Positive momentum continues in afternoon deals

Indian equity benchmarks continued their positive momentum in afternoon deals, as buying in the equities persisted. Traders remained in jubilant mood with the finance ministry expecting economic growth to accelerate to 7.5% in 2019-20 from 7.2% projected for the current fiscal. The sentiments also got a push with United Nations’ latest report that India is among the several countries that stand to benefit from the ongoing trade tensions between the world's top two economies - the US and China. Adding the optimism among the investors, US retail major Walmart, which invested $16 billion in Flipkart, said it is committed to the Indian market and is optimistic despite recent changes in the FDI policy for e-commerce firms in the country. However, there was some cautiousness too ahead of the outcome of a three-day central bank policy meeting that ends on Thursday.

On the global front, Asian stock markets were trading higher, following the positive cues overnight from Wall Street. However, trading volume remained thin as several markets in the region remain closed for the Lunar New Year holidays. Investors waited to see if US President Donald Trump drops any hints of progress on tariffs in his State of the Union speech. Back home, the BSE Sensex is currently trading at 36853.85, up by 237.04 points or 0.65% after trading in a range of 36680.88 and 36894.25. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.33%, while Small cap index was down by 0.24%.

The top gaining sectoral indices on the BSE were Energy up by 1.23%, TECK up by 1.15%, IT up by 1.10%, Metal up by 0.91% and Oil & Gas up by 0.90%, while Consumer Durables down by 0.50%, Telecom down by 0.33%, Realty down by 0.23%, Healthcare down by 0.17% and Industrials down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.68%, ICICI Bank up by 2.11%, Bajaj Finance up by 2.01%, Bajaj Auto up by 1.71% and Reliance Industries up by 1.53%. On the flip side, Bharti Airtel down by 0.83%, Indusind Bank down by 0.73%, Vedanta down by 0.65%, NTPC down by 0.54% and Axis Bank down by 0.25% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has warned that around Rs 3.5 lakh crore or 3.9 percent of the stressed corporate loans continue to remain unrecognised on the books of banks, while around Rs 1.5-2 lakh crore or 40 percent of them may slip into NPAs by September 2020. It indicated that as of September 2018, these accounts constitute the total stressed corporate exposure (interest coverage ratio of 1.5x) of 19.3 percent or Rs 13.5-14 lakh crore.

According to the report, banks have recognised only Rs 10 lakh crore out of the Rs 13.5-14 lakh crore stressed corporate loans as of September 2018. It also stated that banks may require an additional of Rs 40,000 crore in provisions for these Rs 1.5-2 lakh crore loans, which may become dud assets. It expects state-run banks would require incremental capital of about Rs 66,000 crore from the fourth quarter of FY19 through FY20, which is needed for a credit expansion of 10-11 percent in FY19 and FY20 each. However, it pointed out that this capital infusion is not adequate to cover the impact of Ind-AS which could be substantial.

Besides, the agency has maintained a stable outlook on large private sector banks and just two of the 19--State Bank of India and Bank of Baroda-and has retained a negative outlook for the remaining state-run banks till FY20. It said in FY20, all banks on which we have a stable outlook might see moderate write-backs of provisions on corporate assets, depending on the pace of resolutions.

The CNX Nifty is currently trading at 11020.30, up by 85.95 points or 0.79% after trading in a range of 10962.70 and 11022.40. There were 41 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 6.73%, Tech Mahindra up by 5.93%, Grasim Industries up by 2.88%, Tata Steel up by 2.63% and HPCL up by 2.44%. On the flip side, Dr. Reddys Lab down by 2.00%, Adani Ports &SEZ down by 1.50%, Indusind Bank down by 1.09%, Bharti Airtel down by 0.97% and Titan Co down by 0.89% were the top losers.

Several markets in Asia are closed for the Lunar New Year holiday. Nikkei 225 surged 29.61 points or 0.14% to 20,874.06 and Jakarta Composite soared 61.43 points or 0.95% to 6,542.88.