Benchmarks extend losses; Realty, Metal drag

Indian equity markets extended losses and continued trading in red in the late afternoon session on account of selling in frontline blue chip counters and taking cues from Asian counterparts. The sentiments were on pessimistic note as India’s trade deficit, exerting pressure on country’s external sector, widened to 18-month high of $16.86 billion in month of November, as compared to $9.57 in the same month previous year and $13.36 billion in the previous month October. Traders were seen piling positions in IT and TECK stocks while selling was witnessed in Realty, Metal and Consumer Durables sector stocks. In scrip specific development, SpiceJet was trading in red despite the beleaguered company got a breather with indications that state-run Airports Authority of India would not press for immediate clearance of Rs 200 crore dues.

On the global front, the Asian markets were trading mostly in red while the European markets too were trading mostly on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,100 and 26,900 levels respectively. The market breadth on BSE was negative in the ratio of 467:2240 while 87 scrips remained unchanged.

The BSE Sensex is currently trading at 26871.69, down by 447.87 points or 1.64% after trading in a range of 26845.54 and 27199.37. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.27%, while Small cap index down by 2.91%.

The gaining sectoral indices on the BSE were IT up by 2.10%, TECK up by 1.50% while, Realty down by 3.63%, Metal down by 3.39%, Consumer Durables down by 2.84%, FMCG down by 2.76%, Bankex down by 2.60% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.82%, Wipro up by 0.81% and Infosys up by 0.69%. On the flip side, Sesa Sterlite down by 6.37%, Dr. Reddy’s Lab down by 6.00%, Hindalco down by 5.44%, Tata Power down by 4.47% and ICICI Bank down by 3.81% were the top losers.

Meanwhile, in a major boost to the infrastructure sector as well as for banks financing long gestation projects, the Reserve Bank of India (RBI) eased norms for structuring of existing long-term project loans to infrastructure and core industries. The RBI widened the scope of 5:25 scheme by extending flexible refinancing and repayment option for long-term infrastructure projects to existing ones where the total exposure of lenders is more than Rs.500 crore.

As per the RBI’s circular, banks can now fix fresh loan amortization schedules for existing projects without being treated as restructuring. The amortization schedule should be within 85% of the initial concession period of the projects, and banks should be sure about the cash flow generation capabilities of the projects. The move came as a major boost to banking industry and since April any freshly restructured asset will be considered as bad debt and they will have to set aside a minimum of 15% provision against such loans. The circular also noted that flexible refinancing and repayment option will also be available for projects that have already been classified as bad debt or stressed, however it will be treated as restructuring and the project will continue to be termed non-performing till the project gets upgraded after satisfactory performance on servicing the loans. Further RBI has also allowed banks to raise long-term assets to avoid asset-liability mismatches.

Five sectors including infrastructure, iron and steel, textiles, aviation and mining contribute 24% to total advances of commercial banks, and account for around 53% of their total stressed advances. Till now, banks were typically not lending beyond 10-12 years, resulting into cash shortage for infrastructure and core industries firms as they tried to meet shorter repayment schedules. With this change in rule, cash flows will match the repayment schedule and long-term infrastructure projects will become viable.

The CNX Nifty is currently trading at 8081.35, down by 138.25 points or 1.68% after trading in a range of 8080.85 and 8189.35. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 4.22%, TCS up by 3.92%, Tech Mahindra up by 3.05%, BPCL up by 1.12% and Wipro up by 0.72%. On the flip side, Sesa Sterlite down by 6.38%, Dr. Reddy’s Lab down by 6.17%, Hindalco down by 5.42%, Tata Power down by 4.59% and Bank of Baroda down by 4.30% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 357.35 points or 1.55% to 22,670.50, Nikkei 225 decreased 344.08 points or 2.01% to 16,755.32, Jakarta Composite decreased 77.76 points or 1.52% to 5,030.67, Straits Times decreased 71.36 points or 2.17% to 3,222.78, Taiwan Weighted decreased 34.72 points or 0.39% to 8,950.91, KOSPI Index decreased 16.23 points or 0.85% to 1,904.13 and FTSE Bursa Malaysia KLCI decreased 13.56 points or 0.8% to 1,683.75.

On the other hand, Shanghai Composite increased 68.1 points or 2.31% to 3,021.52.

The European markets were trading mostly in red; France’s CAC decreased 15.18 points or 0.38% to 3,990.20, Germany’s DAX decreased 6.75 points or 0.07% to 9,327.26 while, UK’s FTSE 100 increased 0.27 points or 0% to 6,182.99.