Post Session: Quick Review

Logging healthy gains for second day in row, Indian equity benchmarks ended Tuesday’s trade with gains of over a percent, amid unabated buying by foreign investors and strong global cues. Sensex settled above crucial 37,500 mark, while Nifty ended just shy of 11,300 mark. Markets made a solid start to the session, as sentiment remained up-beat 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. Market-men also took some encouragement with a report that key policymakers from India and African nations will brainstorm on strategies for scaling up bilateral trade volume to $150 billion in the next few years at the India-Africa Project Partnerships Conclave.

Key indices maintained their upward momentum in the last leg of trade, taking support from the Cotton Textiles Export Promotion Council (TEXPROCIL) Chairman K.V. Srinivasan’s statement that rebate of state and central taxes will improve the competitiveness of made ups products in the export markets. Investors continued their buying spree ahead of key macroeconomic prints, including IIP (Index of Industrial Production) data for January and CPI (consumer price index) prints for February. Moreover, rupee's rise is another factor helping markets in maintaining the positive sentiment.

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading mostly in green, amid improved risk appetite after the U.S. retail sales report for January showed a rebound and the EU said it is now up to MPs to decide the next steps for Brexit.  Back home, housing finance company’s stocks were 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. Airline sector too were in focus after private report indicating that a series of air-crash incidents have led to insurers incurring a loss of Rs 2,500 crore in India's aviation sector. These incidents include both major and minor instances in the Indian air space.

The BSE Sensex ended at 37501.10, up by 447.00 points or 1.21% after trading in a range of 37230.85 and 37586.63. There were 21 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.55%, while Small cap index up by 0.98%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.60%, Telecom up by 2.43%, Capital Goods up by 2.13%, Bankex up by 1.66% and Industrials up by 1.54%, while IT down by 0.29% and PSU down by 0.05% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 5.02%, ICICI Bank up by 3.22%, Indusind Bank up by 3.21%, Larsen & Toubro up by 3.06% and Sun Pharma up by 2.24%. (Provisional)

On the flip side, Bajaj Finance down by 1.51%, ONGC down by 0.72%, Bajaj Auto down by 0.71%, Infosys down by 0.70% and NTPC down by 0.59% were the top losers. (Provisional)

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 ended at 11290.85, up by 122.80 points or 1.10% after trading in a range of 11227.00 and 11320.40. There were 31 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 5.15%, ICICI Bank up by 3.38%, Indusind Bank up by 3.38%, Larsen & Toubro up by 3.15% and Adani Ports &SEZ up by 2.86%. (Provisional)

On the flip side, Eicher Motors down by 2.20%, Bajaj Finance down by 1.36%, ONGC down by 0.95%, Bharti Infratel down by 0.95% and HPCL down by 0.70% were the top losers. (Provisional)

European markets were trading mostly in green; France’s CAC increased 10.15 points or 0.19% to 5,276.11 and Germany’s DAX increased 8.32 points or 0.07% to 11,551.80, while UK’s FTSE 100 decreased 5.68 points or 0.08% to 7,124.94.

Asian markets ended mostly higher on Tuesday after US retail sales stabilized in January, helping ease concerns over the state of the economy. The market sentiment was also bolstered after British Prime Minister Theresa May won legally binding assurances from the European Union in an updated Brexit deal, just ahead of a vote in the British parliament. Chinese shares ended higher on trade optimism after media reports suggested that Chinese Vice-Premier Liu He held a telephone call with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer on key issues in their trade talks. Further, Japanese shares ended up, with gains in global equities and continued weakness in the yen helping underpin investor sentiment.