Sensex, Nifty again join northward rally in early noon deals

Indian equity benchmarks were again heading to their highs in early afternoon deals, aided by positive cues from other Asian markets along with heavy buying at Oil & Gas and Energy stocks. Traders were optimistic amid reports that the market capitalisation of BSE-listed firms reached a record high of Rs 297.94 lakh crore in early trade on Monday as the benchmark Sensex hit the 65,000 mark for the first time ever amid bullish investor sentiments. Besides, Care Ratings in its latest report has said that banks' net interest margin (NIM), a key profitability gauge, grew 46 basis points (bps) to 3.3 per cent in the January-March quarter (Q4FY23), driven by slower deposit rate resetting.

On the global front, Asian markets were trading higher, even after the manufacturing sector in China continued to expand in June, albeit at a slower pace, with a manufacturing PMI score of 50.5. That's down from 50.9 in May although it remains above the boom-or-bust line of 50 that separates expansion from contraction. After rising at the quickest rate in 11 months in May, Chinese manufacturing output expanded only slightly in June. Where production increased, companies often linked this to firmer demand conditions and greater intakes of new work.

The BSE Sensex is currently trading at 65190.64, up by 472.08 points or 0.73% after trading in a range of 64836.16 and 65240.57. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.36%, while Small cap index was up by 0.61%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.15%, Energy up by 1.95%, Metal up by 1.19%, PSU up by 1.05% and Bankex up by 0.86%, while IT down by 0.36%, Healthcare down by 0.23%, TECK down by 0.23%, Auto down by 0.18% and Consumer Durables down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.10%, HDFC up by 2.08%, Ultratech Cement up by 1.64%, HDFC Bank up by 1.56% and Mahindra & Mahindra up by 1.50%. On the flip side, Power Grid down by 1.80%, Sun Pharma down by 1.26%, Nestle down by 1.17%, Maruti Suzuki down by 0.93% and Tech Mahindra down by 0.92% were the top losers.

Meanwhile, Care Ratings in its latest report has said that banks' net interest margin (NIM), a key profitability gauge, grew 46 basis points (bps) to 3.3 per cent in the January-March quarter (Q4FY23), driven by slower deposit rate resetting. This has helped lenders register a 29.5 per cent increase in their net interest income during the period. Net interest income (NII), which is the money that banks earn from lending and paying to depositors, rose to Rs 1.83 lakh crore in Q4FY23 due to healthy loan growth and a higher yield on advances as against the year-ago period.

According to the report, the NIM saw an on-year improvement of 46 bps to 3.3 per cent in the fourth quarter due to the faster repricing of loans, while deposit rates have not yet reflected the increased interest rates. The anticipated rise in deposit rates, which is expected to be a lag effect, is likely to be counterbalanced by the withdrawal of the Rs 2,000 banknotes in May this year. The NIM of private sector lenders stood at 4.03 per cent, which was more than 43 bps, and that of public sector lenders at 2.85 per cent, up 46 bps.

The report said despite rising interest rates on loans, the overall economic growth led to higher credit demand leading to banks reporting a robust 17.3 per cent rise in advances mainly driven by personal loans, NBFCs, and MSMEs, taking the full year credit offtake to 15 per cent in FY23. Significantly, private sector banks as well as public sector ones logged in equal pace of loan growth during the reporting period. But public sector banks reported a higher NII growth of 31.6 per cent against 28.2 per cent rise recorded by their private sector peers.

On the other hand, it said interest income rose 32.1 per cent overall led by private sector lenders which reported a 32.6 per cent growth. Their state-owned peers registered a 31.7 per cent growth in the interest income during the quarter. This was based on an increase in advances by 17.3 per cent and 130 bps higher yields from 7.5 per cent in Q4FY22 to 8.8 per cent in Q4FY23. Interest expenses rose by 34.3 per cent with private banks witnessing a 37.5 per cent growth and the state-owned lenders registering a much lower 32.6 per cent hike. It rose due to higher deposit rates triggered by RBI's monetary policy tightening which also led to an increase in the cost of funds by 77 bps. 

The CNX Nifty is currently trading at 19313.10, up by 124.05 points or 0.65% after trading in a range of 19234.40 and 19336.10. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.10%, Grasim Industries up by 2.33%, Reliance Industries up by 2.12%, HDFC up by 2.10% and Ultratech Cement up by 1.63%. On the flip side, Power Grid down by 1.80%, Bajaj Auto down by 1.71%, Sun Pharma down by 1.29%, Nestle down by 1.17% and SBI Life Insurance down by 1.11% were the top losers.

All Asian markets were trading higher; Jakarta Composite gained 15.8 points or 0.24% to 6,677.68, Shanghai Composite strengthened 41.01 points or 1.28% to 3,243.07, Straits Times rose 6.05 points or 0.19% to 3,211.96, KOSPI increased 38.19 points or 1.47% to 2,602.47, Taiwan Weighted added 168.66 points or 0.99% to 17,084.20, Nikkei 225 surged 564.29 points or 1.67% to 33,753.33 and Hang Seng advanced 383.05 points or 2.02% to 19,299.48.