Post Session: Quick Review

Markets coming out of their slump managed a positive close by the end on Wednesday, despite  choppy trade. Though, there was not much positive cues but the short covering on the penultimate day of F&O series expiry helped the markets to some extent, with rollovers picking up. Traders amid the volatility kept lapping up value stocks at the lower levels, while some good earnings too supported the sentiments. Marketmen, also got encouragement with Lok Sabha Speaker Sumitra Mahajan convening an all-party meeting amid continuous disruptions by opposition members, to discuss better functioning of the Lok Sabha, proceedings of which have been virtually washed out in the Monsoon Session so far.

On the global front, while the US markets rallied overnight, most of the Asian markets followed the trend and ended in green, with the Chinese market bouncing back by over 3 percent, as speculation of state buying offsetted waning interest by retail investors and margin traders. The China Securities Regulatory Commission has set up a legal enforcement taskforce to check for clues related to the large-scale selling. Later the European markets too made a green start ahead of the US Federal Reserve concluding its meeting on monetary policy.

Back home, apart from the F&O related volatility, marketmen kept reacting to the earnings announcements and opted a cautious tone ahead of the outcome of the two-day US Fed meet which ends later today. Power and banking sector, though recovered by last but there was concern with global rating agency Crisil Ratings in its latest report stating that the unviable power generation and distribution sector could jeopardise loans worth nearly Rs 75,000 crore if issues plaguing these sectors are not resolved soon. Bank of India, Allahabad Bank, Canara Bank, Dena Bank, Oriental Bank, Syndicate Bank, Uco Bank and Vijaya Bank all  touched their respective 52-week lows on asset quality concern. Meanwhile, Reserve Bank of India Deputy Governor SS Mundra said the latest April-June earnings from state-owned lenders showed 'stability' in terms of non-performing assets (NPAs), but added the central bank would remain 'watchful.' The PSU stocks too came under pressure after Department of Disinvestment (DOD) told Finance Ministry that it would be able to raise only about Rs 30,000 crore out of the total disinvestment target of Rs 69500 crore for the current fiscal 2015-16. In non sectoral gauges, aviation stocks surged on signs of recovery in the sector, after SpiceJet reported a net profit of Rs 71.85 crore for the quarter ended June 30, 2015 as compared to a net loss of Rs 124.10 crore for the same quarter in the previous year. SpiceJet is in talks with Boeing Co and Airbus Group to acquire about 100 new narrow-body jets. The broader markets though, outperformed the benchmarks and ended with gains of around a percent.

The BSE Sensex ended at 27563.43, up by 104.20 points or 0.38% after trading in a range of 27470.09 and 27609.29. There were 19 stocks in green against 11 stocks in red on the index. (Provisional)

The broader indices were trading in green; the BSE Mid cap index was up by 0.89%, while Small cap index ended higher by 0.83%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 1.89%, IT up by 1.48%, Auto up by 1.39%, TECK up by 1.34%, Realty up by 1.22%, while Consumer Durables down by 1.92%, FMCG down by 0.82%, PSU down by 0.30%, Oil & Gas down by 0.18% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were Infosys up by 1.93%, BHEL up by 1.89%, Lupin up by 1.85%, Maruti Suzuki up by 1.82% and Larsen & Toubro up by 1.81%. On the flip side, ITC down by 2.38%, SBI down by 2.10%, GAIL India down by 1.62%, Reliance Industries down by 1.38% and NTPC down by 1.06% were the top losers.(Provisional)

Meanwhile, amid concern of growing bad loans of the banks, the global rating agency Crisil Ratings has red flagged the power sector loans, stating that the unviable power generation and distribution sector could jeopardise loans worth nearly Rs 75,000 crore if issues plaguing these sectors are not resolved soon.

The rating agency noted that 46,000 megawatts of power projects are facing viability issues due to a lack of long-term buyers for electricity, inadequate fuel supply, and aggressive bidding to win projects and coal blocks. According to the Crisil research note, of the 36,000 MW coal-based projects, tariff under recovery has impacted 20,000 MW of capacity, while the rest are reeling because of inadequate feedstock and poor electricity offtake by discoms. Another 10,000 MW gas-based projects have become unviable because of dwindling fuel supplies from Reliance Industries-operated block in the Krishna-Godavari basin.

Crisil has stated that total loans to these stressed generation projects are currently about Rs 2.1 lakh crore. A sixth of it, or about Rs 35,000 crore, is for projects which have the cushion of a strong parent. Additionally, projects with loans of Rs 1 lakh crore could become viable if their payment profiles can be structured appropriately. This leaves the remaining Rs 75,000 crore of loans at risk.

The total outstanding credit to the power sector from various banks amounted to Rs 5.83 lakh crore at the end of 2014. State Bank of India had the highest exposure to the power sector with a total loan amount of Rs 1,00,085 crore, followed by Canara Bank with Rs 45,620 crore. Among the private banks, ICICI had an exposure of Rs 13,646 crore, HDFC Bank Rs 8,962 crore. Banks have raised concern that at least Rs 1.5 lakh crore of their loans to around two dozen power projects may turn non-performing on account of a new rule that mandates them to provide for bad debts if the project cost exceeds 10% of the original estimate due to delays. Though, a working group of bankers, examining the issues faced by the power sector, has recommended that stressed loan accounts of the industry should not be downgraded till September 31, 2015.

The CNX Nifty ended at 8380.35, up by 43.35 points or 0.52% after trading in a range of 8338.45 and 8381.50. There were 35 stocks on gainers side against 15 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Bosch up by 5.15%, HCL Tech. up by 3.01%, Yes Bank up by 2.52%, Tata Motors up by 2.45% and Infosys up by 2.18%. On the flip side, Tata Power down by 3.81%, PNB down by 3.24%, ITC down by 2.31%, SBI down by 2.14% and GAIL India down by 1.92% were the top losers. (Provisional)

European Markets were trading in green, France’s CAC was up by 15.95 points or 0.32% to 4,993.27, Germany’s DAX gained 30.62 points or 0.27% to 11,204.53 and UK’s FTSE 100 was higher by 32.86 points or 0.5% to 6,588.14.

Asian markets closed mixed on Wednesday as investors awaited an update on monetary policy from the Federal Reserve. Japanese government stated that drastic wage increases are needed to create a positive economic cycle and stimulate growth. Chief Cabinet Secretary Yoshihide Suga notified that the government will make its utmost efforts to create an environment where small and medium-sized firms can raise wages. Japan’s retail sales fell to a seasonally adjusted annual rate of 0.9%, from 3.0% in the preceding month. China’s central bank stated that it will maintain prudent monetary policy in the second half of this year despite inflation concerns triggered by recent rise in the price of pork, the nation’s staple meat. The People’s Bank of China notified that it will keep the policy orientation and flexibility of multiple monetary tools to ensure that liquidity stays at an appropriate level. The central bank added that it will continue to improve lending structure, lower financing costs, keep the yuan stable, stabilize financial market expectations and boost the real economy. Indonesia’s finance ministry sold 2.93 trillion rupiah ($217.68 million) of Islamic bonds at an auction, surpassing an indicative target of 2.5 trillion rupiah.