Benchmarks make optimistic start on ease in geopolitical tensions

Indian equity benchmarks made an optimistic start and are trading with traction in early deals with frontline gauges recapturing their crucial 35,100 (Sensex) and 10,700 (Nifty) levels, as tensions in the Korean Peninsula eased after a spectacularly successful inter-Korean summit. Traders took some encouragement with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India’s economy to grow by at least 7.5 per cent in 2018-19 on the back of improvement in investment cycle and capacity utilisation. The government should now concentrate on consolidating the reform initiatives undertaken in the last 47 months, he added. Some support also came with report stating that the Reserve Bank of India (RBI) is withdrawing a restriction that limited foreign investors to only investing in government and corporate bonds with tenures of three years or more, a move that could bolster the domestic bond market.

Global cues too remained supportive with Asian markets rallying at this point of time as investors focused on a mix of ebbing geopolitical tensions, robust earnings and economic data. The US markets showed a lack of direction over the course of the trading day on Friday following the rally seen in the previous session.

Back home, Fitch has kept India’s rating unchanged with a stable outlook, saying the rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment. In scrip specific developments, Kalpataru Power Transmission surged on bagging orders worth Rs 1,463 crore and Dilip Buildcon gained with arm executing concession agreement with NHAI.

The BSE Sensex is currently trading at 35108.65, up by 138.95 points or 0.40% after trading in a range of 35004.00 and 35198.43. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.25%, while Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were IT up by 1.39%, TECK up by 1.21%, Capital Goods up by 0.91%, Healthcare up by 0.85% and Industrials was up by 0.72%, while Energy down by 2.06%, Oil & Gas down by 1.09%, Utilities down by 0.06% and Metal was down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.01%, Mahindra & Mahindra up by 1.81%, Wipro up by 1.74%, Tata Motors - DVR up by 1.72% and TCS up by 1.71%. On the flip side, Reliance Industries down by 3.24%, Axis Bank down by 3.22%, ICICI Bank down by 0.78%, NTPC down by 0.35% and ONGC down by 0.03% were the top losers.

Meanwhile, citing weak fiscal position and lack of structural factors, global ratings agency, Fitch Ratings has retained ‘BBB-’ rating, the lowest investment grade, with a stable outlook for India. This rating was assigned to the country 11 years ago. Besides, the rating agency has forecasted the country’s economic growth at 7.3% for the current fiscal year 2018-19 (FY19) and said that growth will accelerate to 7.5% in FY20. For year ended March 31, 2017, the gross domestic product (GDP) growth is projected at 6.7%.

Fitch Ratings has said that the India’s rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment. It added that the Stable Outlook reflects Fitch’s assessment that upside and downside risks to the ratings are broadly balanced.

The rating agency further said that the country’s fiscal finances are weak but current account deficit position is favourable. It also said per capita GDP is the lowest among ‘BBB’ range peers and continued structural reform implementation should enhance productivity. It added that India has the highest medium-term growth potential among the largest emerging markets.

The CNX Nifty is currently trading at 10728.05, up by 35.75 points or 0.33% after trading in a range of 10704.60 and 10755.90. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Lupin up by 2.07%, HCL Tech up by 2.05%, Yes Bank up by 1.85%, TCS up by 1.74% and SBI up by 1.69%. On the flip side, Reliance Industries down by 3.44%, Axis Bank down by 3.17%, UPL down by 2.12%, BPCL down by 1.36% and GAIL India down by 0.71% were the top losers.

Asian markets are trading in green; FTSE Bursa Malaysia KLCI gained 1.16 points or 0.06% to 1,864.63, KOSPI Index jumped 17.85 points or 0.72% to 2,510.25, Jakarta Composite rose 39.35 points or 0.66% to 5,958.59, Taiwan Weighted surged 94.24 points or 0.89% to 10,647.67 and Hang Seng was up by 458.09 points or 1.51% to 30,738.76.