Local equities remain in rally mood amid lull in US-Iran tensions

Mirroring strong global cues, local equity benchmarks continue to show a positive trend in morning session, with gains of around a percent as crude oil prices retreated. All the sectoral indices on the BSE were trading higher, with Metal, Basic Materials, Energy and BANKEX contributing most of the gains. Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 1%. The sentiments were optimistic with Commerce and Industry Minister Piyush Goyal’s statement that use of artificial intelligence (AI) in different forms can help achieve the target of making India a $5 trillion economy in the coming years. Beside, Reserve Bank of India (RBI) has conducted its simultaneous purchase and sale of government securities (G-Secs) under open market operations (OMOs). It bought Rs 10,000 crore of three long-term securities and sold a same amount of three short-term bonds. Moreover, a report said that India's government is likely to cut spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent years.

On the global front, Asian markets are trading mostly in green, as Middle East tensions remained high, but at least didn’t rise any higher. Back home, on the sectoral front, infrastructure and banking sector stocks were in limelight as rating agency, ICRA reported that credit to infrastructure sector from banks and non-bank financing companies remained muted at Rs 21.2 lakh crore in April-September period of the current fiscal. The infrastructure credit had witnessed a 19 per cent growth in FY19 to Rs 21.1 lakh crore.

The BSE Sensex is currently trading at 41097.47, up by 420.84 points or 1.03% after trading in a range of 40965.94 and 41230.14. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.03%, while Small cap index was up by 1.21%.

The top gaining sectoral indices on the BSE were Metal up by 1.60%, Basic Materials up by 1.52%, Energy up by 1.45%, BANKEX up by 1.32% and Realty was up by 1.20%, while there were no losing indices.

The top gainers on the Sensex were Tata Steel up by 1.98%, HDFC Bank up by 1.76%, Reliance Industries up by 1.73%, Axis Bank up by 1.65% and NTPC was up by 1.64%. On the flip side, Tech Mahindra down by 0.13% and Titan Company was down by 0.03% were the only losers.

Meanwhile, ICRA in its latest report has said that credit to infrastructure sector from banks and non-bank financing companies (NBFCs) remained muted at Rs 21.2 lakh crore in April-September period of the current fiscal (H1FY20).  The tepidness in the first half of FY20 has been led by de-growth in banking sector credit to infrastructure segment, though infrastructure finance non-bank companies (IFCs) continued to grow at a modest pace of 17 per cent year-on-year, and and 12 per cent sequentially.

The infrastructure credit had witnessed a 19 per cent growth in FY19 to Rs 21.1 lakh crore. Majority of the infrastructure credit growth in FY19 was also back ended. Hence, a pickup in H2 FY20 cannot be ruled out, though the pressure on fiscal position may limit the government's push towards expenditure on infrastructure and hence constrain a major reversal in trend. The growth in the total infrastructure credit in FY20 is likely to remain lower than last year.

The report mentioned that the decline in share of banks during past few years was largely attributable to the conversion of their exposures to state distribution companies (discoms) into bonds and the subdued lending amid asset quality issues and capital constraints. Moreover, it said the progress on stressed thermal asset resolution is slow, despite the various measures undertaken by the government and the lenders.

The CNX Nifty is currently trading at 12110.15, up by 117.10 points or 0.98% after trading in a range of 12073.00 and 12152.15. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.69%, Zee Entertainment up by 2.28%, Tata Steel up by 2.03%, NTPC up by 1.85% and HDFC Bank was up by 1.80%. On the flip side, Bharti Infratel down by 0.76%, BPCL down by 0.23%, Titan Company down by 0.13%, Tech Mahindra down by 0.08% and Cipla was down by 0.07% were the top losers.

Asian markets are trading mostly in green, Nikkei 225 surged 362.36 points or 1.56% to 23,567.22, Hang Seng increased 145.37 points or 0.52% to 28,371.56, Straits Times advanced 24.83 points or 0.77% to 3,243.69, KOSPI rose 21.56 points or 1% to 2,176.63 and Shanghai Composite was up by 10.70 points or 0.35% to 3,094.11.

On the other side, Jakarta Composite lost 7.59 points or 0.12% to 6,249.81 and Taiwan Weighted was down by 59.87 points or 0.5% to 11,893.49.