Post Session: Quick Review

Indian stock markets traded firmly in green during session on Friday and ended with gains of over half a percent, tracked a positive trend in Asian peers along with a strong rupee. Markets opened on a firm note, as traders took encouragement with a private report that the Reserve Bank of India's (RBI) $5 billion plan to swap rupees for dollars with domestic banks will help achieve its twin objectives of pushing interest rates down while also preventing a sharp appreciation in the rupee. Sentiment remained up-beat with Rating agency ICRA’s latest report stating that Public Sector Banks (PSBs) are likely to report net profit of Rs 23,000-37,000 crore in the next fiscal year 2019-20, after four years of consecutive losses. The net profit may be supported by fall in gross non-performing assets (GNPAs). Traders took note of the RBI’s statement that financial sector regulators discussed ways to address challenges pertaining to the quality of credit ratings and other issues concerning the economy. It added that the sub-committee reviewed the major developments on the global and domestic fronts that impinge on the financial stability of the country.

Markets extended northward moment in late afternoon session and traded near intraday high levels, as sentiment on the street improved further with Commerce Secretary Anup Wadhawan’s statement that India's exports are likely to touch an all-time high of $330 billion in the current fiscal ending March 31 (FY19), braving global challenges such as protectionist measures. He added that the country’s engineering exports have grown significantly in recent years, notwithstanding major global challenges. Domestic sentiments were also buoyed with EEPC India-Deloitte strategy paper stating that India can achieve a three-fold 'aspirational' increase in its engineering exports to reach $200 billion by 2025, if concerted efforts are made by the government and industry to develop a conducive ecosystem, and ensuring inputs at competitive prices. However, some gains got trimmed as the markets came under some selling pressure in fag-end trading. Some concern also came with principal economic advisor’s report that the economic growth during the UPA era was ‘not bad’, but ‘the system was out of control’. The economy then faced problems of rising soaring inflation, widening and current account fiscal deficit. 

On the global front, Asian markets ended higher on Friday, while European markets were trading in green, after U.K. lawmakers voted to delay a potentially chaotic exit from the European Union for at least three months. Back home, Insurance industry stocks such as HDFC Life Insurance Company, ICICI Lombard General Insurance Company and the New India Assurance Company ended higher with IRDAI data showing that India’s life insurance industry witnessed a rise of 32.7 per cent in its collective new premium income at Rs 18,209.50 crore during February 2019.

The BSE Sensex ended at 38039.19, up by 284.30 points or 0.75% after trading in a range of 37760.23 and 38254.77. There were 20 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index rose 0.50%, while Small cap index down by 0.45%. (Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 1.85%, IT up by 1.82%, Power up by 1.76%, Bankex up by 1.65% and PSU up by 1.63%, while FMCG down by 1.80%, Telecom down by 1.29%, Energy down by 0.69%, Basic Materials down by 0.33% and Metal down by 0.12% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Kotak Mahindra Bank up by 4.45%, Power Grid up by 2.59%, HCL Tech. up by 2.53%, SBI up by 2.39% and ONGC up by 2.38%. (Provisional)

On the flip side, Hindustan Unilever down by 2.09%, Yes Bank down by 2.06%, Reliance Industries down by 1.58%, ITC down by 1.47% and Bharti Airtel down by 1.15% were the top losers. (Provisional)

Meanwhile, rating agency ICRA in its latest report has stated that Public Sector Banks (PSBs) are likely to report net profit of Rs 23,000-37,000 crore in the next fiscal year 2019-20, after four years of consecutive losses. The net profit may be supported by fall in gross non-performing assets (GNPAs). It added that GNPAs and net NPAs (NNPAs) of PSBs are likely to decline to 8.1-8.4% and 3.5-3.6% by March 2020, as against 10.3% and 5.3-5.4%, estimated for March 2019 and 10.9% and 6.3% as on December 31, 2018. However, it said overall profitability will remain weak with return on net worth (RoNW) of 4-6.3%.

The report said with reducing fresh slippages, the credit provisions are expected to decline, and the rating agency expect 14 PSBs in base case and 11 PSBs in the stress case to report profits during FY20, as compared to only five PSBs that are likely to report profits in FY19. In the first nine month of FY19, the net losses stood at Rs 42,900 crore and are expected to increase to Rs 65,000 crore during FY19 as compared to Rs 85,400 crore during FY18. The overall fresh slippages for PSBs are estimated to decline to Rs 2.5 trillion (4.5%) during FY19 and are expected to decline further to Rs 1.3-1.6 trillion (2.1-2.7%) during FY20.

ICRA said compared to PSBs, the performance of the private banks (PVBs) remained strong with year-on-year growth of 18.7% in advances as compared to 4.2% for PSBs as on December 31, 2018, and around 64% share in incremental credit growth during the trailing 12 months (TTM). With improved capital position, it said PSBs are expected to pursue credit growth and pose challenges to PVBs on both the lending and the deposit side and the market share gains are expected to slow down for PVBs, going forward. Besides, the deposit mobilisation to match high credit growth continues to remain a challenge for private banks. It added that with PSBs expected to chase credit and deposit growth next year, it may be difficult for banks to cut lending rates as the competition for deposits is expected to heighten.

The CNX Nifty ended at 11430.30, up by 87.05 points or 0.77% after trading in a range of 11370.80 and 11487.00. There were 33 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were Kotak Mahindra Bank up by 4.50%, Indian Oil Corp. up by 3.64%, HPCL up by 3.01%, Power Grid up by 2.80% and ONGC up by 2.78%. (Provisional)

On the flip side, Hindustan Unilever down by 2.13%, Yes Bank down by 2.08%, Reliance Industries down by 1.61%, ITC down by 1.46% and Ultratech Cement down by 1.12% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 38.20 points or 0.53% to 7,223.63, France’s CAC rose 25.68 points or 0.48% to 5,375.46 and Germany’s DAX was up by 35.40 points or 0.31% to 11,622.87.

Asian markets ended higher on Friday after UK lawmakers backed delaying the Brexit process and Chinese Premier pledged support for the slowing economy during his annual news conference at the end of the National People's Congress. Chinese shares ended higher as Chinese Premier Li Keqiang said the country could use reserve requirements and interest rates to prevent a sharper deceleration in the world's second-largest economy. Further, Japanese shares ended higher after the Bank of Japan left its monetary stimulus program unchanged, as widely expected, but offered a relatively weak assessment of the economy.