Bulls hold tight grip over Dalal Street

Bulls were holding a tight grip over the Dalal Street in late morning session, with both Sensex and Nifty trading near their intraday high points, on the back of positive cues from other Asian markets. Sentiments were positive, after Prime Minister Narendra Modi said his government has tried to ensure that farmers in the country are not affected even though the prices of fertilisers in international markets have soared due to the pandemic and ongoing war in Ukraine.

Adding more relief among traders, a private report stated that states have room to cut value added tax (VAT) on petrol and diesel as they gained Rs 49,229 crore from VAT revenue on fuel when oil prices were increasing and will forego Rs 15,021 crore now that retail prices have been downwardly adjusted through excise cut.

On the global front, Asian markets were trading mostly in green, even after China's industrial profits declined in April as lockdowns disrupted production and higher raw material prices squeezed margins. The data from the National Bureau of Statistics showed that in April, industrial profits decreased 8.5 percent from the previous year. This was the biggest fall since early 2020.

The BSE Sensex is currently trading at 56016.24, up by 1131.58 points or 2.06% after trading in a range of 55466.30 and 56082.65. 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 1.90%, while Small cap index was up by 2.13%.

The top gaining sectoral indices on the BSE were IT up by 3.90%, Consumer Durables up by 3.62%, TECK up by 3.52%, Realty up by 3.16% and Capital Goods up by 2.68%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 4.87%, HCL Tech. up by 4.63%, Titan Co up by 4.43%, Infosys up by 4.30% and Tech Mahindra up by 3.54%. On the flip side, Dr. Reddy's Lab down by 0.84%, Sun Pharma down by 0.68%, ITC down by 0.17% and Kotak Mahindra Bank down by 0.08% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has said that banks would need to support growth while being watchful of the credit behaviour of the restructured advances and possibility of increased slippages arising from sectors that were relatively more exposed to the pandemic. It said banks had extended moratorium on repayment of loans and restructured advances to businesses to help them combat the impact of the COVID-19 pandemic and subsequent lockdowns.

According to the report, with the unwinding of support measures, some of the restructured accounts might face solvency concerns, and the impact on banks' balance sheets will become clearer in the upcoming quarters. It said that prudence warrants proactive recognition of any non-viable accounts to activate timely resolution. It also stated that the gross non-performing assets (GNPA) ratio of all scheduled commercial banks (SCBs) moderated to its lowest level in six years, aided by efforts towards recoveries and technical write-offs. It said going forward, as the economy recovers and credit demand rises, banks will need to focus on supporting credit growth while being vigilant of the evolving risks. Care needs to be taken to ensure that fresh slippages are arrested, and banks' balance sheets are strengthened to avoid future build-up of stress.

It further said bank credit growth has begun to pick up to track nominal GDP growth and lenders are regaining bottom lines. It said bank credit to commercial sector improved and aggregate deposits moderated with the ebbing of precautionary savings and bank credit growth picked up, especially since August 2021, and it was broad-based. During 2021-22, against the target for agricultural credit of Rs 16.5 lakh crore, banks achieved 104 per cent of the target (Rs 17.09 lakh crore) as on March 31, 2022. The banking sector was cushioned against the disruptions caused by the pandemic by adequate liquidity support and various regulatory dispensations provided by the Reserve Bank.

The CNX Nifty is currently trading at 16678.90, up by 326.45 points or 2.00% after trading in a range of 16506.15 and 16695.50. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 4.91%, HCL Tech. up by 4.67%, Titan Co up by 4.42%, Infosys up by 4.28% and UPL up by 3.58%. On the flip side, JSW Steel down by 1.39%, ONGC down by 1.29%, Dr. Reddy's Lab down by 0.76%, Sun Pharma down by 0.66% and ITC down by 0.24% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted strengthened 286.11 points or 1.76% to 16,552.33, Hang Seng increased 387.18 points or 1.87% to 21,084.54, KOSPI rose 31.03 points or 1.18% to 2,669.08, Shanghai Composite gained 9.85 points or 0.31% to 3,140.09, Nikkei 225 surged 614.78 points or 2.3% to 27,396.46 and Straits Times advanced 6.60 points or 0.2% to 3,237.15. On the flip side, Jakarta Composite lost 36.09 points or 0.51% to 6,990.17.