Benchmarks trade higher in early deals

Indian equity benchmarks made optimistic start and were trading higher with gains of nearly half a percent each in early deals on Friday, led by gains in Telecom, TECK and IT stocks. Traders took encouragement with report that foreign investors turned net buyers in the Indian markets in the December quarter, pumping in a staggering $6.3 billion on the back of the government's intent to bring reforms for supporting the economic growth. Some support also came as global ratings agency Standard and Poor's affirmed India's sovereign rating at BBB- with stable outlook, saying the country's GDP growth is likely to gradually recover towards longer-term trend rates over the next two to three years. Though, gains were limited as investors remained cautious ahead of the wholesale inflation numbers to be out later in the day. Adding some pessimism among market participants the International Monetary Fund’s (IMF) communications director Gerry Rice said that India's economy looks weaker than the IMF projected earlier in January and the government needs to focus on more ambitious structural and financial sector reform measures.

Global cues also remained supportive with most of the Asian markets trading in green. Worries about the coronavirus outbreak eased slightly after China's Hubei province, the epicenter of the coronavirus outbreak, reported Friday that the daily death toll as well as the number of infections from the coronavirus declined sharply from the previous day. In addition, China is set to halve tariff rates on $75 billion worth of US goods later today. Meanwhile, Japan will see December numbers for its tertiary industry index today.

Back home, the Reserve Bank of India’s (RBI) data showed that banks credit and deposits grew at 7.13 percent and 9.91 percent to Rs 101.02 lakh crore and Rs 133.24 lakh crore, respectively, in the fortnight ended January 31. In stock specific developments, BPCL advanced as it reported near trebling of net profit in the December quarter. TVS Motor Company gained after it acquired additional shares in a US-based information technology company. Besides, Vodafone Idea surged as it narrowed its quarterly net loss to Rs 6,438.8 crore in the three months to December.

The BSE Sensex is currently trading at 41625.35, up by 165.56 points or 0.40% after trading in a range of 41510.19 and 41702.36. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.21%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Telecom up by 0.82%, TECK up by 0.75%, IT up by 0.70%, Consumer Durables up by 0.53% and Basic Materials was up by 0.53%, while Utilities down by 0.12% and Power was down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.15%, Asian Paints up by 0.99%, Bajaj Auto up by 0.91%, HCL Tech up by 0.86% and Ultratech Cement up by 0.79%. On the flip side, Indusind Bank down by 0.92%, ONGC down by 0.81% and NTPC down by 0.43% were the few losers.

Meanwhile, global ratings agency Standard and Poor's (S&P) in its latest report affirmed India's sovereign rating at 'BBB-' with stable outlook and said that the country's Gross Domestic Product (GDP) growth is likely to gradually recover towards longer-term trend rates over the next two to three years. 'BBB' rating refers to adequate capacity of the rated entity to meet its financial commitments. It said ‘despite a notable deceleration in India's economy in recent quarters, we believe its structural growth outperformance remains intact. Real GDP growth is therefore likely to gradually recover toward longer-term trend rates over the next two to three years’.

As per the report, the economic growth rate to improve to 6% during 2020-21, 7% in the next fiscal and 7.4% thereafter. It expects India's economy to continue to outperform peers at a similar level of income, despite a recent slowdown in real GDP growth. It added that supportive monetary, fiscal, and cyclical factors should support economic recovery, with real GDP growth averaging 7.1% in fiscals 2020-2024. Though, it pointed out that India's fiscal position remains precarious, with elevated fiscal deficits and net government indebtedness. It said fiscal deficits have exceeded the government's plan, and added that it expects limited consolidation over the next few years.

S&P Global Ratings affirmed its 'BBB-' long-term and 'A-3' short-term unsolicited foreign and local currency sovereign credit ratings on India. The outlook on the long-term rating is stable. Providing rationale for its rating action, S&P said the ratings on India reflect the country's above-average real GDP growth, sound external profile, and evolving monetary settings. The stable outlook reflects S&P's expectation that India's growth will be strong, the country will maintain its sound net external position, and its fiscal deficits will remain elevated but broadly in line with its forecasts over the next two years.

Further, ‘upward pressure’ on the ratings could build if the government significantly curtails its fiscal deficits, resulting in lower net indebtedness at the general government level. Upside potential on the ratings could also increase if India's external accounts strengthen substantially. Also, the downward pressure on the ratings could emerge if India's GDP growth falls well below the agency's forecasts, causing it to reassess view of trend growth; net general government deficits rise further from their currently elevated levels; and political developments materially undermine economic reform momentum.

The CNX Nifty is currently trading at 12226.70, up by 52.05 points or 0.43% after trading in a range of 12190.15 and 12246.70. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 7.26%, Tata Motors up by 3.19%, UPL up by 2.30%, Zee Entertainment up by 1.56% and Grasim Industries up by 1.26%. On the flip side, Indusind Bank down by 1.17%, Eicher Motors down by 1.11%, Coal India down by 0.90%, Dr. Reddy’s Lab down by 0.59% and ONGC down by 0.52% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 165.49 points or 0.6% to 27,895.49 Taiwan Weighted strengthened 28.25 points or 0.24% to 11,820.03, Shanghai Composite gained 15.18 points or 0.52% to 2,921.25, KOSPI rose 12.38 points or 0.55% to 2,245.34, Straits Times advanced 5.57 points or 0.17% to 3,225.66 and Jakarta Composite soared 3.60 points or 0.06% to 5,875.55. On the flip side, Nikkei 225 was down by 135.79 points or 0.57% to 23,691.94.