Indian bourses trade flat in early afternoon deals

Indian equity benchmarks traded flat in early afternoon session, as investors remained wary ahead of the Reserve Bank of India's third-bi-monthly monetary policy for fiscal 2019. The sentiments remained in lackluster mood with a report showing that growth in India's manufacturing industry slowed last month, largely pressured by a modest weakening in demand and output, though overall conditions remained solid. The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, decreased to 52.3 in July from June's 53.1. However, traders took some support with report that the Indian economy is likely to have witnessed solid economic growth in the April-June quarter but leading indicators suggest a slowdown in the coming months. The report stated that GDP growth to peak in April-June quarter and then moderate to 7.2% in the second half of 2018 from around 7.8% in first half. On the sectoral front, auto stocks also remained in limelight as companies report their sales number today. Bajaj Auto has registered a rise of 65% in total sales to 404,429 units in June 2018 against, 244,878 units in June 2017. 

On the global front, Asian markets were trading mostly in green, taking cues from the positive session seen in the US market following news that the US and China may restart official talks about their months-long trade dispute. Back home, the BSE Sensex is currently trading at 37596.23, down by 10.35 points or 0.03% after trading in a range of 37507.74 and 37711.87. There were 12 stocks advancing against 18 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.55%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.05%, Healthcare up by 0.98%, Energy up by 0.90%, Consumer Durables up by 0.61% and PSU up by 0.48%, while Auto down by 0.52%, Bankex down by 0.36% and Consumer Disc down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.99%, Coal India up by 1.72%, Power Grid up by 1.70%, Sun Pharma up by 1.48% and Bajaj Auto up by 1.21%. On the flip side, Maruti Suzuki down by 1.85%, Tata Motors - DVR down by 1.84%, Tata Motors down by 1.82%, Axis Bank down by 0.95% and Yes Bank down by 0.75% were the top losers.

Meanwhile, global rating agency Standard and Poor's (S&P) has said that debt-ridden Indian banks are set to strengthen over the next two years as stressed loans are cleared and capital injections from the government shore up eroded capital bases. It noted that the ratings on the banks are more likely to be raised than lowered in the next 2 years. However, it pointed out that weak risk management and internal-control practices limit the potential for considerable upside.

In its report titled 'The Worst Is Almost Over For India's Banks', S&P estimates that Indian banks' recognised non-performing loans (NPLs) now cover a substantial part of weak loans in the system, which comprise about 13-15% of total loans. Besides, it said that a turnaround in the earning performance of India's banks should take place in fiscal 2020 (ending 31 March, 2020). However, it warned that the expected recovery in the banking sector could get delayed if large unexpected NPLs materialise in the agriculture sector. It further cautioned that the loan-against-property segment may also be vulnerable.

The rating agency said this more realistic recognition, coupled with rebounding corporate profits, and quicker resolution of non-performing assets under the new bankruptcy law, will help banks gradually recover from a protracted bad-debt cycle. With more stringent provisions introduced by the Reserve bank of India, it believed that banks will increasingly find it more difficult to window-dress accounts to hide the true level of weak assets. In addition, it said that the government's Rs 2.1 lakh crore bank recapitalisation plan will help shore up depleted capital positions. 

The CNX Nifty is currently trading at 11364.95, up by 8.45 points or 0.07% after trading in a range of 11337.55 and 11390.55. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Lupin up by 2.15%, Coal India up by 2.11%, TCS up by 2.00%, Bajaj Finance up by 1.92% and HPCL up by 1.91%. On the flip side, Maruti Suzuki down by 1.96%, Eicher Motors down by 1.88%, Tata Motors down by 1.70%, Axis Bank down by 1.16% and ICICI Bank down by 0.87% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted increased 40.62 points or 0.37% to 11,098.13, KOSPI surged 11.81 points or 0.51% to 2,307.07, Nikkei 225 rose 192.98 points or 0.85% to 22,746.70 and Straits Times was up by 10.63 points or 0.32% to 3,330.48.

On the other hand, Jakarta Composite decreased 83.99 points or 1.4% to 6,020.43, Hang Seng dipped 128.32 points or 0.45% to 28,454.69 and Shanghai Composite was down by 37.07 points or 1.31% to 2,839.33.