Post Session: Quick Review

Extending previous session’s northward journey, Indian equity benchmarks ended Thursday’s trade on an optimistic note, with Sensex settling above crucial 35,900 mark, while Nifty ended just shy of 10,800 mark. Markets started off with marginal gains, as traders took some support with private report that India will remain the fastest growing major economy, much ahead of China, in the next decade 2019-28. But traders soon turned cautious with report that the Goods and Services Tax (GST) Council has deferred a decision on tax rates on real estate and lottery till February 24, and extended the deadline for businesses to file sales returns for January till February 22 for all states; and February 28 for Jammu & Kashmir.

Indian markets erased all losses and gained some momentum in noon trade, as sentiment turned optimistic with the Finance Ministry expecting bad loan recoveries to touch Rs 1.80 lakh crore during the current fiscal with two major cases at the final stage of resolution. Buying further crept in with Prime Minister Narendra Modi’s statement that the Indian economy is based on sound fundamentals and will in the near future double in size to $5 trillion. The government’s decision to infuse Rs 48,239 crore in 12 PSU banks was also supporting the markets. Traders also took a note of EPFO data showing that employment generation in the formal sector almost trebled to touch a 16-month high of 7.16 lakh in December 2018 compared to 2.37 lakh in the year-ago month. Around 72.32 lakh new subscribers were added to social security schemes of the EPFO from September 2017 to December 2018.

On the global front, Asian markets ended mixed on Thursday, after the Federal Reserve left open the possibility it could lift interest rates this year, while investors kept an optimistic eye on China-US trade talks. European markets were trading mostly in red, as Turkey consumer confidence eased for the third consecutive month in February. The figures from the Turkish Statistical Institute showed that the consumer confidence index declined to 57.8 in February from 58.2 in January. The reading was the lowest in three months.

The BSE Sensex ended at 35907.38, up by 151.12 points or 0.42% after trading in a range of 35707.29 and 35983.07. There were 18 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.92%, while Small cap index was up by 1.08%. (Provisional)

The top gaining sectoral indices on the BSE were Basic Materials up by 1.32%, Metal up by 1.19%, Healthcare up by 1.05%, Consumer Durables up by 1.02% and Energy up by 0.89%, while IT down by 0.31% and TECK down by 0.18% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 2.91%, Tata Motors - DVR up by 2.80%, Vedanta up by 2.62%, Bajaj Finance up by 1.89% and Sun Pharma up by 1.82%. (Provisional)

On the flip side, Yes Bank down by 1.22%, Infosys down by 0.90%, Coal India down by 0.72%, NTPC down by 0.51% and Indusind Bank down by 0.50% were the top losers. (Provisional)

Meanwhile, in a bid to take public sector banks (PSBs) out of Reserve Bank of India’s (RBI) prompt corrective action framework, the Finance Ministry has decided to recapitalise 12 PSBs with capital infusion of Rs 48,239 crore in this fiscal to help them maintain regulatory capital requirements and finance growth plans. Financial Services Secretary Rajiv Kumar said with this funding, the total amount of capital infusion would increase to Rs 1,00,958 crore of the planned recapitalisation of Rs 1.06 lakh crore for PSBs for the current fiscal. The remaining Rs 5,000 crore capital infusion would be used as buffer for any contingency or growth capital for Bank of Baroda which is in the process of merging Dena Bank and Vijaya Bank with itself.

Corporation Bank is the biggest beneficiary of this round of capital infusion with Rs 9,086 crore of funding, followed by Allahabad Bank with Rs 6,896 crore. Explaining the rationale for giving higher capital to these two banks, Kumar said equipping these two better performing banks, currently under the Prompt Corrective Action (PCA) supervision of the RBI, would help meet requisite capital thresholds of 7.375 CET-1 ratio, 8.875% Tier I ratio, 10.875% of capital-to-risk weighted assets ratio (CRAR) and the net NPA ratio threshold of below 6%.

Further, Rs 4,638 crore and Rs 205 crore will be provided to Bank of India and Bank of Maharashtra. These banks have recently come out of the regulatory supervisory framework PCA of the RBI. Kumar further said Punjab National Bank will get Rs 5,908 crore, Union Bank of India Rs 4,112 crore, Andhra Bank Rs 3,256 crore and Syndicate Bank Rs 1,603 crore. The government will pump in Rs 12,535 crore in four other banks under PCA -- Central Bank of India, United Bank, UCO Bank and Indian Overseas Bank. The government in December had increased the outlay by Rs 41,000 crore for infusion in PSBs. Subsequently, the government infused Rs 28,615 crore into 7 PSBs through recapitalisation bonds.

The CNX Nifty ended at 10793.60, up by 58.15 points or 0.54% after trading in a range of 10721.50 and 10808.85. There were 36 stocks advancing against 14 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing Finance up by 6.49%, Bajaj Finserv up by 3.47%, Tata Motors up by 2.97%, Dr. Reddys Lab up by 2.73% and Vedanta up by 2.59%. (Provisional)

On the flip side, BPCL down by 1.42%, Bharti Infratel down by 1.34%, Yes Bank down by 1.29%, Infosys down by 0.92% and Indusind Bank down by 0.66% were the top losers. (Provisional)

European markets were trading mostly in red; UK’s FTSE 100 decreased 47.73 points or 0.66% to 7,180.89 and France’s CAC dropped 4.16 points or 0.08% to 5,191.79, while Germany’s DAX gained 23.41 points or 0.21% to 11,425.38.

Asian markets ended mostly higher on Thursday following a report that the United States and China were outlining agreements on the stickiest trade issues. Dovish signals from the US Federal Reserve also lent some support. Japanese shares ended higher as optimism over US-China trade talks helped investors shrug off weak manufacturing data. Japan's manufacturing sector slipped into contraction in February, the latest survey from Nikkei revealed with a 32-month low manufacturing PMI score of 48.5. That's down from 50.3 in January. Meanwhile, Chinese shares ended modestly lower after a spokesman for China's Ministry of Foreign Affairs said the country would not use the yuan's exchange rate as a bargaining chip to deal with trade dispute. Investors also bet that Beijing will not resort to aggressive interest rate cuts to spur the slowing economy, despite stronger yuan and cooling inflation.