Benchmarks trim gains; trade continues in green

Indian equity benchmarks trimmed minor gains but continued its firm trade in the late afternoon session taking cues from Asian counterparts. The sentiments were on optimistic note from early trade after C Rangarajan, Chairman, Prime Minister’s Economic Advisory Council (PMEAC) stated that with gold imports slowing down and inflation levels showing signs of decline, the country’s current account deficit (CAD) is expected to be around 2% of the GDP in the coming few years. The upbeat mood continued after Reserve Bank of India (RBI) Governor Raghuram Rajan expressed optimism on India’s growth rate going beyond the 5% mark soon. Traders were seen piling up positions in Oil & Gas, Capital Goods and Consumer Durables stocks, while selling was witnessed in TECK, IT and Metal sector stocks. In scrip specific development, United Bank of India was trading firm on reporting a 15-fold jump in net profit at Rs 469.37 crore for the quarter ended March 31, 2014, on the back of a strong bad loan recovery, coupled with a decent growth in net interest income. Ricoh India rallied after the company’s promoter announced delisting offer to the public shareholders of the company. On the global front, the Asian markets were trading in green, while the European markets traded on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,700 and 22,500 levels respectively. The market breadth on BSE was negative in the ratio of 1253:1275 while 137 scrips remained unchanged. The BSE Sensex is currently trading at 22512.44, up by 67.32 points or 0.30% after trading in a range of 22602.71 and 22496.22. There were 12 stocks advancing against 18 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.41%, while Small cap index up by 0.33%. The gaining sectoral indices on the BSE were Oil & Gas up by 1.35%, Capital Goods up by 0.99%, Consumer Durables up by 0.69%, FMCG up by 0.68% and Bankex up by 0.27% while, TECK down by 0.51%, IT down by 0.50%, Metal down by 0.22% and HealthCare down by 0.05% were the only losing indices on BSE.    The top gainers on the Sensex were RIL up by 2.05%, Tata Motors was up 1.39%, ITC up by 1.28%, L&T up by 1.22% and Tata Steel up by 1.21%. On the flip side, Bharti Airtel down by 2.12% Hindalco Industries down by 1.59%, Hero Motocorp down by 1.48%, Wipro down by 1.08% and Bajaj Auto down by 1.05%. Meanwhile, in order to revive the economic growth and reduce bad loans of banks, Industry body Assocham has suggested measures such as developing a strong corporate bond market, speeding up the implementation of infrastructure projects and a single-window clearance mechanism. Expressing concerns over the deteriorating asset quality of banks, Assocham stated that it has become imperative to bring down non-performing assets (NPAs) of banks as the huge portfolio of restructured assets and NPAs has been exerting huge pressure on the country's financial system.  Increasing number of corporate debt restructuring cases is an indication of the growing difficulties faced by companies in meeting their financial obligations, it added. NPAs of state-owned banks rose 28.5 percent to Rs 2.36 lakh crore in September 2013 from Rs 1.83 lakh crore in March last year. Prevailing economic slowdown coupled with high interest rates in order to tame the inflation has led to a sharp deterioration in asset quality for the banking sector. Regarding the infrastructure sector, Industry chamber emphasized need to sort out the issues related with the big infrastructure projects like constraints in mobilisation of financial resources, gestation lags, land acquisition issues and hurdles in obtaining statutory clearances.  Assocham also suggested the government to develop a strong and vibrant corporate bond market which could help in widening the scope of infrastructure funding. It also recommended a single-window clearance system with specific guidelines and time-bound approvals to fast track the implementation of mega infrastructure projects. The CNX Nifty is currently trading at 6,714.00, up by 14.65 points or 0.22% after trading in a range of 6,743.45 and 6,709.50. There were 17 stocks advancing against 32 declining ones on the index, while 1 stock remained unchanged. The top gainers of the Nifty were Reliance Industries up 1.78%, ICICI Bank up by 1.49%, IndusInd Bank up by 1.39%, Tata Motors up by 1.35% and DLF up by 1.26%. On the flip side, Bharti Airtel down by 2.06%, Hindalco Industries down by 1.87%, Ambuja Cement down by 1.63%, Hero MotoCorp down by 1.36% and Wipro down by 1.08% were the major losers on the index. Asian equity indices were trading in green; Shanghai Composite up by 0.03%, Straits Times up by 0.19%, Jakarta Composite up by 1.07% and Taiwan Weighted added 0.47%. Hong Kong and South Korea markets remained shut for the trade today for Buddha's Birthday Holiday, while the Japanese market is closed for Greenery Day. The European markets were trading in red; France’s CAC 40 was down 0.23%, Germany’s DAX lost 0.39% while UK’s FTSE 100 dropped 0.34%.