Benchmarks trade in fine fettle in early deals; Sensex reclaims 36K mark

Paring all of their initial loses, Indian equity benchmarks are trading in fine fettle in early deals on Friday with frontline gauges recapturing their crucial 36,000 (Sensex) and 10,800 (Nifty) levels  ahead of the Reserve Bank of India (RBI) board meeting later in the day. The central board of the RBI under new Governor Shaktikanta Das will meet on December 14 where the directors are likely to push for greater say in the decision making of the central bank. However, gains remained capped as traders remain concerned about global credit ratings agency Moody’s statement that liquidity constraints faced by some non-bank financial institutions (NBFIs) will likely tighten overall credit supply and slow India’s economic growth rate to just above 7% for the fiscal 2019 and 2020. In addition, any further distress in the Indian NBFI sector will pose significant downside risks to India's growth outlook.

Global cues remained sluggish with all the Asian markets are trading in red as caution returned and the recent recovery in equities showed signs of losing steam. The US markets end mostly lower on Thursday as concerns about a creeping economic slowdown weighted on investor sentiments.

Back home, public sector banking stocks remained in focus with report that the government is considering additional capital infusion of up to Rs 30,000 crore in public sector banks as they have been unable to raise required funds from the markets. Cement sector stocks remained buzzing with report that the Goods and Services Tax (GST) Council is likely to rationalise the 28% slab by cutting tax rates on construction items, like cement, in its meeting next week.

The BSE Sensex is currently trading at 36012.22, up by 82.58 points or 0.23% after trading in a range of 35813.85 and 36019.02. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.52%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Telecom up by 1.47%, Realty up by 0.96%, Oil & Gas up by 0.86%, Basic Materials up by 0.75% and Auto was up by 0.62%, while Consumer Durables down by 0.02% was the lone losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.92%, Tata Motors - DVR up by 1.60%, Asian Paints up by 1.41%, Yes Bank up by 1.09% and ICICI Bank up by 0.86%. On the flip side, Bajaj Auto down by 0.59%, Adani Ports & SEZ down by 0.57%, Maruti Suzuki down by 0.56%, HDFC down by 0.43% and Coal India down by 0.39% were the top losers.

Meanwhile, raising concerns over economic growth, global credit ratings agency, Moody's Investors Service has said that liquidity constraints faced by some non-bank financial institutions (NBFIs) in India, after the default of Infrastructure Leasing & Financial Services (IL&FS) in September 2018, will likely tighten credit supply and the country’s Gross Domestic Product (GDP) growth rate will slow to just a little over 7% for the fiscal 2019 and 2020. Besides, Indian economy grew at 7.1% in the July-September quarter of FY19, lower than 8.2% in April-June.

Moody’s also said that just above 7% growth for fiscal 2019 and 2020, is below an estimated 7.4% outturn in the fiscal year ending March 2018 and below the pick-up in growth that they envisaged a few months ago. It added that any further distress in the NBFI sector will pose significant downside risks to India’s growth outlook. The nation’s NBFIs are an important provider of credit to the country's economy and, in the fiscal year ended March 31, 2018, accounted for nearly 17% of total loans and one third of total retail loans.

The rating agency further said in a downside scenario, a sharper slowdown in NBFI credit supply would significantly tighten overall credit availability, drive up borrowing costs and reduce economic growth by around half a percentage point over a few years. It noted that weaker nominal GDP growth over a prolonged period would weigh on India's fiscal strength and the overall sovereign credit profile.

The CNX Nifty is currently trading at 10810.25, up by 18.70 points or 0.17% after trading in a range of 10752.10 and 10815.75. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.62%, Indian Oil Corporation up by 2.55%, Indiabulls Housing up by 2.06%, Ultratech Cement up by 1.80% and HPCL up by 1.67%. On the flip side, HCL Tech down by 1.81%, Maruti Suzuki down by 0.73%, Bajaj Auto down by 0.72%, Kotak Mahindra Bank down by 0.58% and Indusind Bank down by 0.56% were the top losers.

All the Asian markets are trading in red; Nikkei 225 tumbled 371.17 points or 1.70% to 21,445.02, Straits Times declined 37.98 points or 1.22% to 3,073.10, Hang Seng dropped 364.54 points or 1.37% to 26,159.81, Taiwan Weighted fell 108.52 points or 1.10% to 9,750.24, KOSPI shed 25.09 points or 1.20% to 2,070.46, Jakarta Composite slipped 3.78 points to 6,173.94 and Shanghai Composite was down by 14.98 points or 0.57% to 2,619.07.