Markets trade higher in early deals

Indian equity benchmarks opened at new highs for a second session on Friday mirroring overnight strength on Wall Street coupled with firm trade in Asian counterparts after better-than-expected Chinese economic data added to the good vibes from expectations that tightening campaigns by the world's biggest central banks were close to over. Robust U.S. economic data also supported. Domestic markets trimmed some of their opening gains and are trading higher with decent gains of around quarter a percent each. Auto stocks are driving force in the markets. Foreign fund inflows continue to aid sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) bought shares worth Rs 294.69 crore on September 14. 

On the sectoral front, edible oil industry stocks are in focus as industry body SEA data showed that India's vegetable oil imports rose 33 per cent year-on- year to 18.66 lakh tonne in August due to lower duties and a revival of demand after a fall in domestic rates. Stocks of OMCs and paint industry traded under pressure amid overnight jump in crude oil prices. In stock specific development, Shakti Pump zoomed on receiving Rs 293-crore govt order for 10,000 pumps.

The BSE Sensex is currently trading at 67684.94, up by 165.94 points or 0.25% after trading in a range of 67633.69 and 67774.46. 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 0.39%, while Small cap index was up by 0.51%.

The top gaining sectoral indices on the BSE were Auto up by 1.20%, IT up by 0.69%, Healthcare up by 0.63%, Metal up by 0.62% and TECK up by 0.52%, while Oil & Gas down by 0.33%, FMCG down by 0.20%, Consumer Durables down by 0.17% and Realty down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.79%, HCL Technologies up by 1.53%, Mahindra & Mahindra up by 1.02%, Wipro up by 0.96% and HDFC Bank up by 0.90%. On the flip side, Asian Paints down by 1.35%, Hindustan Unilever down by 1.01%, Titan Company down by 0.58%, Power Grid down by 0.54% and Nestle down by 0.43% were the top losers.

Meanwhile, expressing some cautiousness, domestic rating agency Icra has said that credit growth in the banking system will moderate to 12.1-13.2 per cent in the current fiscal (FY24) from 15.4 per cent in the year-ago period. But, it also said asset quality improvement will continue, while the Gross Non-Performing Assets (GNPA) ratio is expected to come down to 2.8-3 per cent by March 2024, as against 3.7 per cent at the end of the June quarter. Amid the high growth in unsecured credit, it said there is nothing much to be concerned about on the front, and the vulnerable retail book remains low and manageable.

Icra Co-Group Head Anil Gupta termed the credit growth as ‘robust’, despite the slight moderation from the percentage growth perspective, and added that the agency expects the quantum of credit to also be lower at Rs 16.5-18 lakh crore as against the Rs 18.2 lakh crore in the year-ago period. Banks will chase more deposits this year, and the overall deposit growth for FY24 is expected to come at over 9 per cent. This will lead to hikes in deposit rates and will consequentially have an impact on the net interest margin by over 0.20 per cent. 

He said this will, in turn, lead to the profitability of the banks being impacted, and added that the return on assets will moderate mildly. He said some banks will prefer to protect profitability, and the improvement in net NPAs at a systemic level will not be as sharp as the GNPAs. Overall, banks’ credit costs will come down as the fresh slippage reduces to under 2 per cent, he said, adding that the quality of the books they are left with after taking care of the legacy bad loans is much better.

The rating agency said it remains cautious about the impact of macro-economic shocks on the asset quality, if these were to materialise. State-run lenders as well as private sector banks will be comfortable on the capitalisation front, the agency said, adding that the government will not have to infuse money into any of its lenders. With general elections coming up next year, Gupta said there is a risk of farm loan waivers, especially in light of deficit monsoon, which needs to be monitored, and added that its estimates do not include the impact of the deficient rains.

The CNX Nifty is currently trading at 20156.45, up by 53.35 points or 0.27% after trading in a range of 20136.10 and 20173.15. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 4.43%, Hero MotoCorp up by 2.22%, Eicher Motors up by 1.75%, Tata Motors up by 1.71% and HCL Technologies up by 1.66%. On the flip side, Asian Paints down by 1.33%, Hindustan Unilever down by 1.07%, Britannia Industries down by 0.84%, BPCL down by 0.64% and Titan Company down by 0.55% were the top losers.

All Asian markets are trading higher; Nikkei 225 surged 408.23 points or 1.22% to 33,576.33, Hang Seng jumped 306.52 points or 1.67% to 18,354.44, Taiwan Weighted strengthen 38.91 points or 0.23% to 16,846.47, KOSPI increased 33.04 points or 1.27% to 2,605.93, Straits Times rose 32.96 points or 1% to 3,282.47, Jakarta Composite added 28.05 points or 0.40% to 6,987.38 and Shanghai Composite was up by 8.76 points or 0.28% to 3,135.31.