Benchmarks trade jubilantly; Nifty surpasses 11,250 mark

Indian equity benchmarks mad a gap-up opening and are trading jubilantly in early deals with frontline gauges surpassing their crucial 37,300 (Sensex) and 11,250 (Nifty) levels ahead of macroeconomic data such as Index of Industrial Production (IIP) and Consumer Price Index (CPI) to be announced after the market hours. Sentiments remained upbeat with report that in a major overhaul of oil and gas exploration permits, the government will not charge any share of profit on hydrocarbons produced from less explored areas as it looks to attract the elusive private and foreign investment to raise domestic output. Traders took note of report that the Reserve Bank of India’s (RBI) board, which included the present Governor Shaktikanta Das as a director, had warned of short-term negative impact of demonetisation on the country's economic growth and observed that the unprecedented move will not have any material impact on tackling the black money menace.

On the global front, most of the Asian counters are trading in green at this point of time after the European Commission agreed to changes in a Brexit deal ahead of a vote in the British parliament on a divorce agreement. The US markets settled higher on Monday as the technology shares led a broad-based rebound, offsetting some of the gloom from Boeing Company’s woes after a deadly airline crash in Ethiopia.

Back home, housing finance company’s stocks remained in focus with global rating agency Moody's report that the National Housing Bank's proposed guidelines to tighten the capital adequacy and leverage norms is credit positive for housing finance company (HFCs) but will not address their issues regarding the key credit risk, funding and liquidity. Solar energy sector related stocks edged higher despite Crisil Research’s report that India’s target of adding 100 GW of solar project capacity by 2022 is facing headwinds as lack of clarity on policy, frequent bid cancellation and safeguard measures have negatively impacted the sector.

The BSE Sensex is currently trading at 37394.24, up by 340.14 points or 0.92% after trading in a range of 37230.85 and 37405.45. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.94%, while Small cap index was up by 1.14%.

The top gaining sectoral indices on the BSE were Realty up by 2.06%, Power up by 1.96%, Utilities up by 1.92%, Consumer Durables up by 1.70% and Capital Goods was up by 1.57%, while Telecom down by 0.47% was the lone losing index on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 2.88%, NTPC up by 2.43%, ICICI Bank up by 2.42%, Larsen & Toubro up by 1.81% and Vedanta up by 1.70%. On the flip side, Bharti Airtel down by 0.31%, Coal India down by 0.16% and Infosys down by 0.03% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has stated that if credit growth is higher than deposit, scheduled commercial banks’ reliance on bulk deposits may increase. This could lead to a higher cost of funds along with increasing volatility in the asset-liability structure of banks. According to the report, the system level credit growth of 12.9% year-on-year continues to outpace deposit growth at 9.3%, thereby intensifying competition for deposits among banks. This is based on Reserve Bank of India’s (RBI’s) quarterly statistics on deposits and credit of scheduled commercial banks for December 2018.

In third quarter of 2018-19 (Q3FY19), state-owned banks have seen credit growth of 8.4% and deposit growth at 4.9% as compared to the year-ago period, implying that they could also compete to recoup some of the deposit market share loss that they have conceded to private banks over the years. On the private banks, the rating agency said they are likely to solicit deposits even by offering higher rates, with continues strong credit growth at 22% year-on-year in Q3FY19.

During April-February 2018-19, deposits raised by banks were up 24.6% as compared to the year-ago period even as the outstanding amount was up only 3.6% at Rs 1.78 lakh crore. Ind-Ra said the longer term trend of market share shift from public sector banks (PSBs) to private banks continued to play out in the last 12 months. Private Banks saw an increase of 235 bps to 26.2% and 234 bps to 31.4% in market share in deposits and credit, respectively, in the last one year, while PSBs saw a 274 bps decline to 65.7% in deposits and a 253 bps decline in credit to 60.9%.

The CNX Nifty is currently trading at 11268.10, up by 100.05 points or 0.90% after trading in a range of 11227.00 and 11270.55. There were 43 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 2.80%, ICICI Bank up by 2.79%, NTPC up by 2.44%, Larsen & Toubro up by 2.31% and Hindalco up by 2.26%. On the flip side, Bharti Infratel down by 2.06%, Eicher Motors down by 1.06%, Coal India down by 0.49%, Cipla down by 0.19% and UPL down by 0.16% were the top losers.

Asian markets are trading mostly in green; NIKKEI 225 soared 436.08 points or 2.06% to 21,561.17, Straits Times gained 31.04 points or 0.97% to 3,222.46, Hang Seng surged 415.76 points or 1.46% to 28,919.06, Taiwan Weighted jumped 122.70 points or 1.20% to 10,372.98, KOSPI increased 16.83 points or 0.79% to 2,154.93 and Shanghai Composite was up by 48.70 points or 1.61% to 3,075.69. On the flip side, Jakarta Composite was down by 3.76 points or 0.06% to 6,362.67.