Key benchmarks extend gains in late morning session

Indian equity benchmarks extended their gains in late morning session, ahead of macro-economic data - index of industrial production (IIP) and consumer price index (CPI).  Investors took some encouragement with private report stating that digital transformation will add an estimated $ 154 billion to India’s GDP by 2021. By the year 2021, around 60 per cent of the country's Gross Domestic Product (GDP) is expected to be derived from digital products and services. Market-men also took some support from a private report which stated that FDI inflows have increased by 34% to an average of $10.2 billion quarterly, since the BJP came to power in mid-2014. The report notes that FDI inflows in India have nearly doubled to $42 billion in FY17. As per the global firm’s estimates, annual FDI inflows will rise further to around $75 billion over the next 5 years. Traders shrugged off the International Monetary Fund’s (IMF) report stating that it is optimistic on the outlook for global growth but warned darker clouds are looming due to fading fiscal stimulus and rising interest rates. The trade conflict between the United States and China is creating significant uncertainty for businesses and their global supply chains.

On the global front, most of the Asian stocks were under pressure as threat of imminent US military action in Syria rattled investors and sent oil prices to their highest levels since late 2014 on concerns about supply. Back on domestic turf, banking stocks were trading in red, despite CRISIL’s report stating that the Reserve Bank of India’s (RBI) recent decision to relax provisioning norms for banks and permitting them to spread mark-to-market (MTM) losses on investments will provide the much-needed breather of Rs 27,000 crore to banks by reducing their provisioning burden. In scrip specific development, BEL surged on signing Memorandum of Understanding with L&T. The MoU is to share their expertise in design, development, engineering and manufacturing to develop. Besides, Capacite Infraprojects strengthened on bagging contract worth of Rs 162.67 crore, from Sea View Developers, a Brookfield Investee Company for Civil and Structure work package for construction of Tower 11 and Multi Level Car Park.

The BSE Sensex is currently trading at 34041.21, up by 100.77 points or 0.30% after trading in a range of 33924.88 and 34055.36. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.08%, while Small cap index was up by 0.21%.

The top gaining sectoral indices on the BSE were IT up by 2.71%, TECK up by 2.12%, Consumer Durables up by 0.41%, Auto up by 0.28% and Industrials was up by 0.25%, while Oil & Gas down by 0.97%, Metal down by 0.81%, Telecom down by 0.78%, PSU down by 0.77% and Realty was down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.23%, Infosys up by 2.87%, Tata Motors up by 2.11%, ICICI Bank up by 1.46% and Tata Motors - DVR was up by 1.35%. On the flip side, Dr Reddys Laboratories down by 1.98%, SBI down by 1.32%, Sun Pharma down by 1.10%, Adani Ports down by 1.06% and ITC was down by 0.87% were the top losers.

Meanwhile, Credit ratings agency, Crisil Ratings in its latest report has said that the Reserve Bank of India’s (RBI) recent decision to relax provisioning norms for banks and permitting them to spread mark-to-market (MTM) losses on investments incurred in the third and fourth quarters of FY18 across four quarters, will provide the much-needed breather of Rs 27,000 crore to banks by reducing their provisioning burden for the fourth quarter of fiscal 2018.

According to the report, profitability of banks has come under intense pressure as provisioning requirements have been rising with ageing of non-performing assets (NPAs), withdrawal of various restructuring schemes prior to February 2018 causing an increase in NPAs, and massive spike in bond yields since September 2017 leading to significant MTM losses in their gilt investments. It also noted that accounting for the MTM losses over four quarters would mean nearly Rs 8,000 crore provisioning relief including write-backs for banks in the last quarter of fiscal 2018. It added that another relief worth Rs 19,000 crore, in the form of lower provisioning or write-back, would also ensue because the RBI has permitted banks to achieve 50 percent provisioning on accounts referred to NCLT by June 2018 instead of March as stipulated earlier.

However, the ratings agency has stated that in fiscal 2018-19, operating profitability of banks should stabilise on the back of incremental credit growth and lower interest reversals after reduction in fresh slippages to NPAs but overall, bottom lines will remain under pressure because of high provisioning burden stemming from the large stock of NPAs. Besides, it pointed out that in the current fiscal, recoveries are expected from the resolution of few large accounts under the IBC, especially from the steel sector. It said “that should provide some offset to the high provisioning requirements”.

The CNX Nifty is currently trading at 10429.45, up by 12.30 points or 0.12% after trading in a range of 10395.25 and 10437.55. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 3.84%, TCS up by 3.35%, Infosys up by 2.83%, Tech Mahindra up by 2.25% and Tata Motors was up by 1.60%. On the flip side, BPCL down by 2.72%, HPCL down by 2.54%, Indian Oil Corporation down by 2.42%, Dr Reddys Laboratories down by 2.02% and Lupin was down by 1.70% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite slipped 58.1 points or 0.91% to 6,302.84, Hang Seng fell by 57.17 points or 0.19% to 30,840.54, Nikkei 225 losses 19.7 points or 0.09% to 21,667.40, Taiwan Weighted dropped 18.73 points or 0.17% to 10,955.29, Shanghai Composite declined 11.43 points or 0.36% to 3,196.65 and FTSE Bursa Malaysia KLCI was down by 3.23 points or 0.17% to 1,866.66.

On the other flip, KOSPI Index was up by 3.66 points or 0.15% to 2,447.88.