Benchmark continue to trade in positive terrain

Mirroring firm global cues, domestic equities continued their positive trend in morning session, with gains of around half a percent, on sustained domestic institutional investor (DII) buying coupled with strengthen in rupee against the dollar. Besides, Asian Paints, Axis Bank, Yes Bank, Vedanta, Sun Pharma, Tata Motors and Reliance Industries gained over 1%. Investors were also looking forward to the quarterly results of IT majors TCS and Infosys that will kick-start the earnings season later this week. Traders were optimistic on a report that despite the global equity market volatility, along with banking sector woes, the macro-economic scenario is extremely positive in India. With growing GDP, legislative reforms such as GST and IBC, India will hit double-digit growth rates soon. Meanwhile, the Union Minister for Commerce and Civil Aviation Suresh Prabhu sought to dispel the notion of other countries that India subsidised its exports. He said the government was merely trying to mitigate the adversities of the exporters, which did not tantamount to subsidising of exports from India. Investors overlooked the former Union finance minister P Chidambaram statement that GDP growth is shrinking, investment flow has dried up and no jobs are being created. Not a single bank is ready to give loans to the industry.

On the global front, Asian markets were trading in green, tracking gains on Wall Street after the release of strong jobs data for June, which muffled the impact of an escalating US-China trade dispute. Back home, on the sectoral front, Pharma stocks jumped over 1% on a private report highlighting that the pharmaceutical industry is likely to report a 17% revenue growth in the June quarter, driven by strong domestic growth and currency tailwinds. In scrip specific development, NMDC gained on reporting 6.87 MT production of iron ore up to June 2018, while Cyient advanced on completing acquisition of remaining 49% stake in Cyient Insights.

The BSE Sensex is currently trading at 35816.24, up by 158.38 points or 0.44% after trading in a range of 35783.55 and 35931.09. 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 0.78%, while Small cap index was up by 0.91%.

The top gaining sectoral indices on the BSE were Metal up by 0.95%, Telecom up by 0.86%, Auto up by 0.84%, Healthcare up by 0.83% and Industrials up by 0.74%, while there were no losing sectoral indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.99%, Yes Bank up by 1.75%, Vedanta up by 1.69%, Sun Pharma up by 1.55% and Asian Paints was up by 1.39%. On the flip side, TCS down by 1.23%, Coal India down by 0.72%, HDFC down by 0.48% and ONGC was down by 0.19% were the top losers.

Meanwhile, amid rising bad loans in banking sector, Fitch Ratings, in its latest report on the banking sector in India and Indonesia, has said the new ‘Sashakt’ scheme to tackle non-performing loans (NPL) through a market-led approach could stabilise balance sheets in the medium term. It also said that a further downside risk exists if bad loan problems and thin loss-absorption buffers persist. But there are many initiatives in the works to repair the books of banks, especially public sector banks. The deteriorating condition of Indian banks means they are relying more on state support. The long-term issuer default ratings (IDRs) of all government banks are based entirely on sovereign support.

The rating agency highlighted the successful resolution of bad loans currently under the National Company Law Tribunal (NCLT) and the government's plan to infuse an additional $11 billion in current financial year (FY19) could stabilise balance sheets over the medium term. It has downgraded the viability ratings of several of these banks over the past four years due to their weakening intrinsic strength.

Besides, it’s the negative sector outlook on Indian banks that has been maintained for several years on account of continuing problems with bad loans and paucity of capital. In the last financial year (FY18), Indian banks reported large losses as the new regulatory NPL framework accelerated bad-loan recognition and pushed up banks' credit costs. As a result, the sector’s NPL ratio rose to 12.1 per cent, from 9.6 per cent in FY17, and 4.1 per cent in FY14. Under Project Sashakt, financial institutions will enter into an inter-creditor agreement to authorise the lead bank to implement a resolution plan in 180 days.

The CNX Nifty is currently trading at 10813.90, up by 41.25 points or 0.38% after trading in a range of 10807.85 and 10844.70. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 2.37%, Axis Bank up by 2.14%, HPCL up by 2.03%, Vedanta up by 1.99% and HCL Tech was up by 1.97%. On the flip side, TCS down by 1.45%, Ultratech Cement down by 1.17%, Titan Company down by 0.74%, HDFC down by 0.65% and Coal India was down by 0.55% were the top losers.

Asian markets were trading in green; Taiwan Weighted gained 115.65 points or 1.08% to 10,724.22, Straits Times strengthened 31.81 points or 0.99% to 3,223.63, Shanghai Composite surged 45.34 points or 1.62% to 2,792.57, Jakarta Composite advanced 64.61 points or 1.12% to 5,759.52, Nikkei 225 soared 256.10 points or 1.16% to 22,044.24, Hang Seng rose 404.46 points or 1.41% to 28,720.08 and KOSPI was up by 8.66 points or 0.38% to 2,281.53.