Local equities trade with traction

Local equities continued to trade with traction in late morning session, as buying activity remained optimistic across all sectors on improved investor confidence on a report that India’s economic growth momentum is likely to pick up further in the April-June period and the country is expected to clock GDP growth of 7.5% in this financial year. Meanwhile, the Indian rupee was trading three paise up against the United States dollar at 68.68. Major contributors to the markets are Metal, Healthcare, Bankex and PSU counters. Nifty Midcap and the BSE MidCap, both are trading with optimism. The traders overlooked former Reserve Bank Governor C Rangarajan’s statement that the full implementation of recent hike in Minimum Support Prices (MSP) for some of the agricultural products may push financial system under stress. Meanwhile, a report also highlighted that the revenue collection might fall in the next 3-4 months due to rate cuts on a number of items totalling to Rs 70,000 crore.

On the global front, Asian markets were trading mixed, following a tech-led rise on Wall Street, although the latest exchange of trade threats between Beijing and Washington limited gains and drove safehaven flows to the dollar, which brushed a two-week high. Back on the domestic turf, in scrip specific development, State Bank of India (SBI) gained over 1% on a report that National Highways Authority of India (NHAI) will ink pact with SBI for a long-term unsecured loan to the tune of Rs 25,000 crore. This is SBI's highest long-term unsecured loan to any entity and also the largest ever loan sanctioned to NHAI.

The BSE Sensex is currently trading at 37437.91, up by 272.75 points or 0.73% after trading in a range of 37319.61 and 37456.50. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.17%, while Small cap index was up by 1.01%.

The top gaining sectoral indices on the BSE were Metal up by 1.37%, Healthcare up by 1.24%, Bankex up by 0.98%, PSU up by 0.95%, Industrials up by 0.94%, while there were no losing sectoral indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.22%, Yes Bank up by 2.03%, Axis Bank up by 1.57%, ICICI Bank up by 1.53% and HDFC was up by 1.45%. On the flip side, Asian Paints down by 0.31%, Wipro down by 0.20% and HDFC Bank was down by 0.13% were the few losers.

Meanwhile, expressing concerns over financial system of India, Former Reserve Bank of India (RBI) Governor C Rangarajan has said that full implementation of recent hike in Minimum Support Prices (MSP) for some of the agricultural products may push financial system under stress. He added that any steep rise in crude prices can pose severe problems for the country’s balance of payments. Recently, the government hiked the minimum support price for paddy by a steep Rs 200 per quintal as it looked to fulfil its poll promise to give farmers 50% more rate than their cost of production.

Rangarajan said ‘The trade war can get worse. Any steep rise in crude prices can pose severe problems for our balance of payments. The banking system is still under great stress. For a strong growth, we need a strong banking system. The fisc can come under stress if some of the new commitments such as the full implementation of new MSPs for agricultural commodities are to be fulfilled. Much depends on good governance.’

On the growth front, former RBI Governor said that the India economy after performing below potential for nearly four quarters beginning last quarter of 2016-17 showed a strong pick up in the last quarter 2017-18. He added that the expectation is that the overall growth in 2018-19 will be the little above 7%. He also said how much higher over 7% depends on a number of factors. He noted that the external environment is disturbing.

The CNX Nifty is currently trading at 11331.55, up by 86.85 points or 0.77% after trading in a range of 11294.55 and 11335.10. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 4.92%, Vedanta up by 2.54%, Yes Bank up by 2.39%, Dr. Reddy’s Lab up by 2.12% and Lupin was up by 1.93%. On the flip side, Tech Mahindra down by 1.27%, Wipro down by 0.41%, HDFC Bank down by 0.33%, Asian Paints down by 0.19% and Bharti Infratel was down by 0.14% were the top losers.

Asian markets were trading mixed; KOSPI strengthened 12.18 points or 0.53% to 2,282.38, Taiwan Weighted advanced 62.34 points or 0.57% to 10,992.11, Nikkei 225 gained 16.70 points or 0.07% to 22,529.23 and Shanghai Composite was up by 2.12 points or 0.08% to 2,770.14.

On the other hand, Hang Seng declined 41.26 points or 0.15% to 27,673.30, Jakarta Composite slipped 12.88 points or 0.21% to 5,998.84 and Straits Times was down by 6.68 points or 0.2% to 3,279.64.