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Barometer gauges maintain gains in early noon deals
Aug-19-2019

Markets were trading in fine fettle in the early noon session due to heavy buying in Capital Goods, Healthcare and Telecom sectors. Healthy buying was observed in blue-chip stocks like Sun Pharma, Larsen & Toubro and NTPC. Investors cheered with Fitch Solutions’ report that Reserve Bank of India (RBI) is expected to cut interest rates by 40 basis points before the end of the current financial year as monetary easing till now appears to be insufficient in boosting economic growth. Further, sentiments remained up-beat with Union finance minister Nirmala Sitharaman’s statement that with a view to tackle a slowdown in economy, the Narendra Modi government might come out with a stimulus for the trade and industry. Meanwhile, the RBI Governor stated that Insolvency and Bankruptcy Code (IBC) amendments would help ring-fence banks. The governor also expects more banks to move to repo-linked loan and deposit pricing, and wanted faster lending rate cuts.

On the global front, Asian markets were trading mostly in green on account of fresh hopes for trade negotiations between US and China, and as President Donald Trump's comments dismissed worries about a recession, and touted a strong economy. Back on street, in scrip specific developments, shares of Bharti Airtel gained on the buzz of tying up with Uttar Pradesh government. Besides, United Bank of India surged on targeting net profit of Rs 1,000 crore in FY20.

The BSE Sensex is currently trading at 37659.42, up by 309.09 points or 0.83% after trading in a range of 37420.52 and 37682.92. There were 25 stocks advancing against 6 stocks declining on the index.The broader indices were trading in green; the BSE Mid cap index rose 0.63%, while Small cap index was up by 0.65%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.44%, Healthcare up by 1.43%, Telecom up by 1.23%, Consumer Durables up by 1.22% and Realty was up by 1.08%, while PSU down by 0.20% and Oil & Gas was down by 0.08% were the few losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.24%, Larsen & Toubro up by 1.78%, NTPC up by 1.65%, ICICI Bank up by 1.61% and Axis Bank was up by 1.32%. On the flip side, Power Grid down by 1.87%, Tata Steel down by 0.90%, ONGC down by 0.70%, Yes Bank down by 0.63% and SBI was down by 0.33% were the top losers.

Meanwhile, global rating agency Fitch Ratings in its latest report has said that Indian-based real-estate developers may face liquidity crunch as non-bank financial companies (NBFCs) and housing finance companies (HFCs) becoming risk -averse towards lending to real-estate sector. It pointed out that majority of the developers with weak balance sheet rely on the parallel banking sector for funds and these players are likely to be affected the most if situation continues.

According to the report, NBFCs have excessively increased their share of real-estate sector credit in the past few years, due to heightened risk aversion by banks. It also said banks' low appetite for lending to real-estate developers is due to the usually high risk weights attached to such loans. It noted that NBFCs are also shying away from refinancing maturing debt of even large, proven developers to limit concentration risk to the sector, which is pushing developers towards alternative funding channels, such as private equity.  It pointed out that the availability of such funding could be more limited than the value of maturing debt and may only be available to established developers with sufficient unpledged assets.  It added that it would also come at a higher cost.

Rating agency further said the availability of unencumbered assets among large developers may be of limited use, as NBFCs are looking to shed their already-high exposure to the sector, especially to large borrowers. It stated developers that are focused on high-end projects may face higher risk, as sales of such projects have slowed in the last two years. It also said that the government has announced several measures to enhance liquidity access for NBFC sector, but their efficacy remains to be seen. It believed that the government's recent Budget 2019-20 proposal to provide a first-loss guarantee of 10 percent on securitised assets issued by NBFCs to banking entities could ease funding pressure for NBFCs in the short term.

The CNX Nifty is currently trading at 11130.50, up by 82.70 points or 0.75% after trading in a range of 11068.65 and 11139.55. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.53%, Sun Pharma up by 3.22%, Dr. Reddys Lab up by 2.77%, NTPC up by 1.83% and Larsen & Toubro was up by 1.74%. On the flip side, Power Grid down by 1.63%, UPL down by 0.80%, GAIL India down by 0.77%, Tata Steel down by 0.59% and ONGC was down by 0.47% were the top losers.

Asian stocks were trading mostly in green; Nikkei 225 surged 144.35 points or 0.71% to 20,563.16, KOSPI rose 12.84 points or 0.67% to 1,940.01, Taiwan Weighted strengthened 67.86 points or 0.65% to 10,488.75, Hang Seng increased 554.42 points or 2.15% to 26,288.64, Shanghai Composite gained 44.54 points or 1.58% to 2,868.36 and Straits Times was up by 18.50 points or 0.59% to 3,133.53. On the other hand, Jakarta Composite was down by 0.61 points or 0.01% to 6,286.05.
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