Post Session: Quick Review

Indian equity benchmarks traded in the positive grid since morning and ended with gains of over half a percent, tracking gains in global markets. Markets bounced back from 2-day losing streak with Sensex and Nifty settling above their crucial 41,200 and 12,100 levels, respectively. Traders took encouragement with report that the Reserve Bank of India (RBI) announced detailed rules for exempting incremental car, home and micro, small and medium enterprises (MSMEs) loans from maintaining cash reserve ratio (CRR). The RBI said CRR will not have to be maintained for five years or for the tenure of the loan, depending upon which-ever is less. This will essentially mean a lower cost for banks and will help improve liquidity. Traders also took note of Agriculture Minister Narendra Singh Tomar’s statement that India is on track to become self-sufficient in production of the protein-rich commodity and will further boost the output to meet global demand. 

The market breadth remained optimistic with Finance Minister Nirmala Sitharaman’s statement that bad loans of public sector banks (PSBs) came down to Rs 7.27 lakh crore at the end of September 2019 from Rs 8.96 lakh crore at the end of March 2018. Encouraging earnings by some companies too added some thrust on the street. However, further up-ward move got restricted as some anxiety spread among the traders ahead of the macroeconomic data-points due to be released during the week including CPI/WPI inflation and IIP data.

On the global front, Asian markets ended higher on Tuesday, while European markets were trading in green as the number of new coronavirus cases slowed in China and the country's factories slowly returned to work, easing some concerns of a long-drawn impact on the global economy. Back home, Airline sector were in focus as the government is mulling certain measures to support the growth and development of the maintenance, repair and overhaul (MRO) industry, an important segment for the aviation sector. Stocks related to coal industry also were in watch, as the Ministry of Coal (MoC) has launched a web portal for star rating of coal mines, in order to promote green, safe and sustainable mining practices using technology as a tool.

The BSE Sensex ended at 41234.70, up by 255.08 points or 0.62% after trading in a range of 41179.14 and 41444.34. There were 24 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index rose 0.29%, while Small cap index was down by 0.24%. (Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 1.69%, Power up by 1.54%, Metal up by 0.92%, Bankex up by 0.87% and Energy up by 0.75%, while Telecom down by 0.34%, FMCG down by 0.22%, Industrials down by 0.04% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were NTPC up by 3.04%, Maruti Suzuki up by 1.98%, SBI up by 1.84%, Bajaj Auto up by 1.45% and Power Grid up by 1.29%. (Provisional)

On the flip side, Bharti Airtel down by 0.98%, Nestle down by 0.89%, Mahindra & Mahindra down by 0.72%, TCS down by 0.57% and Sun Pharma down by 0.39% were the top losers. (Provisional)

Meanwhile, with an aim to boost demand in the sagging economy, the Reserve Bank of India (RBI) has said the special lending window with cash reserve ratios (CRR) exemption will be open from February 14 and incremental loans disbursed under this facility will have CRR exemption for the next five years. This means that banks will not be needed to make additional cash reserve ratio against any incremental loans disbursed to the targeted segments. The window opens on February 14 for six months ending July 31, 2020, but the net demand and time liabilities (NDTL) will be calculated as of January 31, 2020.

The productive sectors identified by the regulator are auto and residential housing loans, and also loans to micro, small and medium enterprises (MSMEs). The central bank said banks can claim the first such deduction from the NDTL of February 14, 2020 for the amount equivalent to the incremental credit extended to the above identified sectors over the outstanding level of credit as at the end of the fortnight to January 31, 2020. An amount equivalent to the incremental credit outstanding from the fortnight beginning January 31, 2020 and up to the fortnight ending July 31, 2020 will be eligible for deduction from NDTL for the purpose of computing the CRR for a period of five years from the date of origination of the loan or the tenure of the loan, whichever is earlier.

The central bank feels revitalising credit flow to productive sectors like these can have multiplier effects to spur support growth. It added that proper fortnightly records of net incremental credit extended to these select sectors/NDTL exemption claimed, duly certified by the chief financial officer or an equivalent officer, must be maintained by banks for supervisory review. The RBI expects this special window to enable improved credit flow to needy sectors, reinforces monetary transmission, strengthens regulation and supervision, broadens and deepens financial markets; and also improves payment and settlement systems.

The CNX Nifty ended at 12110.65, up by 79.15 points or 0.66% after trading in a range of 12099.00 and 12172.30. There were 39 stocks advancing against 11 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 5.91%, JSW Steel up by 3.90%, Bharti Infratel up by 3.42%, NTPC up by 3.00% and Maruti Suzuki up by 1.93%. (Provisional)

On the flip side, Yes Bank down by 1.86%, BPCL down by 0.88%, Mahindra & Mahindra down by 0.85%, Bharti Airtel down by 0.85% and Nestle down by 0.70% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 48.42 points or 0.65% to 7,495.30, France’s CAC rose 25.31 points or 0.42% to 6,040.98 and Germany’s DAX was up by 92.29 points or 0.68% to 13,586.32.

Asian markets ended higher on Tuesday amid bets that Chinese policy makers will likely roll out more measures to support the economy and minimize the fallout from the corona virus outbreak. China's central bank should consider lowering its benchmark deposit rate to enable banks to reduce lending rates and help small businesses weather the economic fallout from the fast-spreading corona virus, a central bank advisor said. Since the outbreak began in Wuhan late last year, it has infected over 42,000 and killed over 1,000 worldwide, the overwhelming majority of which in China. Meanwhile, markets in Japan were closed in observance of National Day.