Markets continue to trade in high spirit; Nifty above 11,100 mark

Indian equity benchmarks continued to trade in high spirit in early noon session, on account of broad based buying in blue chip counters. Most of the sectoral indices were trading firm and Basic Materials was the top gainer on BSE, up by around 1.89% followed by Capital Goods and Realty indices, trading up over 1.00% each. Apart from blue chips, broader indices too equally participated in the rally with both mid and small cap indices trading up by over 1.00% each. Sentiment got a boost with the report that government may announce several market-friendly measures, including withdrawal of a hike in income tax surcharge on FPIs. In that regard, Finance minister Nirmala Sitharaman will meet market participants, including senior officials of foreign portfolio investors and mutual funds, later in the day to ascertain views on current issues relating to financial markets. Market mood remained up-beat as India Ratings’ report stated that the budgeted Rs 70,000-crore capital infusion in public sector banks (PSBs) may translate into limited credit growth at these lenders, as much of it goes towards meeting provisioning and regulatory requirements.

On the global front, Asian markets were trading mixed on account of increased risk appetite among investors after the release of upbeat Chinese exports data. Back on home turf, in scrip specific developments, shares of Britannia Industries inched up despite reporting marginal fall of 3.66% in Q1 consolidated net profit. Besides, Trent shined on raising over Rs 1,000 crore via preferential allotment.

The BSE Sensex is currently trading at 37692.30, up by 364.94 points or 0.98% after trading in a range of 37406.26 and 37706.58. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.15%, while Small cap index was up by 1.29%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.89%, Capital Goods up by 1.49%, Realty up by 1.41%, Industrials up by 1.29% and Bankex was up by 1.28%, while Telecom down by 0.12%, TECK down by 0.05% and IT down by 0.01% were the only losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 3.14%, HDFC up by 2.58%, Bajaj Finance up by 2.18%, Larsen & Toubro up by 2.17% and Axis Bank was up by 1.73%. On the flip side, Yes Bank down by 1.74%, ITC down by 1.03%, Mahindra & Mahindra down by 0.95%, Bharti Airtel down by 0.81% and Sun Pharma was down by 0.57% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that the huge Rs 3 trillion capital infusion by the government into Public Sector Banks (PSBs) between FY14 and FY19 has helped them cut losses but has failed to contribute meaningfully to credit growth.

According to the report, the sharp deterioration in asset quality in the last few years has led to accelerated provisions among by all the PSBs leading to massive losses. It pointed out that in reality, the capital infused was largely consumed to tide over losses resulting from provisions required on non-performing assets (NPAs). It also said over the years, market share of PSBs in incremental credit generation shifted to other market participants including private banks, foreign banks, non-bank financial companies, housing finance companies and mutual funds.

Ind-Ra has indicated that the market share of PSBs dropped to 46.5 percent in FY19 from 60.9 percent in FY14. In terms of incremental credit, the share of PSBs has been 26.2 percent over FY14-FY19. It said recapitalization is a prompt response to infuse funds in cash-strapped public sector banks. It added that the capital infusion by the government in PSBs may ensure banks' solvency but may not necessarily ensure stability and growth in the absence of non-financial and structural reforms.

The CNX Nifty is currently trading at 11148.25, up by 115.80 points or 1.05% after trading in a range of 11062.80 and 11148.65. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 11.95%, Vedanta up by 3.42%, Grasim Industries up by 3.26%, Ultratech Cement up by 2.88% and UPL was up by 2.58%. On the flip side, Yes Bank down by 1.74%, ITC down by 1.07%, Indian Oil Corporation down by 0.92%, Mahindra & Mahindra down by 0.90% and Coal India was down by 0.83% were the top losers.

Asian markets were trading mixed; Nikkei 225 surged 104.31 points or 0.51% to 20,697.66, KOSPI rose 21.05 points or 1.1% to 1,941.66, Jakarta Composite was up by 6.12 points or 0.1% to 6,280.79. On the flip side, Hang Seng decreased 37.90 points or 0.15% to 26,082.87 and Shanghai Composite was down by 6.01 points or 0.22% to 2,788.54.