Local equities trade in green trajectory

Local equity benchmarks continued to show a positive trend in morning session, with gains of around half a percent, despite weak global clues. High beta indices like Metal and Basic Materials were, as usual, inched higher with the up-move on the benchmarks. Traders took some support with Finance Minister Nirmala Sitharaman’s statement that the government is open to hearing concerns of the foreign portfolio investors. The Economic Affairs Secretary will be directly meeting the FPIs soon. Some positivity came with a private report indicated that India's economy needs external capital flow to grow at 9% and touch $5 trillion in the next five years. Traders also took encouragement from finance ministry’s statement that banks have agreed to take steps to review lending rates as they have not ‘commensurately’ transmitted to borrowers benefits of reduction in the policy rate by the RBI. Some optimism came with a private report indicating that the Reserve Bank of India is expected to cut key policy rates by 25 basis points taking the benchmark repo rate to 5.50 percent.

On the global front, Asian markets were trading in red as the US-China trade war intensified, after Beijing confirmed it is suspending agricultural product purchases in response to new American tariffs. Back home, on the sectoral front, power industry stocks were in focus, as power ministry introduced mechanism ‘Trust Retention Account’(TRA)  for certain stressed power plants to utilise their surplus after meeting operating expense, for servicing debt in the first place. In case the developers using coal linkage of amended SHAKTI policy, a TRA must be put in place, if it is not there already.

The BSE Sensex is currently trading at 36853.35, up by 153.51 points or 0.42% after trading in a range of 36536.59 and 36933.13. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.11%, while Small cap index was up by 1.26%.

The top gaining sectoral indices on the BSE were Metal up by 1.98%, Basic Materials up by 1.60%, Realty up by 1.59%, Capital Goods up by 1.50% and Consumer Disc was up by 1.15%, while TECK down by 0.47%, IT down by 0.44% and Energy was down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.45%, Tech Mahindra up by 2.10%, Vedanta up by 1.99%, Maruti Suzuki up by 1.88% and Tata Steel was up by 1.80%. On the flip side, TCS down by 0.89%, Power Grid down by 0.62%, Infosys down by 0.61%, HCL Tech down by 0.38% and Reliance Industries was down by 0.21% were the top losers.

Meanwhile, bank credits to non-banking finance companies (NBFCs) have declined by more than Rs 6,000 crore in first quarter of current financial year (Q1FY20). Credit disbursals by NBFCs dropped by a third in the year to March raising worries over the solvency issue gripping other NBFCs after the implosion of IL&FS in September last year.

NBFCs and housing finance companies account for 23% of credit to the Indian economy. Indiscriminate loans chasing high valuations have led to poor asset quality for the sector. RBI data showed that bad loan ratio of NBFCs climbed to 6.6% at the end of March this year. It was 3.6 per cent in March of 2013.

Besides, auto sector, the worst-hit till now on account of the slowdown, saw credit from NBFCs contract nearly 10% at the end of May. Passenger vehicle sales fell 18.4 per cent in the first quarter and monthly passenger vehicle sales in June fell by the biggest margin in 18 years.

The CNX Nifty is currently trading at 10908.70, up by 46.10 points or 0.42% after trading in a range of 10813.80 and 10938.65. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 4.31%, Yes Bank up by 3.08%, Coal India up by 2.32%, Dr. Reddy’s Lab up by 2.24% and IndusInd Bank was up by 2.07%. On the flip side, Zee Entertainment down by 2.83%, Wipro down by 1.22%, TCS down by 0.92%, Power Grid down by 0.72% and Infosys was down by 0.55% were the top losers.

Asian markets were trading in red; Hang Seng decreased 268.35 points or 1.03% to 25,882.97, Nikkei 225 slipped 163.94 points or 0.79% to 20,556.35, Taiwan Weighted dropped 41.89 points or 0.4% to 10,381.52, Jakarta Composite lost 60.57 points or 0.98% to 6,115.13, Shanghai Composite declined 68.61 points or 2.43% to 2,752.89, Straits Times trembled 19.55 points or 0.61% to 3,174.96 and KOSPI fell 20.68 points or 1.06% to 1,926.30.