Indian bourses trim gains in afternoon deals

Key benchmark indices pared some of their initial gains in afternoon session but continued to trade in green, tracking positive cues from other Asian markets. The indices remained positive with Union minister Piyush Goyal’s statement that India's service sector can help achieve the Central government's target of $5 trillion GDP. He said the service sector has the potential to be the largest job creators in the country and over the next five years it has the potential to contribute $3 trillion out of the $5 trillion GDP target set by the government. However, the markets pared some gains with Fitch group firm India Ratings and Research stating that Indian economy may have slowed for the sixth consecutive quarter in July-September to 4.7 per cent and it lowered GDP growth forecast for current fiscal for the fourth time. Meanwhile, the commerce ministry has sought views of all the ministries, including steel, shipping and others on the draft national logistics policy, which aims at promoting seamless movement of goods across the country. The draft policy also seeks to reduce high transaction cost of traders. On the sectoral front, infrastructure stocks remained in focus with rating agency Crisil’s report that states need to scale up investments to Rs 110 lakh crore over the next decade to achieve India's massive infrastructure targets.

On the global front, Asian markets were trading mostly in green, after U.S. President Donald Trump said negotiators were close to inking an initial trade deal, while expectations the Federal Reserve will keep rates low underpinned sentiment. Back home, the BSE Sensex is currently trading at 40887.13, up by 65.83 points or 0.16% after trading in a range of 40877.38 and 41075.76. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.21%, while Small cap index was down by 0.01%.

The top gaining sectoral indices on the BSE were Auto up by 1.05%, Basic Materials up by 0.96%, Metal up by 0.65%, IT up by 0.59% and TECK was up by 0.45%, while Capital Goods down by 1.66%, Realty down by 0.98%, Telecom down by 0.80%, Industrials down by 0.66% and Power was down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.60%, Tata Motors up by 1.80%, Maruti Suzuki up by 1.68%, Mahindra & Mahindra up by 1.30% and HCL Technologies was up by 1.19%. On the flip side, Larsen & Toubro down by 2.67%, ICICI Bank down by 1.02%, Bharti Airtel down by 0.98%, Tata Steel down by 0.91% and ITC was down by 0.74% were the top losers.

Meanwhile, Reserve Bank of India (RBI) deputy governor MK Jain has warned bankers about the growing stress in Pradhan Mantri Mudra Yojana (PMMY) also known as Mudra loans, which has crossed more than Rs 3.21 lakh crore RPT crore system-wide and asked them to monitor such loans closely as unsustainable credit growth in the sector can risk the system. The government had launched the Mudra scheme in April 2015 for providing loans up to Rs 10 lakh to the non-corporate, non-farm small/micro enterprises and which normally do not get bank funds due to their poor and mostly no credit rating. These loans are extended by banks, NBFCs, RRBs, cooperative banks and small finance banks.

RBI deputy governor said 'Mudra loans are a case in point. While such a massive push would have lifted many beneficiaries out of poverty, there has been some concerns at the growing level of non-performing assets (NPAs) among these borrowers.' He also said systemic risk may arise from unsustainable credit growth, increased interconnectedness, pro-cyclical and financial risks manifested by lower profitability. He noted that it is interesting to see leading e-commerce companies tying up with banks and NBFCs to offer working capital loans to their suppliers, which are mostly micro and small enterprises, at competitive terms.

Stating that GST has hit the informal economy significantly, Jain said as a result of the improved digital footprint, MSMEs have become attractive clients for banks, NBFCs, and MFIs, thereby reducing their dependence on the informal source of funds. He said the cost of credit for MSMEs will also come down meaningfully as lending will shift from collateral-based lending to cash flow based lending. Noting that technology has its own share of risks and challenges for the financial sector regulators and supervisors, he said early recognition of these risks and initiating action to mitigate the related regulatory and supervisory challenges is key to harnessing the full potential of these developments. He added that the focus of the MFI sector must be on digital finance, and data confidentiality and consumer protection are major areas that also need to be addressed by bankers. 

The CNX Nifty is currently trading at 12067.25, up by 29.55 points or 0.25% after trading in a range of 12060.80 and 12108.50. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 6.02%, Ultratech Cement up by 3.03%, Tata Motors up by 2.05%, UPL up by 1.94% and Maruti Suzuki was up by 1.74%. On the flip side, Larsen & Toubro down by 2.69%, Cipla down by 2.38%, Bharti Airtel down by 1.13%, ICICI Bank down by 0.94% and Tata Steel was down by 0.81% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted strengthened 70.64 points or 0.61% to 11,647.46, Nikkei 225 surged 64.45 points or 0.28% to 23,437.77, KOSPI rose 6.50 points or 0.31% to 2,127.85, Jakarta Composite soared 6.04 points or 0.1% to 6,032.23 and Straits Times was up by 4.76 points or 0.15% to 3,212.61.

On the flip side, Shanghai Composite declined 5.18 points or 0.18% to 2,901.88 and Hang Seng was down by 12.94 points or 0.05% to 26,900.98.