Equity benchmarks extend gains

Indian equity benchmarks extended their gains in late morning session, as traders took some support with global rating agency, Moody’s Investors Service’s latest report stating that economic growth in India is positive for asset-backed securities (ABS), as it supports the ability of borrowers to earn income and repay their loans. The stronger growth will support the ability of borrowers to earn income and repay loans backing ABS deals. Investors also took some encouragement with report stating that Asian Infrastructure Investment Bank (AIIB) will extend a $140 million loan to improve rural connectivity in Madhya Pradesh. The project, co-financed with the World Bank, aims to improve rural road connectivity and management for residents of 5,640 villages who use the rural roads for daily activities. Sentiments remained positive on report that India’s retail inflation eased to 4.1% in March from 4.4% in the previous month. Meanwhile, report which enlightened that Index of Industrial Production (IIP) grew by a healthy 7.1% in February as the manufacturing sector grew at 8.7% in February as compared to almost flat growth of 0.7% in the same month a year ago, also provided some support.

On the global front, the Asian markets were trading mixed. China’s trade balance swung to a deficit of $4.98 billion in March from a $33.7 billion surplus in the February month. Back on domestic turf, in scrip specific development, Ashok Leyland surged on bagging order worth over Rs 100 crore from MoD. Besides, Apollo Pipes edged higher with completing the installation of a rooftop solar plant at its manufacturing facility at Dadri, Uttar Pradesh (UP), with a total capacity of 1.2 MW.

The BSE Sensex is currently trading at 34268.01, up by 166.88 points or 0.49% after trading in a range of 34154.94 and 34288.12. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.82%, while Small cap index was up by 0.75%.

The top gaining sectoral indices on the BSE were Realty up by 1.15%, Metal up by 1.01%, Healthcare up by 0.99%, Telecom up by 0.88% and Basic Materials was up by 0.83%, while Capital Goods down by 0.15% and FMCG was down by 0.09% were the only losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 3.31%, Kotak Mahindra Bank up by 1.66%, Dr Reddys Laboratories up by 1.65%, Bajaj Auto up by 1.30% and ICICI Bank was up by 1.19%. On the flip side, Hindustan Unilever down by 0.66%, SBI down by 0.45%, Larsen & Toubro down by 0.44% and ITC was down by 0.11% were the top losers.

Meanwhile, global rating agency, Moody's Investors Service in its latest report has said that the pick-up in India’s gross domestic product (GDP) growth rate is optimistic for asset-backed securities (ABS), because such growth will support the ability of borrowers to earn income and repay loans backing ABS deals, including auto loans and loans against property to micro, small and medium enterprises (MSMEs). Besides, it expects that growth in the Indian economy will pick up to 7.6% in 2018 from 6.2% in 2017.

The rating agency has stated that Auto ABS delinquency rates will remain stable at current levels through 2018, but delinquency rates for small and medium size enterprise ABS backed by loans against property will continue to rise, even as the higher economic growth in India. On Indian auto ABS, it explained that they are mainly backed by commercial vehicle (CV) loans that will benefit from higher demand for the transportation of freight, as economic growth picks up. It added that the improved demand to move freight will increase the CV operators’ revenues and therefore improve their ability to repay auto loans.

According to the report, while rising fuel costs will moderate the benefit of improving economic growth for CV operators, overall, auto ABS delinquency rates should stay stable throughout 2018. Moreover, it noted that the pick-up in economic growth will support domestic consumption in India. It also said that such a situation is positive for loan against property borrowers, who typically own MSMEs that are highly dependent on consumer demand. However, it stated that delinquency rates for SME ABS will continue to rise in 2018 from the levels in 2017, because of the ongoing disruption to the MSME sector caused by the goods and services tax (GST).

The CNX Nifty is currently trading at 10505.00, up by 46.35 points or 0.44% after trading in a range of 10475.80 and 10513.30. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 3.44%, Indiabulls Housing up by 2.12%, Bharti Infratel up by 1.85%, Hindalco up by 1.76% and Kotak Mahindra Bank was up by 1.56%. On the flip side, BPCL down by 1.43%, HCL Tech down by 1.09%, Larsen & Toubro down by 0.64%, Hindustan Unilever down by 0.62% and Indian Oil Corporation was down by 0.56% were the top losers.

Asian markets were trading mixed; Taiwan Weighted gained 10.1 points or 0.09% to 10,965.39, KOSPI Index surged 10.65 points or 0.44% to 2,453.36, Hang Seng rose by 35.64 points or 0.12% to 30,866.92 and Nikkei 225 was up by 139.3 points or 0.64% to 21,799.58.

On the other flip, Shanghai Composite declined 4.7 points or 0.15% to 3,175.46, FTSE Bursa Malaysia KLCI slipped 4.17 points or 0.22% to 1,869.45 and Jakarta Composite was down by 1.87 points or 0.03% to 6,308.93.