Benchmarks trade in high spirit in early deals; Nifty nears 15,150 mark

Indian equity benchmarks made gap-up opening on F&O expiry day, extending gains from yesterday's extended session, on strong global cues amid optimism over economic recovery and the government’s mass privatisation plans. Markets are trading in high spirit with gains of around a percent in early deals on the back of buying in all the sector indices, except FMCG, led by Metal, Bankex and Oil & Gas. Sentiments got boost with a private report that India's economy is likely to have returned to growth in the December quarter due to the easing of restrictions on movement after the first wave of the coronavirus epidemic peaked. Some support also came in as the Reserve Bank of India (RBI) announced yet another round of Open Market Operations (OMO) or simultaneous purchase and sale of gilts on March 4. Under this, the RBI will buy Rs 15,000 crore worth bonds in four different papers and sell Rs 150,000 crore worth bonds in two different securities. Meanwhile, India’s count of active cases once again topped the 150,000 mark. On Wednesday, the country registered 17,106 fresh Covid-19 cases, taking its the caseload tally to 11,046,432. India continues to be second-most-affected globally, and ranks 14th among worst-hit nations by active cases.

Global cues remained supportive with all the Asian markets trading higher on a broadly positive lead from Wall Street overnight as well as easing bond yields and surging crude oil prices. Investors are refocusing on a vaccine and stimulus-driven global economic recovery with optimism about the reopening of the economy. Back home, pharma and IT hardware stocks were in focus as extending the Production-Linked Incentive (PLI) scheme to more sectors, the Union Cabinet approved Rs 15,000 crore for incentives to domestic manufacturing of pharmaceuticals and Rs 7,350 crore for production of laptops, tablets, all-in-one personal computers and servers in India. In scrip specific development, Axis Bank rallied as the IRDAI gave its formal approval for the acquisition of up to 12 percent stake in Max Life Insurance by the private sector lender and its subsidiaries.

The BSE Sensex is currently trading at 51291.42, up by 509.73 points or 1.00% after trading in a range of 51057.74 and 51386.12. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.90%, while Small cap index was up by 0.83%.

The top gaining sectoral indices on the BSE were Metal up by 2.10%, Bankex up by 1.80%, Oil & Gas up by 1.48%, PSU up by 1.39%, Basic Materials up by 1.36%, while FMCG down by 0.13% was the sole losing index on BSE.

The top gainers on the Sensex were Axis Bank up by 3.73%, Indusind Bank up by 3.48%, ONGC up by 2.77%, Kotak Mahindra Bank up by 1.92% and TCS up by 1.76%. On the flip side, Nestle down by 1.23%, Asian Paints down by 0.68%, Hindustan Unilever down by 0.67%, Titan Company down by 0.52% and Tech Mahindra down by 0.39% were the top losers.

Meanwhile, S&P Global Ratings has said that an improvement in macroeconomic conditions is likely to alleviate stress for India's banking sector. It said the Indian government's strong efforts to shield banks from the COVID-19 pandemic have largely been successful, but a hit from the pandemic is inevitable. It also stated that while the Indian economy is on a mend, the permanent GDP loss stemming from the brunt of the coronavirus is huge at 10 percent. It estimates the banking system's weak loans are at 12 percent of gross loans.

S&P further said that India's economic risk trend is stable and credit risk remains very high for Indian banks. It noted that these banks hold elevated levels of stressed corporate assets and, despite new foreclosure laws, progress on their resolution has been slow. It also said the pandemic-induced downcycle has delayed the improvement in asset quality for Indian banks. It added that Small and midsize enterprises (SME) have been hit hardest, followed by retail loans, especially unsecured loans.

It further stated that steps by the government and the Reserve Bank of India, including an emergency credit guarantee scheme for SMEs, are likely to lessen the stress. It expects earnings of Indian banks to gradually recover from the weak base of past few years.

The CNX Nifty is currently trading at 15149.50, up by 167.50 points or 1.12% after trading in a range of 15065.35 and 15170.85. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.03%, Axis Bank up by 3.49%, Indusind Bank up by 3.33%, UPL up by 2.93% and TCS up by 2.56%. On the flip side, Nestle down by 1.06%, Titan Company down by 1.04%, Hero MotoCorp down by 1.01%, Hindustan Unilever down by 0.68% and Britannia Industries down by 0.65% were the top losers.

All the Asian markets were trading in green; Nikkei 225 surged 465.34 points or 1.57% to 30,137.04, Straits Times jumped 42.77 points or 1.46% to 2,967.35, Hang Seng soared 677.98 points or 2.28% to 30,396.22, Taiwan Weighted rose 145.14 points or 0.90% to 16,357.67, KOSPI advanced 79.31 points or 2.65% to 3,074.29, Jakarta Composite increased 47.54 points or 0.76% to 6,298.59, and Shanghai Composite was up by 38.20 points or 1.07% to 3,602.28.