose 1.37 points or 0.01% to 11,012.44, FTSE Bursa Malaysia KLCI gained 5.53 points or 0.3% to 1,871.33, KOSPI Index increased 12.82 points or 0.52% to 2,497.79, Jakarta Composite added 21.47 points or 0.34% to 6,334.31 and Nikkei 225 was up by 112.27 points or 0.53% to 21,493.24.

On the flip side, Hang Seng decreased 196.47 points or 0.63% to 31,218.05 and Shanghai Composite was down by 26.64 points or 0.81% to 3,254.31.