Benchmarks trade firm in early deals

Indian equity benchmarks made gap-up opening on Tuesday despite mixed glaobl cues. markets are trading firm in early deals with notable gains on the back of buying in Basic Materials, Consumer Durables and Bankex. Sentiments got some support with Finance Minister Nirmala Sitharaman’s statement that the fiscal measures taken by the government have resulted in positive growth of 0.4 per cent in the third quarter of the current financial year. The minister further said that the gradual unlocking of the economy has eased supply-side disruptions enabling inflation to decline from 7.6 per cent in October, 2020 to 4.1 per cent in January 2021, mainly on account of decline in food inflation. She added that the economy is estimated to contract by 8 per cent during 2020-21 due to the impact of the COVID-19 pandemic. Meanwhile, the coronavirus cases in India jumped to 11,244,624 with 15,353 new infections reported across the country, according to Worldometer. The death toll, meanwhile, reached 157,966 with 76 fatalities in the last 24 hours.

On the global front, Asian markets are trading mixed in choppy trading, following mixed cues overnight from Wall Street. Markets are concerned that the passage of a fresh US coronavirus relief package could cause inflation to soar. Investors are also worried that rising bond yields could hurt high-growth companies reliant on easy borrowing. Besides, Japan's gross domestic product was up an annualized 11.7 percent in the fourth quarter of 2020.

Back home, insurance companies stocks were buzzing with a report that the gross premium underwritten by non-life insurers rose 14 per cent in February with premiums of Rs 15,767.09 crore compared to Rs 13,805.82 crore in the same period, a year ago. Telecom stocks were in limelight as the Telecom Department issued demand notes to Reliance Jio, Bharti Airtel, and Vodafone Idea asking them to make stipulated payments for the spectrum they bought in the just-concluded auctions. In scrip specific development, Tata Motors surged after it received shareholder nod for hiving off its passenger vehicles business into a separate entity.

The BSE Sensex is currently trading at 50847.97, up by 406.90 points or 0.81% after trading in a range of 50706.20 and 50994.60. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.52%, while Small cap index up by 0.61%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.12%, Consumer Durables up by 1.06%, Bankex up by 1.02%, Consumer Disc up by 0.76%, Capital Goods up by 0.60%, while Oil & Gas down by 0.88%, Utilities down by 0.30%, PSU down by 0.13% were the few losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 2.24%, Ultratech Cement up by 2.15%, Asian Paints up by 1.60%, Bajaj Finance up by 1.44% and HDFC up by 1.41%. On the flip side, ONGC down by 1.31%, Indusind Bank down by 0.77%, Power Grid down by 0.68% and Nestle down by 0.28% were the top losers.

Meanwhile, Fitch Ratings has said the impact of Covid-19 pandemic is likely to pose challenges to improving financial performance of Indian banks once asset-quality risks manifest in the financial year ending March 2022 (FY22). The banks reported lower impaired loans and improved profitability for nine months ended December 2020 due to various forbearance measures and continued large write-offs.

Particularly, the government-owned banks remained more risk averse than in prior years which was reflected in their weak credit growth. Fitch said it expects a moderately worse sector outlook for Indian banks for FY22 based on muted expectations for new business and revenue generation, and deteriorating asset quality. It said the government's less-than-adequate recapitalisation plans for its banks further underscores the risk which will likely keep risk aversion high among banks amid continuing uncertainty about asset quality and an uneven economic recovery.

The disproportionate shock to India's informal economy and small businesses coupled with high unemployment and declining private consumption have yet to fully manifest on bank balance sheets. The banks' impaired-loans ratio declined by 130 basis points to 7.2 per cent at 9M FY21 but it is yet to factor in the majority of pandemic stress which is unrecognised due to judicial intervention or forbearance. As these measures unwind, it expects banks to reverse the improvements in asset quality and profitability with state banks more vulnerable to higher stress than private banks, which have better profitability and higher contingent reserves and capitalisation.

The CNX Nifty is currently trading at 15073.90, up by 117.70 points or 0.79% after trading in a range of 15042.20 and 15119.30. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were SBI Life Insurance up by 4.23%, Grasim Industries up by 4.00%, HDFC Life Insurance up by 2.70%, Shree Cement up by 2.51% and HDFC Bank up by 2.20%. On the flip side, BPCL down by 4.08%, IOC down by 1.40%, ONGC down by 1.31%, UPL down by 1.20% and GAIL India down by 1.04% were the top losers.

Asian markets were trading mixed; Taiwan Weighted slipped 30.92 points or 0.20% to 15,789.19, KOSPI fell 19.45 points or 0.65% to 2,976.66, Jakarta Composite lost 13.79points or 0.22% to 6,234.68, and Shanghai Composite was down by 6.18 points or 0.18% to 3,415.23. On the other hand, Nikkei 225 surged 294.47 points or 1.02% to 29,037.72, Straits Times jumped 39.15 points or 1.27% to 3,110.31 and Hang Seng soared 401.35 points or 1.41% to 28,942.18.