Sensex, Nifty extend gains in late morning deals

Indian equity benchmarks extended their gains in late morning session, maintaining their gaining rally. Indices remained higher, despite negative cues from other Asian markets. In line with the larger peers, the broader indices were also trading in green terrain. Domestic sentiments were positive, as bank credit grew by 5.15 per cent to Rs 102.72 lakh crore, and deposits rose by 10.51 per cent to Rs 142.64 lakh crore in the fortnight ended September 25, according to RBI data. In the fortnight ended September 27, 2019, bank credit was Rs 97.68 lakh crore and deposits stood at Rs 129.06 lakh crore.

On the global front, Asian markets were trading mostly in red, even after China's service sector registered a strong growth in business activity in September, signaling a further recovery from the coronavirus pandemic. The survey data from IHS Markit showed that the Caixin composite services Purchasing Managers' Index rose to 54.8 in September from 54.0 in August. This was the fifth consecutive increase in service sector output. The expansion was underpinned by a sustained rise in total new business. Stronger domestic demand was the principal factor that supported new work as export orders contracted again.

The BSE Sensex is currently trading at 40541.13, up by 358.46 points or 0.89% after trading in a range of 40066.54 and 40542.58. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.20%, while Small cap index up by 0.15%.

The top gaining sectoral indices on the BSE were Bankex up by 2.58%, Capital Goods up by 1.54%, Industrials up by 0.72%, PSU up by 0.41% and Realty up by 0.21%, while FMCG down by 0.60%, IT down by 0.59%, TECK down by 0.49%, Utilities down by 0.36% and Healthcare down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.02%, HDFC up by 2.45%, ICICI Bank up by 1.73%, Tata Steel up by 1.62% and Indusind Bank up by 1.56%. On the flip side, Tech Mahindra down by 1.60%, Hindustan Unilever down by 1.45%, TCS down by 1.42%, Asian Paints down by 1.27% and Bajaj Auto down by 1.23% were the top losers.

Meanwhile, expressing cautiousness over fiscal deficit condition in the country, former Reserve Bank Governor C Rangarajan has said that the combined fiscal deficit of states and the centre is likely to go up to 14 per cent during the current year (FY21) against the mandated level of 6 per cent. He also said banks should neither be timid nor adventurous while lending as the loans of today should not become NPAs of tomorrow.

He said ‘so therefore we are essentially talking about 13.8 per cent or 14 per cent of the GDP (gross domestic product) as the overall fiscal deficit of the states and the Centre. It is obvious this is twice the mandated level. The mandated level for both the Centre and state is 6 per cent of the GDP. It is twice or even more than twice of the estimated figure’.

Rangarajan added that the fiscal deficit may further go if the government decides to go in for additional borrowings to meet GST compensation part. He said RBI's monetary policy is ‘consistent’ under the present circumstances and as a result banks have adequate liquidity for more lending. He opined that governments need to spend more when the economy is in slump and it is essential to spend on healthcare, relief and rehabilitation and on stimulus to spur the economy.

He said ‘There are three types of expenditure required. One- expenditure on healthcare second is the expenditure on relief and rehabilitation. Third is expenditure on stimulus. And it appears that the government both at the Centre and states are somewhat slow in increasing expenditures’. He said the economic growth of the country and other nations has come to a grinding halt due to lockdown to contain the spread of coronavirus. However, he said capital flows into India was encouraging during the last three months.

The CNX Nifty is currently trading at 11913.45, up by 78.85 points or 0.67% after trading in a range of 11805.20 and 11924.25. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were HDFC up by 3.29%, ICICI Bank up by 3.20%, Axis Bank up by 2.85%, Larsen & Toubro up by 2.68% and HDFC Bank up by 2.65%. On the flip side, Asian Paints down by 1.61%, UPL down by 1.53%, Grasim Industries down by 1.40%, Tata Motors down by 1.31% and Bajaj Auto down by 1.23% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 88.64 points or 0.37% to 23,558.43, Jakarta Composite lost 5.40 points or 0.11% to 5,033.74 and Straits Times trembled 0.07 points or 0% to 2,543.04. On the flip side, Shanghai Composite gained 60.78 points or 1.89% to 3,278.83 and Hang Seng increased 21.60 points or 0.09% to 24,214.95.