Sensex Finishes Marginally Higher; Jaitley's Comments Boost Bank Stocks

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Indian share markets trimmed their early gains in the afternoon session to finish marginally higher. At the closing bell, the BSE Sensex stood higher by 89 points, while the NSE Nifty finished up by 22 points. Meanwhile, the S&P BSE Mid Cap finished flat and the S&P BSE Small Cap finished up by 0.4%. Gains were largely seen in bank stocks, PSU stocks and realty stocks.

PSB stocks surged today after Finance Minister Arun Jaitley promised a solution to the growing NPA problem within the next few days. Finance Minister Arun Jaitley had yesterday said the resolution being worked out with the RBI will put enough pressure on borrowers to settle the dues. He blamed the bad loans of public sector banks on just 30-50 companies, saying accounts of these will have to be fixed to resolve the issue.

Bank of India share price rose 5%, Bank of Baroda share price surged 4.3%, and SBI share price was up 2.8% on the BSE. Buying was also seen in private lenders, with ICICI Bank share price and Axis Bank share price finishing firm.

Bad Loan Inventory Bloats Up

Gross NPAs of public sector banks have gone up to Rs. 6.06 lakh crore in December 2016 from Rs. 5.02 lakh crore at the end of March 2016. Rising to the menace of bad debts, the Reserve Bank of India is pondering initiating tough measures against willful defaulters.

While RBI's proactive measure to tighten NPAs is proactive, banks need to take their share of blame. In our recent The 5 Min WrapUp edition, we had highlighted how the banks return ratios had deteriorated due to its profits written off on account of NPA provisions.

Meanwhile, Yes bank share price also finished up by 0.9% on the BSE after the company launched a US$650 million Qualified Institutional Placement (QIP) issue with an option to upsize to US$750 million.

This QIP sale comes more than six months after the bank withdrew a similar issue in September last year. The issue size is US$650 million with an option to raise another US$100 million.

Asian stock markets finished higher today with shares in Japan leading the region. The Nikkei 225 is up 0.93% while China's Shanghai Composite is up 0.64% and Hong Kong's Hang Seng is up 0.13%. European markets are lower today with shares in France off the most. The CAC 40 is down 0.32% while London's FTSE 100 is off 0.07% and Germany's DAX is lower by 0.03%.

The rupee was trading at Rs 65.45 against the US$ in the afternoon session. Oil prices were trading at US$ 48.35 at the time of writing.

According to a leading financial daily, India's current account deficit (CAD), the difference between the value of all imports and the value of all exports, has widened in the third quarter (October-December) of 2016-17, to US$7.9 billion or 1.4% of GDP as compared to US$7.1 billion or 1.4 % of GDP in the same quarter of 2015.

As per the data released by Reserve Bank of India (RBI), during April-December 2016, the CAD narrowed to 0.7 % of GDP from 1.4 % in April-December 2015, on the back of the contraction in the trade deficit. India's trade deficit narrowed to US$82.8 billion in April-December 2016 as compared to US$105.3 billion in April-December 2015. It said that private transfer receipts, mainly representing remittances by Indians employed overseas registered a decline of 3.8% amounting to US$15.2 billion, from the previous level a year ago.

In the year 2016-17, net services receipts moderated on a y-o-y basis, mainly due to the fall in earnings from software, financial services and charges for intellectual property rights. In the financial account, net foreign direct investment at US$9.8 billion in Q3 of 2016-17 was marginally lower than its level a year ago. On the other hand, portfolio investment recorded a net outflow of US$11.3 billion in Q3 of 2016-17 as against US$0.6 billion net inflow in the year-ago period.

In news from power stocks, Power Grid Corporation of India share price finished the trading day up by 0.4% after it was reported that the company has commenced commercial operation of its 800 Kilovolt HVDC Champa-Kurukshetra Pole I project.

The power line is part of 800 kV, 3,000 Megawatt western-northern region HVDC interconnector transmission system for independent power projects in Chhattisgarh. The 2,576 circuit km Champa-Kurukshetra line has been set up at a cost of Rs 63 billion.

Power stocks finished the day on a strong note with SJVN share price and KSK Energy share price leading the gains.

Moving on to news from pharma stocks. As per an article in The Economic Times, Sun Pharmaceutical Industries and its Spain-based partner Almirall S.L have sought regulatory approval from the European Medicines Agency (EMA) for a new drug, tildrakizumab.

As per the reports, the psoriasis market is set to rise from US$ 6.6 billion in 2014 to over US$ 13.3 billion by 2024 globally. Notably, Sun Pharma is the largest generic dermatology company (subscription required) and third largest dermatology company in the US. Going ahead, whether the company's comprehensive product portfolio and a robust pipeline of products help widen footprints in dermatology space will be the key thing to watch out for.

Sun Pharma share price finished down by 0.1% on the BSE.

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