Benchmarks trade with traction in early deals

Indian equity benchmarks made an optimistic start and are trading in fine fettle in early deals on Wednesday amid firm cues from regional counters. Sentiments remained up-beat with ICRA’s report that  while the number of insolvency cases are expected to pile up over the next few quarters, timely conclusion of cases within the law mandated 180-270 days can free up as much as Rs 67,000 crore to the system. Traders also took encouragement with the annual index releasing by an anti-graft watchdog that India has improved its ranking on a global corruption index in 2018, while its neighbour China lagged far behind. Besides, India Ratings has said income support as a core centrally sponsored scheme is a better option than debt waiver. Meanwhile, Commerce and Industry Minister Suresh Prabhu said that India is optimally leveraging technology to offer various services on digital platforms and is poised to take full advantage of new generation of technological advancements.

On the global front, Asian markets are trading mostly in green at this point of time as the earnings season rolled on and investors awaited the Federal Reserve’s policy meeting. The US markets ended mostly lower on Tuesday as investors sorted through a fresh batch of earnings reports and awaited clarity from the Federal Reserve on its monetary policy plans.

Back home, banking sector stocks edged higher with SBI in its Ecowrap report stating that Public sector banks (PSBs) will require another Rs 50,000 crore fund infusion in 2019-20 to help enable credit growth of 11 per cent. In scrip specific developments, HCL Technologies gained on reporting 25% rise in Q3 consolidated net profit and Asian Paints surged on commencing commercial production at Vishakhapatnam plant.

The BSE Sensex is currently trading at 35706.59, up by 114.09 points or 0.32% after trading in a range of 35671.94 and 35850.41. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.15%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Metal up by 1.33%, Bankex up by 1.20%, Basic Materials up by 0.85%, Capital Goods up by 0.56% and Industrials was up by 0.50%, while Realty down by 0.54%, FMCG down by 0.38%, Power down by 0.05%, Oil & Gas down by 0.02% and TECK down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 5.01%, ICICI Bank up by 3.99%, Tata Steel up by 3.20%, Yes Bank up by 2.47% and Bajaj Finance up by 2.31%. On the flip side, HDFC Bank down by 1.32%, Hero MotoCorp down by 1.02%, HDFC down by 0.97%, Power Grid Corporation down by 0.89% and Bajaj Auto down by 0.73% were the top losers.

Meanwhile, in a bid to help enable credit growth of 11%, SBI in its 'Ecowrap' report has stated that public sector banks (PSBs) will require fund infusion of another Rs 50,000 crore in 2019-20. In December 2018, the government enhanced bank recapitalisation outlay from Rs 65,000 crore to Rs 1,06,000 crore for the current fiscal. As of December 2018, a total amount of Rs 51,513 crore has been infused into PSBs.

SBI said ‘We also request that government should infuse the promised recapitalisation amount of Rs 54,487 crore (net of promised Rs 1,06,000 crore) by March 2019. This will act as a big enabler for banks. For the record, PSBs may require another Rs 50,000 crore of growth capital in FY20’. It added that this one year window has afforded an opportunity to PSBs by an estimated relief of around Rs 35,000-38,000 crore.

As per the report, assuming an 11% credit growth in FY20 with credit risk weighted assets of 70% (RWAs to Gross Advances ratio declined from 80.26% in Sep-17 to 71.20% in Sep-18), PSBs may be requiring around Rs 50,000 crore growth capital in FY20. However, it said the same also depends upon some major variables that is alternate long term investor, recoveries from NCLT, investment environment, out of NCLT settlements, MTM provisioning of investments, additional or provision write-back.

The CNX Nifty is currently trading at 10676.85, up by 24.65 points or 0.23% after trading in a range of 10667.50 and 10710.20. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 4.42%, ICICI Bank up by 3.86%, Tata Steel up by 3.20%, Bajaj Finance up by 2.16% and HCL Tech up by 2.05%. On the flip side, BPCL down by 1.44%, Adani Ports &Special down by 1.39%, HDFC down by 1.31%, Indiabulls Housing down by 1.26% and Hero MotoCorp down by 1.20% were the top losers.