Benchmarks make gap-down start; Nifty breaches 8,000 mark

Indian equity benchmarks once again made a negative start and shed around a percent in early deals on Wednesday with frontline gauges declining below their crucial 8,000 (Nifty) and 26,600 (Sensex) levels. Sentiments remained dampened after Indian rupee fell a 13-month low against the dollar on Wednesday while benchmark bond yields hit their highest level in two weeks as the brewing financial crisis in Russia continued to raise concerns about foreign fund outflows. The partially convertible rupee was trading at 63.88 per dollar, after hitting as weak as 63.89, its lowest level since Nov 13, 2013. It had closed on Tuesday at 63.53. Meanwhile, shares of oil marketing companies remained under pressure with the government denying it had any plans to withdraw the recent hike in excise duty on petrol and diesel.

On the global front, the US markets extended their declining spree and all the major indices closed notably lower after a volatile day of trade on fluctuating price of crude oil. The Asian markets were trading mostly in the green at this point of time ahead of the US Federal Reserve policy decision. Japanese market has recovered from its initial fall.

Back home, on the sectoral front, fast moving consumer goods remained the lone gainer in trade, while healthcare, consumer durables and realty remained the top losers on the BSE sectoral space. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 390 shares on the gaining side against 1611 shares on the losing side while 44 shares remained unchanged.

The BSE Sensex is currently trading at 26547.05, down by 234.39 points or 0.88% after trading in a range of 26507.88 and 26834.43. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.91%, while Small cap index down by 2.25%.

The only gaining sectoral indices on the BSE was FMCG up by 0.23% while, Healthcare down by 3.76%, Consumer Durables down by 3.15%, Realty down by 2.10%, Capital Goods down by 1.78% and Auto down by 1.65% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.25%, Reliance Industries up by 0.41%, Hindustan Unilever up by 0.39%, HDFC up by 0.36% and ITC up by 0.29%. On the flip side, Cipla down by 3.05%, Sun Pharma down by 2.76%, Hindalco down by 2.70%, ICICI Bank down by 2.66% and Bharti Airtel down by 2.60% 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 7988.95, down by 78.65 points or 0.97% after trading in a range of 7979.05 and 8080.65. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 1.09%, NMDC up by 0.60%, Grasim Industries up by 0.57%, Ultratech Cement up by 0.55% and HDFC up by 0.53%. On the flip side, Lupin down by 4.32%, Asian Paints down by 3.90%, Cipla down by 3.19%, Sun Pharma Inds. down by 3.10% and Hindalco down by 2.94% were the top losers.

The Asian markets were trading mostly in the green, KOSPI Index increased 0.58 points or 0.03% to 1,904.71, FTSE Bursa Malaysia KLCI surged 12.07 points or 0.72% to 1,686.01, Jakarta Composite rose 23.1 points or 0.46% to 5,049.13, Shanghai Composite added 29.94 points or 0.99% to 3,051.46 and Nikkei 225 was up by 106.19 points or 0.63% to 16,861.51. On the flip side, Taiwan Weighted decreased 84.83 points or 0.95% to 8,866.08, Hang Seng dipped 52.88 points or 0.23% to 22,617.62 and Straits Times was down by 4.73 points or 0.15% to 3,210.36.