Indian equity markets continue firm trade in late afternoon session

Indian equity markets continued its firm trade hovering near the highest point of the day in the late afternoon session on account of buying in frontline counters. The sentiments on the street were however on caution note after global rating agency Moody’s warned that India’s widening trade deficit is negative for the country and also raises its vulnerability to global shocks. At present, Moody’s has a ‘Baa3’ (lowest investment grade) rating for India with a stable outlook and any downward revision from here could pull the country’s credit rating into junk grade. Traders were seen piling some position in Realty, Capital Goods and Power sector while selling was witnessed in IT, TECk and Consumer Durables sector.

In the scrip specific development, DB Realty is trading in green after the property developer repaid a portion of its loan from the bank. Realty counter was trading firm in green led by gains of real estate major DLF after brokerage houses upgraded the stock despite weak performance in third quarter. Also the company’s management sounded bullish in its maiden analyst meet. The company stated that it is targeting cutting its net debt by 50% via an equity issuance over the next two or three years. Jet Airways was trading in red on reports that Etihad Airways PJSC is contemplating to revise its deal to buy a stake in the airline company.

On the global front, most of the Asian markets were trading in green while the European markets were trading on a mixed note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,900 and 19,500 levels respectively. The market breadth on BSE was positive in the ratio of 1471:1142 while 168 scrips remain unchanged.

The BSE Sensex is currently trading at 19,532.98, up by 64.83 points or 0.33% after trading in a range of 19,542.62 and 19,462.92. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.60% and Small cap index added 0.61%.

The top gaining sectoral indices on the BSE were, Realty up by 2.15%, Capital Goods up by 1.10%, Power up by 0.98%, PSU up by 0.59% and Oil & Gas up by 0.56%. While, IT down by 0.39%, TECk down by 0.36% and Consumer Durables down by 0.25% remained the few losers on the index.

The top gainers on the Sensex were Tata Steel up by 2.26%, Hindustan Unilever up by 1.86%, HDFC up by 1.53%, BHEL up by 1.46%, and Hindalco Industries up by 1.46%.

On the flip side, Coal India was down by 1.92%, Jindal Steel was down by 1.22%, Dr Reddy’s down by 1.03%, TCS was down by 0.98%  and  Bharti Airtel was down by 0.70% were the top losers on the Sensex.

Meanwhile, in a major relief for road developers, National Highways Authority of India (NHAI) is seeking to push a 'relief package' as several of road developers are under stress and finding it tough to raise debt and equity to finance projects. Considering the recent poor performance of highway sector in the wake of changed economic scenario, the Prime Minister's Office (PMO) on February 18 will consider ways to revitalize the highway sector.

The bailout is being discussed as large players such as GMR and GVK walked out of projects. So far this year, NHAI has awarded contracts to build under 1,000 km of highways compared to the revised target of 4,800 km. However, PMO had set a target of 9,500 km, twice the revised level. NHAI is expected to allow a staggered payment, which will allow road developers to pay a lower upfront premium this year and postpone a part of the amount during the latter part of the contract period to make the projects viable.

Developers pay the annual upfront payment as premium to government that increases 5% every year during the contract period that can extend to 30 years. To revive the sector, in the first year the premium amount could be reduced substantially to provide some relief, however, for the later part of the contract period, the premium amount paid by the companies could be increased to 10-15%  annually instead of 5%, so, that the net present value of the premium (NPV) won't change.

Other issues like allowing 100% dilution of equity of developers in projects which have already been completed and tolling has started is also expected to come up at the PMO meeting. After having several rounds of talks with the highway developers, NHAI has been pushing this for all completed projects. This will infuse more equity into the sector, enabling developers to get funds to start the projects. However, the proposal is facing resistance from the planning commission and the expenditure department.

The S&P CNX Nifty is currently trading at 5,907.30 up by 19.60 points or 0.34% after trading in a range of 5,908.05 and 5,878.45. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were DLF up by 5.01%, JP Associates up by 2.86%, Reliance Infrastructure up by 2.65%, Tata Steel up by 2.23% and Power Grid up by 2.22%.

On the flip side, Coal India down by 1.97%, Jindal Steel down by 1.35%, Ultratech Cement down by 1.19%, Axis Bank down by 1.10% and TCS down by 1.05%, were the major losers on the index.

Most Asian equity indices were trading higher; Shanghai Composite rose 0.13%, Nikkei 225 soared 2.09%, KOSPI Composite up by 0.04%, Straits Times up by 0.11% and Taiwan Weighted was up by 0.47%. On the flip side, Hang Seng declined by 0.27%, Jakarta Composite dipped 0.01% and KLSE Composite slipped by 0.37%.

The European markets were trading on a mixed note; France’s CAC 40 lost 0.29%, Germany’s DAX added 0.05% and United Kingdom’s FTSE 100 edged lower by 0.20%.