Benchmarks continue to trade in green in morning deals

Indian equity benchmarks continued to trade in green in morning deals, tracking gains in Consumer Durables, Realty and Power stocks amid a firm trend in global markets. Traders took some support with RBI Monetary Policy Committee (MPC) Member Ashima Goyal stating that eight years of systemic economic reforms under the Modi government have increased India's macroeconomic stability and its capacity to withstand any external shocks. She further said appropriate countercyclical macroeconomic policy with continuing supply-side improvements has enabled a growth recovery that is among the best in the world. Some support also came as exchange data showed Foreign Institutional Investors (FIIs) bought shares worth Rs 23.19 crore on Wednesday. Traders overlooked the former chairman of the statistical commission Pronab Sen’s statement that India's banking sector is faced with the predicament of a 'massive asset-liability mismatch' that could explode anytime. Sen stated that there is a need to reassess laws governing the industry. Sen said that explosion has not yet happened as most of the banks are in the public sector.

On the global front, Asian markets are trading mostly in green with investors nervously awaiting the U.S. Federal Reserve's annual Jackson Hole conference for clues on how sharp future interest rate hikes might be. Back home, Fertilizer industry stocks remained in limelight as to bring about uniformity in fertiliser brands across the country, the government issued an order directing all companies to sell their products under a single brand name of Bharat.

The BSE Sensex is currently trading at 59371.81, up by 286.38 points or 0.48% after trading in a range of 59290.94 and 59469.24. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.81%, while Small cap index was up by 0.78%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.37%, Realty up by 1.34%, Power up by 1.31%, Utilities up by 1.27% and PSU up by 1.12%, while IT down by 0.08%, TECK down by 0.06% and Healthcare down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 1.44%, Hindustan Unilever up by 1.43%, Titan Company up by 1.36%, SBI up by 1.21% and Indusind Bank up by 1.19%. On the flip side, HCL Technologies down by 0.36%, Tech Mahindra down by 0.36%, TCS down by 0.29%, Sun Pharma down by 0.18% and Power Grid Corporation down by 0.15% were the top losers.

Meanwhile, the former chairman of the statistical commission Pronab Sen has said that India's banking sector is faced with the predicament of a 'massive asset-liability mismatch' that could explode anytime. Sen stated that there is a need to reassess laws governing the industry. Sen said that explosion has not yet happened as most of the banks are in the public sector.

Explaining the situation, he said the Indian banks had adopted the British model, and the laws don't allow lenders to borrow from the capital market, which essentially makes deposits the only source of funds. He mentioned ‘Today, the average tenure of bank lending is about nine years, and deposits' tenure is close to two-and-a-half years. So, you have nine years on the asset side, and 2.5 years on the liability side... which means there is a massive asset-liability mismatch which can explode anytime.

He said ‘It hasn't happened because the largest chunk of our banks are in the public sector... But, now banks have to assess not only the risk of the borrower, but also the length of time of lending... There is an enormous risk for the banking sector’. He said 20 years back, the loan portfolio of banks comprised 70-per cent working capital finance and 20-per cent retail, while term loans to companies accounted for 10 per cent of the share. Moreover, He said, in present times, term lending for fixed capital is 45 per cent of the loan portfolio, and working capital finance has shrunk to around 35 per cent.

The CNX Nifty is currently trading at 17693.95, up by 89.00 points or 0.51% after trading in a range of 17659.25 and 17716.35. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were UPL up by 1.93%, SBI Life Insurance up by 1.93%, Hindustan Unilever up by 1.38%, Titan Company up by 1.38% and Bajaj Finserv up by 1.35%. On the flip side, Cipla down by 0.72%, Adani Ports &SEZ down by 0.39%, Tech Mahindra down by 0.34%, TCS down by 0.32% and HCL Technologies down by 0.31% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 199.05 points or 0.7% to 28,512.52, Taiwan Weighted strengthened 129.16 points or 0.86% to 15,198.35, KOSPI rose 24.62 points or 1.01% to 2,472.07, Shanghai Composite gained 13.06 points or 0.41% to 3,228.26 and Straits Times advanced 6.02 points or 0.19% to 3,239.50.

On the flip side, Jakarta Composite lost 37.36 points or 0.52% to 7,157.35.