Post Session: Quick Review

Bulls tightened grip on Dalal Street with both the key indices Sensex and Nifty ending Tuesday’s session on a jubilant note. Sensex and Nifty ended just shy of 35,700 and 10,850 levels respectively. After a positive start, the key indices continued their firm trade throughout the session, as domestic sentiments got boost with a report stating that the Reserve Bank of India has came out with draft guidelines on loan system for delivery of bank credit, in order to improve discipline among larger borrowers with working capital facility from the banking system. Adding some support, finance ministry official said that the government is likely to launch a Rs 500-crore credit enhancement fund next month to facilitate infrastructure investments by insurance and pension funds.

Further, heavy buying in blue-chip stocks and the historic US-North Korea summit in Singapore helped the markets end on a positive note. Optimism remained on the street, as the Union government has formed a new committee under the chairmanship of former Chief Statistician Prof. T.C.A Anant to bring more transparency in employment related data releases. Meanwhile, market participants look forward to the release of key inflation data later in the day.

On the sectoral front, banking stocks were trading higher, supported by finance ministry official’s statement that more banks are unlikely to be brought under the RBI's Prompt Corrective Action (PCA) framework as the situation pertaining to bad loans is expected to improve in the next couple of quarters, while selected telecom stocks ended in green, after Communications Minister Manoj Sinha said that the new telecom policy is expected to be cleared by the Union Cabinet by the end of next month.

On the global front, Asian markets ended mixed, as investors look ahead to key policy meetings at the Federal Reserve and European Central Bank this week. European markets were trading in red, despite President Donald Trump signed a historic agreement with North Korean leader Kim Jong Un. The accord between North Korea and the US aims to work toward complete denuclearization and a lasting peace regime on the Korean Peninsula. Kim said that their agreement will lead to a major change in the world.

The BSE Sensex ended at 35692.52, up by 209.05 points or 0.59% after trading in a range of 35479.07 and 35743.08. There were 17 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.90%, while Small cap index up by 0.54%.(Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 1.94%, Capital Goods up by 1.19%, Industrials up by 0.81%, FMCG up by 0.73% and PSU up by 0.71%, while Metal down by 0.56%, Telecom down by 0.31%, Basic Materials down by 0.29% and Utilities down by 0.15% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddys Lab up by 5.23%, SBI up by 3.36%, Indusind Bank up by 2.41%, Hindustan Unilever up by 2.41% and Hero MotoCorp up by 2.11%. (Provisional)

On the flip side, Bharti Airtel down by 1.98%, Tata Steel down by 1.52%, Coal India down by 1.49%, ONGC down by 1.10% and Yes Bank down by 0.98% were the top losers. (Provisional)

Meanwhile, in order to facilitate infrastructure investments, which are presently facing major headwinds, Kumar Vinay Pratap, joint secretary (infrastructure, policy and finance), ministry of finance (MoF) has said that the government may launch Rs 500 crore credit enhancement fund in July. In the financial year 2016-17 Budget had first proposed setting up of the fund. The fund will operate as a non-banking financial company (NBFC) with 49% government stake. It has got support from investors such as India Infrastructure Finance Company (IIFCL) and Life Insurance Corporation (LIC) of India.

The joint secretary said more than 70% projects worldwide being implemented on SPV (special purpose vehicle) basis have a credit rating of BBB. The regulatory threshold for pension and insurance funds in India provides that people cannot invest below AA. So, in order to remove this mismatch, India is launching a dedicated fund may be next month.

Besides, Kumar Vinay Pratap stated, at present, the banking system does a bulk of infrastructure project financing and exposes itself to asset liability management (ALM) mismatches and hence, alternatives like raising of money through corporate bonds is necessary. He further added that the present state of the banking system, where all the lenders are saddled with NPAs, will also make it necessary to accommodate alternatives. He also said that in the past few year bank lending to the infra segment has slowed down and the annual growth rates plummeted to 3% between FY14 and FY17, against 43% from FY2000 to FY13. The NPAs from the segment have also ballooned to 9% in FY17, from 3 per cent in FY13.

The CNX Nifty ended at 10842.85, up by 55.90 points or 0.52% after trading in a range of 10789.40 and 10856.55. There were 29 stocks advancing against 21 stocks declining on the index. (Provisional)

The top gainers on Nifty were Lupin up by 5.62%, Dr. Reddys Lab up by 5.16%, SBI up by 3.23%, Indusind Bank up by 2.62% and Hindustan Unilever up by 2.31%. On the flip side, Bharti Airtel down by 2.10%, Hindalco down by 1.66%, Eicher Motors down by 1.58%, UPL down by 1.52% and Coal India down by 1.51% were the top losers. (Provisional)

All European Markets were trading in red; UK’s FTSE 100 decreased 24.71 points or 0.32% to 7,712.72, France’s CAC decreased 14.88 points or 0.27% to 5,459.03 and Germany’s DAX decreased 5.23 points or 0.04% to 12,837.68.

Asian equity markets ended mixed on Tuesday amid US President Donald Trump and North Korean leader Kim Jong Un signing a ‘comprehensive’ document committing to work together to ‘build a lasting and stable peace regime on the Korean Peninsula’.  Aside from the summit, investors also awaited cues from three major central bank meetings this week. While the US Federal Reserve is almost certain to raise rates again when it meets on Wednesday, the European Central is likely to signal on Thursday that it will start to wind down its vast bond-buying program by the end of this year. The Bank of Japan also concludes its two-day policy meeting on Friday, with expecting no change to policy. Japanese shares hit a three-week high after US President Trump said he had ‘developed a very special bond’ with North Korean leader Kim Jong Un during their historic summit. The markets in Indonesia remained closed for Eid-Ul-Fitr holiday.