Markets trade higher with marginal gains in early deals

Indian equity markets made a cautious start and are trading in green with marginal gains in early deals on Thursday with taking support from rally in global markets. Besides, BSE Mid cap and Small cap outperforming larger peers with gains of around half a percent each. Sentiments got support with private report that India will remain the fastest growing major economy, much ahead of China, in the next decade 2019-28. Some support also come 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. However, gains remained capped as traders are concerned with the commerce and industry ministry’s data showing that foreign direct investment (FDI) into India contracted by 7% to $33.49 billion during April-December in the current fiscal. Foreign fund inflows during April-December 2017-18 stood at $35.94 billion. A decline in foreign inflows could put pressure on the country's balance of payments and may also impact the value of the rupee. Some cautiousness also came in 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.

On the global front, all the Asian markets were trading higher on Thursday after the US Federal Reserve affirmed it would be ‘patient’ on further interest rate rises and as Sino-US trade talks hinted of progress towards a deal in their tariff war. Back home, on the sectoral front, banking stocks are trading in green with the government’s announcement of final recapitalisation tranche amount of Rs 48,239 crore for as many as 12 public sector banks, in a bid to take them out of RBI’s prompt corrective action framework. Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das would be holding a meeting, later in the day, with the CEOs and MDs of the banks, both public and private sector, to discuss the issue of transmission of rate cuts by the central bank to the actual loans being disbursed by the banking sector.

The BSE Sensex is currently trading at 35760.88, up by 4.62 points or 0.01% after trading in a range of 35732.72 and 35851.41. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.45%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Basic Materials up by 0.81%, Metal up by 0.76%, Utilities up by 0.54%, BANKEX up by 0.45%, PSU was up by 0.34%, while Telecom down by 0.91%, TECK down by 0.66%, IT down by 0.63%, Capital Goods down by 0.11% and Auto was down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.06%, Vedanta up by 1.78%, ONGC up by 1.49%, Hindustan Unilever up by 0.86% and Tata Steel was up by 0.72%. On the flip side, Infosys down by 1.45%, Bharti Airtel down by 1.15%, Yes Bank down by 1.03%, Mahindra & Mahindra down by 0.78% and Coal India was down by 0.53% were the top losers.

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 is currently trading at 10741.35, up by 5.90 points or 0.05% after trading in a range of 10723.55 and 10756.95. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 2.16%, GAIL India up by 1.96%, Grasim Industries up by 1.76%, ONGC up by 1.56% and Vedanta was up by 1.56%. On the flip side, BPCL down by 3.30%, Bharti Infratel down by 2.83%, Infosys down by 1.38%, Yes Bank down by 1.10% and Bharti Airtel was down by 0.86% were the top losers.

All the Asian markets were trading in green, Hang Seng increased 150.06 points or 0.53% to 28,664.11, Nikkei 225 surged 80.90 points or 0.38% to 21,512.39, Taiwan Weighted strengthened 12.84 points or 0.12% to 10,285.30, KOSPI rose 0.68 points or 0.03% to 2,230.44, Straits Times advanced 3.89 points or 0.12% to 3,282.27, Jakarta Composite soared 7.42 points or 0.11% to 6,520.20 and Shanghai Composite was up by 10.06 points or 0.36% to 2,771.28.