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Barometer gauges maintain gains ahead of GST Council meet
Feb-20-2019

Indian stock markets were trading in fine fettle in the early noon session on the back of heavy buying in Metal, Basic Materials and Capital Goods sectors. Besides, Vedanta, Tata Steel and ONGC were contributing the most to Sensex, while Indiabulls Housing Finance, Hindalco and Adani Ports & SEZ were contributing the most to Nifty. Besides, broader indices were also trading in green, supporting their larger peers. Traders remained optimistic with a report that the Union Cabinet has approved a new policy framework on reforms in exploration and licensing sector that aims to enhance domestic exploration and production of oil and gas by providing more attractive terms to investors. Under the new policy framework, bidders of oil and gas blocks in the country will be encouraged to invest more on exploration activities and start sharing revenue with the government only at the production stage. Sentiments remained up-beat with the government's statement that the revised Gross Domestic Product (GDP) figures for the demonetisation year was not cooked up and, in fact, the growth rates are likely to go up further due to the GST. On January 31, the government revised the GDP growth rates by 110 basis points (bps) from 7.1% to 8.2% for 2016-17, the year of demonetisation, and by 50 bps from 6.7% to 7.2% for fiscal 2017-18.

On the global front, Asian markets were trading mostly in green, after US-China trade talks resumed, while investors awaited minutes from the US Federal Reserve for clues on policymakers' thinking on interest rates and its balance sheet reduction policy. Back on streets, realty stocks remained in limelight as the GST Council meets due later in the day, may cut GST rates on under-construction residential properties. At present, 12% GST is levied with input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

The BSE Sensex is currently trading at 35550.15, up by 197.54 points or 0.56% after trading in a range of 35519.80 and 35653.14. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.31%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Metal up by 1.96%, Basic Materials up by 1.46%, Capital Goods up by 1.08%, Oil & Gas up by 1.08% and Industrials was up by 0.99%, while there were no losers on the sectoral front.

The top gainers on the Sensex were Vedanta up by 3.07%, Tata Steel up by 2.68%, ONGC up by 1.44%, Larsen & Toubro up by 1.37% and Infosys was up by 1.25%. On the flip side, Bajaj Auto down by 0.63%, Hero MotoCorp down by 0.38%, Indusind Bank down by 0.37%, HCL Technologies down by 0.28% and ITC was down by 0.22% were the top losers.

Meanwhile, signaling an end to the liquidity crunch faced by non-banking finance companies (NBFCs) following the IL&FS bankruptcy since last September, Credit rating agency Care Ratings in its latest report has said corporate bond issuances by them have increased by 30 percent in the month of January 2019, reflecting renewed confidence among both issuers as well as investors. It noted that NBFCs are the biggest issuers of debt in the corporate bond market, controlling nearly 90 percent of the volume. It added that with the 30 percent spike in fresh issuances in January, their share has clawed backed to the near normal levels to 82.2 percent of the volume.

According to the report, NBFCs depend on the bond market to raise short -term capital for on-lending, and they go to banks for long-term finance. It also indicated that fresh corporate bond issuances by NBFCs saw a notable decline from 71.6 percent (of the total flow) in July 2018 to 64.6 percent in August 2018. It added that between September and November 2018, issuances rose each month rising to almost 80 percent in November 2018. But the liquidity challenges deepened in December as bond sales by NBFCs plunged almost 30 percent.

The rating agency said that the housing finance companies (HFCs) continue to lag and the share of fresh issuances by them plunged deeper from 10.1 percent in July 2018 to a trickle of 2.5 percent in December 2018. But, it noted that the share has almost doubled on a month-on-month basis from 2.5 percent in December 2018 to 5.2 percent in January 2019. In terms of funds raised through commercial papers, it pointed out that the share has seen a significant decline among NBFCs to the tune of 14.1 percent between July 2018 and January 2019 while that of HFCs declined 12.1 percent.

The CNX Nifty is currently trading at 10665.55, up by 61.20 points or 0.58% after trading in a range of 10653.60 and 10697.35. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.00%, Tata Steel up by 2.74%, Indiabulls Housing Finance up by 2.42%, Hindalco up by 1.90% and Adani Ports & SEZ was up by 1.87%. On the flip side, Bajaj Auto down by 0.82%, Bharti Infratel down by 0.71%, ITC down by 0.49%, Zee Entertainment down by 0.39% and Indusind Bank was down by 0.30% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 100.64 points or 0.47% to 21,403.29, Taiwan Weighted strengthened 113.74 points or 1.12% to 10,266.00, Hang Seng increased 186.25 points or 0.66% to 28,414.38, KOSPI rose 18.30 points or 0.83% to 2,223.93 and Straits Times was up by 15.29 points or 0.47% to 3,275.09.

On the other hand, Shanghai Composite declined 9.40 points or 0.34% to 2,746.25 and Jakarta Composite was down by 5.25 points or 0.08% to 6,489.42.

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