Local equities cut some initial gains

Local equity benchmarks trimmed some of their initial gains in morning deals but continued to trade in green territory. Some pessimism spread among the investors with Former RBI deputy governor Rakesh Mohan said manufacturing growth is not consistent with India's overall economic growth figures. He added that the country cannot grow at 8 per cent without manufacturing sector recording 10 per cent growth. Traders took note of a report that The Bimal Jalan committee report, which is delayed, will lead to transfer of under Rs 3 lakh crore of excess capital from the Reserve Bank to the government, which will most likely use the money for meeting regular expenses. However, traders took some support from Finance Minister Nirmala Sitharama’s statement that the government and the Reserve Bank of India (RBI) are closely monitoring the rupee exchange rate against the dollar on an on-going basis. The rupee has depreciated from Rs 60.50 to a dollar in 2013-14 to Rs 69.74 to a dollar in April-December of 2018-19. Some encouragement also came with a report that currency notes in circulation stood at Rs 21.71 lakh crore at May-end 2019, showing an increase of more than 22 per cent over the pre-demonetisation level. Sentiments remain positive with exporters body FIEO’s report that the government’s focus to improve logistics, ease of doing business and modern trade infrastructure will help exports to touch $1 trillion in the next three years.

On the global front, Asian markets were trading mostly in red after US Federal Reserve Chairman Jerome Powell tempered expectations for a potential interest rate cut. Back home, Commerce and Industry Minister Piyush Goyal stated that the government will come out with a national e-commerce policy within 12 months to facilitate achieving holistic growth of the sector.

The BSE Sensex is currently trading at 39504.80, up by 69.86 points or 0.18% after trading in a range of 39319.64 and 39599.40. There were 19 stocks advancing against 11 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.44%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Power up by 1.86%, Utilities up by 1.57%, Capital Goods up by 0.99%, Industrials up by 0.92% and Healthcare was up by 0.76%, while IT down by 0.18%, Energy down by 0.15%, TECK down by 0.11%, Metal down by 0.10% and Oil & Gas was down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.10%, Power Grid up by 3.00%, NTPC up by 1.66%, Larsen & Toubro up by 1.36% and Axis Bank was up by 1.03%. On the flip side, Tata Steel down by 0.81%, Vedanta down by 0.70%, TCS down by 0.61%, IndusInd Bank down by 0.49% and Reliance Industries was down by 0.33% were the top losers.

Meanwhile, Crisil in its latest report has said that gross non-performing loans (GNPAs) of banks may reduce to 8% by March 2020. This will be driven by a combination of a reduction in fresh accretions to NPA as well as stepped-up recoveries from existing NPA accounts. NPA in the banking system had peaked at 11.5 percent in March 2018 and then declined to 9.3 percent in March 2019.

The report stated that public sector banks (PSBs), which account for over 80 percent of the NPAs in the system, should see their gross NPAs decline over 400 bps to close to 10.6 percent by March 2020 from a peak of 14.6 percent in March 2018. Slippages have been on the wane since last fiscal and the rate of accretion of fresh NPAs halved in FY19 to 3.7 percent compared with 7.4 percent in the previous fiscal and is expected to drop to around 3.2 percent in FY20.

This is mainly because banks have already recognised around Rs 17 lakh crore of stressed loans as NPAs since FY16, led by accelerated NPA recognition following the Reserve Bank of India's (RBIs) stringent norms and asset quality reviews. Besides, it said the resolution of some large NPA accounts under NCLT-1 and NCLT-2 is expected to fructify by the end FY20.

The CNX Nifty is currently trading at 11815.00, up by 18.55 points or 0.16% after trading in a range of 11757.55 and 11839.10. There were 28 stocks advancing against 21 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Sun Pharma up by 3.12%, Power Grid up by 2.98%, NTPC up by 1.91%, Adani Ports & SEZ up by 1.37% and Larsen & Toubro was up by 1.34%. On the flip side, Indiabulls Housing Finance down by 1.54%, BPCL down by 1.22%, Tata Steel down by 0.92%, Britannia down by 0.88% and Vedanta was down by 0.70% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 147.43 points or 0.7% to 21,046.38, Taiwan Weighted dropped 48.60 points or 0.45% to 10,658.12, Hang Seng decreased 14.36 points or 0.05% to 28,171.62, Straits Times trembled 9.62 points or 0.29% to 3,294.65, Shanghai Composite declined 6.98 points or 0.23% to 2,975.09 and KOSPI was down by 1.64 points or 0.08% to 2,120.00. On the other hand; Jakarta Composite was up by 4.41 points or 0.07% to 6,324.86.