Markets magnify previous session's gains with positive opening

With a positive opening, Indian equity markets magnified their previous session’s gains on firm cues from global markets. Markets are trading higher with gains of over quarter a percent in early deals on Friday on account of buying by funds and retail investors. Hectic buying in Reliance Industries, NTPC, Tata Motors and Sun Pharma companies’ stocks helped the markets to trade higher. Sentiments were upbeat as the Reserve Bank of India (RBI) in its Financial Stability Report (FSR) has said that India’s economy and its financial system are both strong and resilient. This stability is supported by strong macroeconomic fundamentals and a sound financial system. The RBI points out that with healthier balance sheets, banks and financial institutions in India are actively supporting economic activities through consistent credit expansion. Further, Foreign fund inflows also aided domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 7,658.77 crore on June 27. 

On the global front, Asian markets are trading mostly in green on expectations that the U.S. Federal Reserve will cut interest rates this year to prevent a bigger slowdown in the world's largest economy. The US markets ended marginally higher on Thursday as investors awaited fresh inflation data. Back home, on the BSE sectoral front, traders were seen pilling up positions in Metal, Energy, Oil & Gas and Healthcare, while selling was witnessed only in Auto and Realty. 

The BSE Sensex is currently trading at 79506.50, up by 263.32 points or 0.33% after trading in a range of 79308.78 and 79546.19. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.43%, while Small cap index up by 0.67%.

The top gaining sectoral indices on the BSE were Metal up by 1.32%, Energy up by 1.21%, Oil & Gas up by 1.13%, Healthcare up by 1.10%, PSU up by 0.96%, while Auto down by 0.09% and Realty down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.79%, Tata Motors up by 1.53%, Sun Pharma up by 1.39%, Tech Mahindra up by 1.24% and Reliance Industries up by 1.19%. On the flip side, Ultratech Cement down by 1.49%, Adani Ports down by 1.33%, Indusind Bank down by 1.02%, Maruti Suzuki down by 0.51% and Axis Bank down by 0.45% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) in its Financial Stability Report (FSR) has said that India’s economy and its financial system are both strong and resilient. This stability is supported by strong macroeconomic fundamentals and a sound financial system. The RBI points out that with healthier balance sheets, banks and financial institutions in India are actively supporting economic activities through consistent credit expansion.

It said that as of the end of March 2024, the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio for scheduled commercial banks (SCBs) were 16.8 per cent and 13.9 per cent, respectively. These ratios are important indicators of a bank’s financial health, showing how much capital it has relative to its risks. Moreover, it noted a significant improvement in the quality of assets held by banks. The gross non-performing assets (GNPA) ratio fell to a multi-year low of 2.8 per cent, while the net non-performing assets (NNPA) ratio dropped to 0.6 per cent by the end of March 2024. This indicates that banks are effectively managing their bad loans, reducing the risks of defaults.

It also included macro stress tests for credit risk, which are used to assess how well banks can handle potential financial shocks. These tests project that banks will be able to meet minimum capital requirements even under adverse conditions. Specifically, the system-level CRAR is projected to be 16.1 per cent under a baseline scenario, 14.4 percent under a medium stress scenario, and 13.0 per cent under a severe stress scenario by March 2025.

Besides, it highlighted the health of non-banking financial companies (NBFCs) in India. As of the end of March 2024, NBFCs had a CRAR of 26.6 per cent, a GNPA ratio of 4.0 per cent, and a return on assets (RoA) of 3.3 percent. These figures demonstrate that NBFCs are well-capitalized, managing their non-performing assets effectively, and achieving good returns on their investments.  However, it mentioned that the global economy is currently facing significant risks stemming from ongoing geopolitical tensions, high levels of public debt, and slow progress in reducing inflation.

The CNX Nifty is currently trading at 24136.60, up by 92.10 points or 0.38% after trading in a range of 24062.85 and 24137.50. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.39%, ONGC up by 2.24%, Dr. Reddy's Lab up by 1.99%, Divi's Lab up by 1.84% and Hindalco up by 1.71%. On the flip side, Adani Ports down by 1.35%, Grasim Industries down by 1.30%, Ultratech Cement down by 1.11%, Indusind Bank down by 0.91% and Shriram Finance down by 0.68% were the top losers.

Asian markets are trading mostly in green; Hang Seng advanced 81.44 points or 0.46% to 17,797.91, Jakarta Composite gained 95.06 points or 1.36% to 7,063.01, Shanghai Composite strengthened 28.79 points or 0.98% to 2,974.64, KOSPI increased 7.53 points or 0.27% to 2,791.59, Nikkei 225 surged 340.61 points or 0.87% to 39,682.15 and Taiwan Weighted added 169.83 points or 0.74% to 23,075.81. However, Straits Times fell 6.38 points or 0.19% to 3,336.97.