Markets maintain upbeat trend in late afternoon session

Indian equity indices continued to maintain their upbeat trend supported by positive global cues along with gains in Healthcare, Capital Goods and FMCG sectors. Both Sensex and Nifty trading with around half a percent gain. Investors were eyeing the macro-economic data to be released later today. Sentiments also got boost following the US-North Korea summit in Singapore which ended on a positive note. On the domestic turf, traders took encouragement with report stating that the Reserve Bank of India came out with draft guidelines on loan system for delivery of bank credit to improve discipline among larger borrowers enjoying working capital facility from the banking system. Meanwhile, Communications Minister Manoj Sinha has said that the new telecom policy is expected to be cleared by the Union Cabinet by the end of next month. The government has recently issued the National Digital Communications Policy (NDCP) which aims to provide access to every household with download speed of 50 Mbps, attract investment of around Rs 6.5 lakh crore in the sector and create 4 million new job opportunities with a few years. Moreover, a private report stated that solar installations in India increased by 34% to 3,269 mw in the first quarter of 2018 compared with the fourth quarter of 2017.

On the global front, European markets were trading mostly in red, amid 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. Back home, State Bank of India (SBI) gained traction on reports that the country’s largest lender is looking at recovering more than Rs 400 billion of its stressed assets in the current fiscal. Tata Consultancy Services (TCS) was trading in green on expanding its agreement with M&G Prudential, the UK and European savings and investments business of Prudential plc.

The BSE Sensex is currently trading at 35674.56, up by 191.09 points or 0.54% after trading in a range of 35479.07 and 35725.58. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.54%, while Small cap index was up by 0.40%.

The gaining sectoral indices on the BSE were Healthcare up by 1.85%, Capital Goods up by 0.97%, FMCG up by 0.71%, IT up by 0.64%, Energy up by 0.55%, while Metal down by 0.59%, Telecom down by 0.44%, Basic Materials down by 0.35%, Utilities down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 4.59%, SBI up by 2.34%, Indusind Bank up by 2.14%, Hero MotoCorp up by 2.01% and TCS up by 1.79%. On the flip side, Bharti Airtel down by 1.95%, Tata Steel down by 1.40%, Coal India down by 1.13%, Yes Bank down by 1.00% and Axis Bank down by 0.58% were the top losers.

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 is currently trading at 10837.75, up by 50.80 points or 0.47% after trading in a range of 10789.40 and 10855.90. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Lupin up by 5.03%, Dr. Reddy’s Lab up by 4.51%, SBI up by 2.19%, Indusind Bank up by 2.18% and Hindustan Unilever up by 2.01%. On the flip side, Bharti Airtel down by 2.03%, Hindalco down by 1.98%, Eicher Motors down by 1.56%, UPL down by 1.37% and Tata Steel down by 1.36% were the top losers.

Asian markets were trading mixed; Shanghai Composite surged 27.02 points or 0.89% to 3,079.80, Hang Seng increased 39.36 points or 0.13% to 31,103.06 and Nikkei 225 was up by 74.31 points or 0.33% to 22,878.35. on the other hand, FTSE Bursa Malaysia KLCI slipped 11.64 points or 0.66% to 1,764.16, Taiwan Weighted decreased 4.44 points or 0.04% to 11,144.79 and KOSPI Index was down by 1.32 points or 0.05% to 2,468.83.

European markets were trading mostly in red; UK’s FTSE 100 decreased 16.82 points or 0.22% to 7,720.61 and France’s CAC was down by 10.05 points or 0.18% to 5,463.86, while Germany’s DAX increased 20.51 points or 0.16% to 12,863.42.