Key gauges trade lackluster in early noon deals

Indian equity benchmarks are trading lackluster with frontline gauges trading marginally in red in early noon deals as fears of another round of US tariffs on China and rate hike prospects by the Federal Reserve weighed on investors’ sentiment. However, losses remained capped as the Securities and Exchange Board of India (SEBI) has extended the deadline by two months till December for providing a list of beneficial owners, and assured them that issues raised will be looked into by an expert panel, giving relief to foreign portfolio investors. On the global front, most of the Asian counters pared all of their initial losses to trade in green at this point of time, as traders opted to buy beaten down but fundamentally strong stocks. Back home, shares of pharmaceutical companies extended their upward journey with the Nifty Pharma index hitting its 52-week high on the National Stock Exchange (NSE), on positive corporate announcements from Strides Pharma Science and Lupin. Moreover, shares of fast moving consumer goods (FMCG) companies were on a roll with Nestle India, Britannia Industries, Godrej Consumer Products, Dabur India and GlaxoSmithkline Consumer Healthcare have rallied on the BSE in an otherwise subdued market.

The BSE Sensex is currently trading at 38264.86, down by 20.89 points or 0.05% after trading in a range of 38227.36 and 38487.63. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.02%, while Small cap index was down by 0.23%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.93%, FMCG up by 0.72%, IT up by 0.69%, Realty up by 0.63% and TECK was up by 0.54%, while Metal down by 1.47%, PSU down by 0.85%, Bankex down by 0.80%, Basic Materials down by 0.76% and Auto was down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.74%, NTPC up by 0.99%, Hindustan Unilever up by 0.89%, HDFC up by 0.87% and Wipro up by 0.85%. On the flip side, Tata Motors down by 3.29%, Tata Motors - DVR down by 2.59%, Vedanta down by 2.28%, SBI down by 1.96% and Kotak Mahindra Bank down by 1.93% were the top losers.

Meanwhile, global rating agency, Moody’s Investors Service in its latest report has said that the government’s plan to provide Rs 65,000 crore of new capital to public sector banks (PSBs) in the year ending March 2019, will restore capital adequacy and improve loan-loss coverage at many loss making banks, however stress will persist. It noted that of the Rs 65,000 crore, the government has already allocated Rs 11,300 crore to five lenders in July. It added that this capital infusion comes after the capital support of Rs 90,000 crore in the prior year.

According to the report, a large-scale bank recapitalisation plan, which was meant to improve capital buffers and loan-loss reserves and also support sufficiently strong loan growth, will now be just enough to shore up capital ratios above regulatory requirements because the banks' capital shortfalls have grown larger than the government's initial projection. It noted that the PSBs' external capital needs will not grow much further after fiscal 2019 because the banks' profitability will gradually improve as credit costs moderate in tandem with progress in an ongoing balance-sheet cleanup.

The rating agency further said that the capital injections would only help the lenders achieve Common Equity Tier 1 (CET1) ratios of 8 percent by March 2019, satisfying the 2.5 percent conservation buffer on top of the 5.5 percent minimum under Basel III norms in India. It noted that this would give the banks a capitalisation profile comparable to those of their similarly rated peers globally. It added that this means the government has little choice but to increase capital support if it seeks faster loan growth to support economic expansion.

The CNX Nifty is currently trading at 11558.15, down by 12.75 points or 0.11% after trading in a range of 11546.70 and 11620.70. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 1.91%, Power Grid Corporation up by 1.65%, Lupin up by 1.64%, Cipla up by 1.48% and HCL Tech up by 1.31%. On the flip side, Tata Motors down by 3.29%, Indian Oil Corporation down by 2.98%, HPCL down by 2.77%, BPCL down by 2.74% and Vedanta down by 2.22% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 gained 48.27 points or 0.22% to 22,410.82, Taiwan Weighted increased 58.93 points or 0.54% to 10,863.13, Straits Times surged 49.20 points or 1.51% to 3,249.09, KOSPI rose 2.97 points or 0.13% to 2,276.30 and Shanghai Composite was up by 17.01 points or 0.62% to 2,731.62.

On the flip side, Jakarta Composite decreased 0.93 points or 0.02% to 5,943.37 and Hang Seng was down by 152.96 points or 0.55% to 27,774.62.