Sensex, Nifty continue to trade in positive terrain

Stock markets were trading in positive terrain in early noon session due to heavy buying in IT, TECK and FMCG sectors. Axis Bank, Tata Motors and Maruti Suzuki were contributing gains to Sensex. Investors got support with a report that India’s GDP is expected to grow at 7.3 per cent in the fiscal year 2018-19, and 7.5 per cent in the following two years, the World Bank has forecast, attributing it to an upswing in consumption and investment. India will continue to be the fastest growing major economy in the world. Meanwhile, the central government has released Rs 48,202 crore as GST compensation to states during April-November 2018, higher than the Rs 48,178 crore paid in the previous financial year. However, gains remained capped on report that foreign portfolio investors (FPIs) offloaded shares worth a net Rs 553.78 crore on Tuesday.

On the global front, Asian markets were trading in green on back of increasing optimism that the two sides would be able to hammer out a deal ahead of a March deadline and avert further import tariff hikes. Back on street, sugar stocks remained in focus as the government is looking at yet another relief package for sugar companies, and this one could be twice the size of the one announced in September 2018. Textile stocks were buzzing with a private report stating that the Textile and apparel exports, which has recovered in the middle of last year following the sharp depreciation of the rupee has witnessed a surge of 14% year-on-year (y-o-y) to Rs 18,965 crore in November.

The BSE Sensex is currently trading at 36135.63, up by 154.70 points or 0.43% after trading in a range of 36126.80 and 36250.54. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index lost 0.09%, while Small cap index was up by 0.01%.

The top gaining sectoral indices on the BSE were IT up by 0.95%, TECK up by 0.73%, FMCG up by 0.63%, Auto up by 0.49% and Consumer Durables was up by 0.25%, while Oil & Gas down by 1.37%, Metal down by 1.36%, PSU down by 0.89%, Telecom down by 0.83% and Basic Materials was down by 0.54% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.64%, Infosys up by 1.52%, Hindustan Unilever up by 1.32%, Tata Motors up by 1.03% and Maruti Suzuki was up by 0.99%. On the flip side, Tata Steel down by 2.42%, ONGC down by 1.02%, Hero MotoCorp down by 0.95%, Yes Bank down by 0.75% and Vedanta was down by 0.74% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said that the government’s decision to infuse additional Rs 41,000 crore into cash-starved public sector banks (PSBs) for the financial year 2019 is optimistic for these lenders as it will assist them lower their losses on dud loans. It noted that the government had sought Parliament’s approval for infusion of an additional Rs 41,000 crore, taking the total fund infusion to Rs 1.06 trillion in FY19.  It added that with this round, the overall capital infusion into
state-run banks during FY15-FY19 stands at Rs 2.56 trillion.

According to the report, the current round of recapitalisation would enhance the lending capacity of these banks and help them come out of the Reserve Bank's prompt corrective action (PCA) framework. It also pointed out that of the 21 state-owned banks, as many as 11 are under the PCA framework, which imposes lending restrictions on weak banks. It stated that after the merger of Dena and Vijaya Bank with Bank of Baroda (BoB), the number of state-run banks will come down to 19. It added that as a part of capital allocation plan for FY19, recently some state-run lenders have been allocated a relatively higher quantum of capital.

ICRA further said that this capital will enable lenders to reduce their net non-performing advances below the PCA threshold of 6 percent as well as achieving regulatory capital ratios (including capital conservation buffer of 1.875 percent required as of March 2019). Notwithstanding a higher share of capital allocation to some state-owned banks under the PCA, the agency expects capital allocation to other banks under PCA to be limited to enable them to meet the regulatory minimum capital ratios-- 7 percent of tier 1 and 9 percent of CRAR. Despite additional capital infusion, it expects most of these banks currently under the PCA to report second consecutive year of losses in FY19.

The CNX Nifty is currently trading at 10837.65, up by 35.50 points or 0.33% after trading in a range of 10832.95 and 10870.40. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 1.87%, Infosys up by 1.53%, Hindustan Unilever up by 1.39%, Wipro up by 1.37% and Eicher Motors was up by 1.27%. On the flip side, GAIL India down by 3.24%, HPCL down by 2.92%, Tata Steel down by 2.53%, BPCL down by 2.46% and Bharti Infratel was down by 1.88% were the top losers.

All Asian markets were trading in green, Hang Seng increased 680.87 points or 2.63% to 26,556.32, Taiwan Weighted strengthened 176.56 points or 1.85% to 9,740.16, Jakarta Composite soared 27.34 points or 0.44% to 6,290.19, KOSPI rose 40.59 points or 2% to 2,065.86, Shanghai Composite gained 42.77 points or 1.69% to 2,569.23, Straits Times advanced 35.55 points or 1.14% to 3,158.49 and Nikkei 225 was up by 208.25 points or 1.03% to 20,412.29