Benchmarks manage to keep head above water

Indian equity benchmarks have made a positive start and are trading slightly in the green terrain in early deals, as traders took encouragement with the Organization for Economic Cooperation and Development’s (OECD) statement that India’s economy will grow close to 7.5% in 2019 and 2020. India’s gross domestic product (GDP) grew 6.7% in 2017-18. Some support also came with SBI Research report stating that following decline in oil prices, the country’s current account deficit (CAD) is expected to touch 2.6% of GDP in the current fiscal against an earlier expectation of 2.8%. Traders reacted positively to the Reserve Bank of India’s (RBI) report that the country’s foreign exchange reserves rose by $568.9 million to $393.580 billion in the week to November 16, mainly due to a spurt in foreign currency assets.

Global cues too remained supportive with all the Asian markets trading in green at this point of time, as investors tentatively pick up cheap stocks, with focus on an expected meeting between Donald Trump and Xi Jinping at the weekend that will be watched for signs of a softening in the China-US trade war. The US markets slipped on Friday as oil prices tumbled to their lowest levels in more than a year, dragging shares of energy companies lower.

Back home, aviation industry stocks flying higher with report that the Goods and Services Tax (GST) Council is likely to bring in two petroleum products - natural gas and aviation turbine fuel (ATF) - under the ambit of the new indirect tax system soon. Gems and jewellery sector related stocks are shining with Commerce and Industry Minister Suresh Prabhu’s statement that he has taken up with the finance ministry the issue concerning credit to the gems and jewellery sector to ensure adequate availability of funds for them.

The BSE Sensex is currently trading at 35011.61, up by 30.59 points or 0.09% after trading in a range of 34974.18 and 35184.93. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.06%, while Small cap index was down by 0.17%.

The top gaining sectoral indices on the BSE were Telecom up by 1.42%, Capital Goods up by 0.48%, Oil & Gas up by 0.47%, Energy up by 0.46% and Power was up by 0.39%, while IT down by 1.44%, TECK down by 0.98%, Consumer Durables down by 0.77%, Metal down by 0.54% and Basic Materials down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.15%, Power Grid Corporation up by 1.31%, Asian Paints up by 1.31%, HDFC Bank up by 1.12% and Axis Bank up by 0.96%. On the flip side, Yes Bank down by 5.37%, ONGC down by 2.37%, Adani Ports & SEZ down by 2.00%, Infosys down by 1.87% and Tata Motors down by 1.73% were the top losers.

Meanwhile, after the expected modification of guidelines and apparent improvement in bottom-line of the public sector banks, the finance ministry is expecting that 3-4 banks would come out of the Reserve Bank of India’s (RBI) Prompt Corrective Action (PCA) watch list in current financial year (FY19).

Of the 21 state-owned banks, 11 are under the PCA framework, which imposes lending and other restrictions on weak lenders. These are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra. The RBI recently in its central board meeting had decided the issue of banks under PCA will be examined by Board for Financial Supervision (BFS) of the central bank.

Besides, the PCA framework kicks in when banks breach any of the three key regulatory trigger points namely capital to risk-weighted assets ratio, net non-performing assets (NPA) and return on assets (RoA). Globally, PCA kicks in only when banks slip on a single parameter of capital adequacy ratio.

The CNX Nifty is currently trading at 10538.30, up by 11.55 points or 0.11% after trading in a range of 10526.15 and 10584.95. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.72%, Bharti Airtel up by 2.49%, HPCL up by 2.39%, Bharti Infratel up by 1.86% and Bajaj Finserv up by 1.51%. On the flip side, Yes Bank down by 5.19%, ONGC down by 2.40%, Tech Mahindra down by 2.19%, UPL down by 2.08% and Adani Ports & SEZ down by 2.05% were the top losers.

All the Asian markets are trading in green; Nikkei 225 increased 126.86 points or 0.58% to 21,773.41, Taiwan Weighted jumped 86.43 points or 0.89% to 9,753.73, Straits Times gained 27.78 points or 0.9% to 3,080.27, Jakarta Composite rose 3.34 points or 0.06% to 6,009.54, Hang Seng surged 439.43 points or 1.67% to 26,367.11, KOSPI soared 21.39 points or 1.03% to 2,078.87 and Shanghai Composite was up by 7.48 points or 0.29% to 2,586.96.