Benchmarks extend early gains; trade at intra-day high level in afternoon session

Indian equity benchmarks extended early gains and reached intra-day high level in afternoon session amid buying witnessed in frontline blue-chip stocks such as L&T, ICICI Bank, ONGC and ITC. Buying was also witnessed in rate sensitive stocks such as baking, auto and metals as investors’ sentiments got a boost after the RBI governor said that several factors, besides inflation, will determine the stance of its policy review. Further, positive global cues and appreciation in rupee value against dollar also added to the optimistic sentiments. Capital Goods was the top gainer among the sectoral indices on the BSE up by around 2.5% followed by banking, oil and gas and FMCG stocks. On stock specific movement, L&T, ICICI Bank and ONGC were trading up by over 2%, while, SSLT and Coal India were down by around 0.9% on BSE. Among other stocks, Elder Pharmaceuticals has soared around 8% on reports that French drug maker Sanofi SA is close to acquiring the Mumbai-based pharmaceuticals company. Amara Raja Batteries rallied nearly 8% after reporting a strong 19% year-on-year growth in net profit at Rs 95 crore for Q2FY14 on back of healthy operational performance.

On Global front, Asian markets were trading in green with Shanghai Composite up by 2.02%, and Taiwan Weighted up by 0.18% as global risk appetite has improved on expectations that Janet Yellen will be more dovish in her approach towards QE tapering. Back home, the NSE Nifty and BSE Sensex were trading over their psychological 6,100 and 20,500 levels respectively. The market breadth on BSE was positive, out of 2,160 stocks traded, 1,306 stocks advanced, while 753 stocks declined on the BSE.       

The BSE Sensex is currently trading at 20,741.59 up by 342.17 points or 1.68% after trading in a range of 20,754.64 and 20,570.59. There were 28 stocks advancing against only 2 declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.08%, while Small cap index up by 0.81%.

The gaining sectoral indices on the BSE were Capital Goods up by 2.44%, Bankex up by 2.34%, Oil and Gas up by 1.98%, FMCG up by 1.85%, and IT up by 1.51%. There were no losing indices on BSE.

The top gainers on the Sensex were L&T up by 3.07%, ICICI Bank up by 2.83%, ONGC up by 2.72%, ITC up by 2.53%, and HDFC Bank up by 2.51%. On the flip side, SSLT down by 0.99% and Coal India down by 0.58%.

Meanwhile, concerned over the rising bad assets of Indian public sector banks (PSBs), Reserve Bank of India (RBI) deputy governor KC Chakrabarty blames poor credit appraisal of the public sector banks. Underscoring the need for making senior management more accountable, who clear large loan proposals, Chakrabarty said complacency in credit management process during the good times since 2006-07 has started putting stress on the books of PSBs. He further added, bank managements wrongly blame the global financial meltdown for high NPAs. Net NPAs of the 26 public sector banks grew by 2.02 percent during the FY13 as compared to 1.53 in the previous fiscal.

In the last three years, state-run banks alone, reported frauds of over Rs 16,690 crore. Chakrabarty added that undeserving companies, having record of NPAs, have also received loans from banks. During the last 13 years since 2001, these banks have added over Rs 6 lakh crore in NPAs and have shown over Rs 4 lakh crore in reduction of which majority of reduction is driven by the write-offs (Rs 1 lakh crore) than the actual recoveries. Asking the banks to rely more on available credit information, the RBI deputy governor has said that wrong project appraisal is leading to diversions, over- leverage, fraud and NPAs, therefore, bankers should be diligent in the loan appraisal processes.

Chakrabarty also lashed out against the practice of restructuring, which is being used as a tool of NPA management by the banks and said that the moment when the loan is restructured, it should be declared as NPA. Banking industry is the most dominant segment of the financial sector and plays an important role in the economic development of the country. Banks encourage economic growth by allocating savings to investments that have potential to yield higher returns. The Indian banking industry’s contribution to GDP moves along with growth in the Indian economy.

The CNX Nifty is currently trading at 6,151.10 up by 94.95 points or 1.57% after trading in a range of 6,157.80 and 6,110.40. There were 46 stocks advancing against 4 declining on the index.

The top gainers of the Nifty were L&T up by 3.13%, Ranbaxy up by 2.95%, ONGC up by 2.70%, ICICI Bank up by 2.69%, and Reliance up by 2.46%. On the flip side, SSLT down by 0.97%, Lupin down by 0.93%, Coal India down by 0.71% and Tata Motors down by 0.12%, were the only losers on the index.

The Asian equity indices were trading in green; Shanghai Composite up by 2.02%, Taiwan Weighted up by 0.18%, Seoul Composite up by 0.33%, KLSE Composite up by 0.25%, Straits Times up by 0.33%, Hang Seng up by 2.58%, and Jakarta Composite up by 1.42%. While, Nikkei 225 down by 0.19%.