Markets manage to trade in green in early noon session despite paring some gains

Indian markets after an early bounce back were just managing to hold in green in the early noon session. There were bouts of profit taking that were restricting any major gains and consistency in the markets. The volatility was also owing to the July F&O series expiry tomorrow, with rollovers picking up. However, markets were getting some support with some positive cues from the regional peers, as the Chinese market was trading flat after government measure provided some stability to the unruly stock market. Back home, though the benchmarks were receding lower, the broader indices were still trading up by around half a percent. On the sectoral front, IT, tech, capital goods and auto were witnessing buying interest, on the other hand consumer durables, realty and FMCG were dragging the markets downwards. There was lots of scrip specific actions that was keeping the markets in action, aviation stocks SpiceJet and Jet Airways are trading up 6-11 percent. SpiceJet has surged to its 52 week high after the company 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.

The BSE Sensex is currently trading at 27492.75, up by 33.52 points or 0.12% after trading in a range of 27470.09 and 27591.65. There were 18 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.31%, while Small cap index gained 0.59%.

The gaining sectoral indices on the BSE were IT up by 1.42%, TECK up by 1.02%, Auto up by 0.54%, Capital Goods up by 0.51%, Bankex up by 0.01% while, Consumer Durables down by 2.36%, FMCG down by 0.85%, Realty down by 0.52%, PSU down by 0.44%, INFRA down by 0.40% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.12%, BHEL up by 1.74%, Wipro up by 1.58%, HDFC up by 1.37% and Tata Motors up by 1.20%. On the flip side, ITC down by 3.31%, NTPC down by 1.50%, Dr. Reddys Lab down by 1.45%, SBI down by 1.29% and GAIL India down by 0.88% were the top losers.

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 is currently trading at 8346.45, up by 9.45 points or 0.11% after trading in a range of 8338.45 and 8374.90. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Bosch up by 2.92% and HCL Tech. up by 2.53% and Infosys up by 2.08% and Wipro up by 1.51% and BHEL up by 1.49%. On the flip side, PNB down by 4.02%, Tata Power down by 3.38%, ITC down by 3.29%, NTPC down by 1.57% and Dr. Reddys Lab down by 1.42% were the top losers.

The Asian markets were trading mixed, Shanghai Composite was up by 7.36 points or 0.2% to 3,670.36, Jakarta Composite gained 9.2 points or 0.2% to 4,723.96 and Hang Seng was higher by 53.57 points or 0.22% to 24,557.51.

On the other hand, Nikkei 225 declined by 25.98 points or 0.13% to 20,302.91, Taiwan Weighted lost19.01 points or 0.22% to 8,563.48, KOSPI Index was down by 1.48 points or 0.07% to 2,037.62, Straits Times was lower by 1.34 points or 0.04% to 3,279.75 and FTSE Bursa Malaysia KLCI was tad down by 0.04% to 1,699.05.