The Indian benchmark indices, Sensex and Nifty, ended higher on Wednesday, helped by the surge in buying across banking space. Investor sentiments were boosted by revival in GST collections during June which indicated that economic activity might be stabilising. Snapping previous session's losses, the BSE Sensex closed 498.65 points, or 1.43 per cent, up at 35,414.45, while the NSE Nifty settled 127.95 points, or 1.24 per cent, higher at 10,430.05. On Tuesday, the 30-share barometer closed 45.72 points, or 0.13 per cent, lower at 34,915.80, while the NSE Nifty dropped 10.30 points, or 0.10 per cent, to 10,302.10.
Among heavyweights, Reliance Industries, HDFC Bank, SBI, Tata Motors, Bajaj Finance, IndusInd Bank, ICICI Bank and Zee Entertainment were top gainers in the Nifty. On the flip side, NTPC was the top loser, followed by M&M, Nestle, L&T, Britannia, Bharti Infratel, ONGC, Sun Pharma, HCL Tech, Tata Steel, among others.
Here are 5 things to look forward in tomorrow's trade
RBI's special liquidity scheme for NBFCs and HFCs: Shares of non-banking financial companies (NBFCs) and housing finance companies (HFCs) will remain in focus on Thursday after the government on Wednesday approved a scheme to avoid any potential systemic risks to the financial sector. The scheme will be implemented through a Special Purpose Vehicle (SPV) to improve liquidity position of NBFCs and HFCs.
SBI Capital Markets (SBICAP), a subsidiary of the state-owned State Bank of India, has set up a SPV (SLS Trust) to manage this operation. The SPV will purchase short-term papers from eligible NBFCs/HFCs, who will utilise the proceeds under this scheme solely for the purpose of extinguishing existing liabilities.
Coronavirus cases: India's COVID-19 infection tally rose to 5,85,493, including 2,20,114 active cases, 3,47,979 recoveries and 17,400 deaths, the Ministry of Health and Family Welfare said on Wednesday. The country reported a total of 507 deaths and 18,653 new COVID-19 cases in 24 hours to 8 AM on Wednesday.
Global cues: Trading in the equity markets will be guided by global cues, geopolitical developments and trend in coronavirus cases. Global market trends will continue to dictate the domestic markets, in the absence of any major domestic event. Investors will continue to keep a close eye on India-China border dispute; any fresh escalation might not go well with the markets.
Macro data: Participants will also track macroeconomic signals like PMI data for the services sectors, scheduled to be announced during the week. Other factors like crude oil and rupee movement would also impact investor sentiments.
Fitch's concerns over Indian banks: Shares of banks will remain in focus on Thursday, especially public sector banks, after the global rating agency said that Indian banks would face a capital shortfall of about $58 billion (about Rs 4.38 lakh crore) in the event of a high-stress situation where the domestic economy fails to recover from the coronavirus pandemic-related disruption. Banks are likely to require at least $15 billion (around Rs 1.13 lakh crore) in fresh capital to meet a 10 per cent weighted-average common equity Tier 1 ratio, with public sector banks requiring the bulk of recapitalisation, it said.
Fitch also warned that banks may continue to face heightened asset quality and earning pressure for at least next two years, as disruption to business activity and supply chains, and shrinking personal incomes damage banks' balance sheets.