Benchmarks continue to trade higher in noon deals

Key domestic bourses continued to trade higher in noon deals as sentiments remained up-beat after India’s core sector, the eight key infrastructure industries, grew at their fastest pace in seven months at 3.7% in August compared with an expansion of 3.1% in the previous month, boosted by robust performance in electricity, cement, steel and petroleum refinery products. Sentiments also remained boosted as buying accelerated in Auto space after companies like Maruti Suzuki and TVS Motor reported better than expected September sales numbers. Some support also came in from Economic Affairs Secretary Arvind Mayaram’s statement that the economy will grow at more than 5% in the current financial year ending in March 2014. India will finance its current account deficit fully in the fiscal year ending March without drawing down on its reserves, and will also contain the fiscal deficit at 4.8% of GDP, he added.

Global cues too remained supportive as European markets opened mostly in the green, while most of the Asian equity benchmarks were trading in the positive terrain at this point of time with Japanese markets were trading higher as a report showed that confidence among large Japanese manufacturers increased before Prime Minister Shinzo Abe unveils plans for an economic-support package.  Back home, on the sectoral front, banking witnessed the maximum gain in trade followed by capital goods and realty, while metal, public sector undertaking and power remained the top losers on the BSE sectoral space. The market breadth on BSE was in favor of advances in the ratio of 1,115:831 while 125 scrips remained unchanged.

The BSE Sensex is currently trading at 19470.86, up by 91.09 points or 0.47% after trading in a range of 19518.55 and 19264.72. There were only 18 stocks advancing against 12 declines on the index.The broader indices too trimmed some gains; the BSE Mid and Small cap indices were trading up by 0.41% and 0.49% respectively.

The gaining sectoral indices on the BSE were Bankex up by 1.58%, Capital Goods up by 1.43%, Realty up by 1.29%, Auto up by 1.06% and Consumer Durables up by 0.39%. While, Metal down by 0.62%, PSU down by 0.50%, Power down by 0.47%, Oil & Gas down by 0.43%  and FMCG down by 0.16% were remained the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 4.08%, Maruti Suzuki up by 1.98%, Tata Motors up by 1.94%, HDFC Bank up by 1.73% and SBI up by 1.56%. On the flip side, Tata Power down by 2.65%, Sesa Goa down by 2.57%, NTPC down by 2.46%, ONGC down by 2.17% and Hindustan Unilever down by 2.01% were the top losers on the Sensex.

Meanwhile, the net non-performing assets (NPA) of Indian banking industry have increased to 1.68 percent of the total loan at the end of financial year13 as against to the 1.28 of total loans in the FY12. Meanwhile, public sector banks recorded steep rise in net NPAs as compared to the private sector banks. Net NPAs of the 26 public sector banks, including State Bank of India (SBI), grew by 2.02 percent during the year as compared to 1.53 in the previous fiscal. SBI and its five associates recorded a net NPA of 2.04 percent against 1.76 percent in the comparable period. Conversely, net NPAs of new private sector bank rose marginally to 0.45 percent as compared to 0.42 percent, showing superior risk management than public sector banks.

The stress on the asset quality is a reflection of the stress in the economy of the country and over the past two years, non-performing Assets (NPAs) of banks have been increasing on account of prevailing economic downturn. Indian economic growth slowed down to four year low at 4.4 percent in Q1 FY14. Meanwhile, in the April- June quarter, 2013, gross NPAs in the banking system grew by 12.02 percent to Rs.2.06 trillion and formed 3.85 percent of the industry’s advances.

At present, banking industry is also concerned over the ongoing tight liquidity situation as it has resulted in increase in cost of funds of all commercial banks to 6.12 percent in FY13 as against 5.90 percent in FY12. For, public sector banks, the cost of funds rose to 6.27 percent from 6.06 percent in 2011-12. Further, increase in cost of funds, has been adversely impacting industry's net interest margin (NIM), which came down to 2.79 percent in FY13 from 2.90 percent a year ago. For the public sector banks, NIM came down to 2.57 percent in the reported fiscal as compared to 2.76 percent in the FY12.

The CNX Nifty is currently trading at 5,763.50, up by 28.20 points or 0.49% after trading in a range of 5,776.75 and 5,700.95. There were 30 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were BHEL up by 4.00%, DLF up by 3.48%, Ranbaxy up by 3.06%, Indusin Bank up by 2.81% and Axis Bank up by 2.50%. On the flip side, Tata Power down by 2.90%, Sesa Goa down by 2.74%, BPCL down by 2.51%, ONGC down by 2.26% and NTPC down by 2.10% were the major losers on the index.

The most of the Asian equity indices were trading in green; Straits Times up by 0.36%, Jakarta Composite up by 1.13%, Seoul Composite up by 0.10%,  Taiwan Weighted up by 0.16%, and Nikki 225 up by 0.20%, while KLSE Composite down by 0.01%.

Chinese and Hong Kong equity markets remained shut for the trade today.

Most of the European markets have got off to a positive start; with CAC 40 trading higher by 0.39% and DAX rising by 0.47%, while FTSE 100 down by 0.08%.