Markets continue to trade lower in early noon session

Indian equity benchmarks continue to trade lower in early noon session on account of sustained selling by fund and retail investors in the blue chips stocks such as IT, TECK, Realty and Capital Goods.  Sentiment was weighed down with consistent selling by foreign investors and weak cues from the Asian markets ahead of a closely watched US jobs report. Further, traders also remained cautious with the report that external advisers of Reserve Bank of India governor Raghuram Rajan are worried about the monetary policy implications of slowing remittances by overseas Indians for the first time since 2009, even though India does not rely significantly on such funds to meet foreign exchange requirements. However, downslide was limited with buying in some banking stock. Some support also come in with the Finance Minister Arun Jaitley’s statement that India can grow at an even faster pace this year if predictions of good monsoon hold up. 

On the global front, Asian markets were trading lower, as investors await closely watched April US non-farm payroll numbers, but Australian shares retraced some declines after the central bank lowered its inflation forecast. Back home, in scrip specific development, share of ABG Shipyard tanked over 14% after ECL Finance sold more than one million shares of the company in the open market. On the flip side, Diamond Power Infrastructure is locked in upper circuit of 9.90% on the NSE after the company said, the board will meet on Monday, May 16, 2016, to evaluate various debt re-alignment options including stake sale to strategic investor and re-organization of company’s various businesses.

The BSE Sensex is currently trading at 25151.12, down by 111.09 points or 0.44% after trading in a range of 25057.93 and 25228.31. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.04%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.36%, Oil & Gas up by 0.31%, PSU up by 0.28% and FMCG up by 0.22%, while IT down by 0.76%, TECK down by 0.58%, Realty down by 0.49%, Capital Goods down by 0.30% and Metal down by 0.26% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.16%, SBI up by 1.44%, Bharti Airtel up by 0.63%, Asian Paints up by 0.62% and ICICI Bank up by 0.47%. On the flip side, Adani Ports &Special down by 2.09%, Dr. Reddys Lab down by 1.64%, Wipro down by 1.31%, Lupin down by 1.22% and Tata Motors down by 0.89% were the top losers.

Meanwhile, bankruptcy law has came a step closer to become a realization with the Lok Sabha passing the Insolvency and Bankruptcy Code, 2015 - a new law aimed at speedy winding up of companies, lower non-performing assets and redeployment of capital for productive uses. As per the law, cases of insolvency will be resolved within a period 180 days, which can be extended by another 90 days. It also provides for fast-track resolution of corporate insolvency within 90 days.

The Lok Sabha passed the code with all the amendments proposed by the joint parliamentary committee being accepted by the government. As suggested by the Joint Committee, two provisions were  added to the draft law: One, Centre may enter into a pact with a foreign country for enforcing provisions of the Code. Second, a Letter of Request to a country outside India seeking information. The Bill also provides for setting up of a ‘Insolvency and Bankruptcy Board of India’ to regulate professionals, agencies and information utilities engaged in resolution of insolvencies of companies.

The creation of the law will also improve India’s position in the World Bank’s Doing Business ranking by ensuring time-bound settlement of insolvency, enabling faster turnaround of businesses and creating a data base of serial defaulters. Enactment of this legislation before 31 May this year will help India improve its position in the World Bank’s ease of doing business ranking.

The process of putting the new insolvency and bankruptcy code would involve repealing the existing bankruptcy laws and amendment of 11 laws dealing with defaulters. These include Partnership Act of 1932, Central Excise Act of 1944, Customs Act of 1962, Income Tax Act of 1961, the Recovery of Debts due to Banks and Financial Institutions Act of 1993, Sarfaesi Act of 2002, Sick Industrial Companies Repeal Act of 2003, Payment and Settlement Systems Act of 2007, Limited Liability Partnership Act of 2008 and Companies Act of 2013.

The CNX Nifty is currently trading at 7706.15, down by 29.35 points or 0.38% after trading in a range of 7678.35 and 7717.65. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 3.12%, GAIL India up by 2.39%, Bank of Baroda up by 2.29%, SBI up by 1.61% and ACC up by 1.28%. On the flip side, Adani Ports &Special down by 1.97%, Dr. Reddys Lab down by 1.69%, Wipro down by 1.57%, Power Grid down by 1.50% and Tech Mahindra down by 1.40% were the top losers.

Asian markets were trading lower; Hang Seng decreased 242.62 points or 1.19% to 20,207.20, Shanghai Composite decreased 56.65 points or 1.89% to 2,941.20, Nikkei 225 decreased 40.66 points or 0.25% to 16,106.72, Taiwan Weighted decreased 21.53 points or 0.26% to 8,146.43 and FTSE Bursa Malaysia KLCI decreased 0.74 points or 0.04% to 1,644.35.