Benchmarks continue to trade in green in late morning session

After getting a gap-up start, benchmark equity indices continued to trade in fine fettle in late morning deals as traders and foreign funds building up long positions, driven by a series of positive factors such as forecast of a normal to excess rainfall this monsoon, robust GDP numbers and encouraging earnings. Further, Investors got some confidence with finance minister Arun Jaitley stating that India will attempt to keep the proposed Goods & Services Tax ( GST ) rate as moderate as possible and the government will push for passage of the bill introducing the levy in the upcoming monsoon session of Parliament. The GST will replace various indirect taxes with one simple tax, creating a boundary-less national market that some estimate will lift India's GDP by as much as 2%. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Indian rupee advanced by 13 paise to 67.16 against the US dollar in early trade on sustained selling of the American currency by banks and exporters. Some support also came with the India Meteorological Department (IMD) stating that the country is all set to receive above-normal monsoon rains this year with a long-period average of 106 per cent. The Met department said that conditions are becoming favourable for the onset of monsoon and it would hit the Indian coast in the next 4-5 days. 

On the global front, Asian markets were trading mostly higher as investors looked to US employment data that could add to or detract from the case for a Federal Reserve interest rate hike this month or in July. Sentiments got some support with the repot that Japan's services sector activity expanded in May, rebounding back from a contraction in the previous month because of a modest increase in new orders. The Markit or Nikkei Japan Services Purchasing Managers Index (PMI) rose to 50.4 in May from 49.3 in April on a seasonally adjusted basis. Moreover, the services sector in China continued to expand in May, albeit at a slower pace, the latest survey from Caixin revealed on Friday with a services PMI score of 51.2. That's down from 51.8 in April, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. Overnight, US stocks closed at session highs Thursday, with health care stocks leading, ahead of the highly anticipated employment report due Friday morning.

Back home, stocks from Banking, Auto and FMCG counters were supporting the markets’ uptrend, while those from Consumer Durables and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, shares of NMDC have surged after the company said that its board will meet next to consider buyback of shares. On the other hand, Idea Cellular has declined after more than 3% of total equity worth of around Rs 1,400 crore of telecom Services Company changed hands via multiple block deals.

The market breadth on BSE was positive, out of 2140 stocks traded, 1179 stocks advanced, while 849 stocks declined on the BSE. The BSE Sensex is currently trading at 26936.92, up by 93.78 points or 0.35% after trading in a range of 26915.02 and 27008.14. There were 17 stocks advancing against 13 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 up by 0.38%.

The top gaining sectoral indices on the BSE were Bankex up by 0.86%, Auto up by 0.82%, FMCG up by 0.51%, Oil & Gas up by 0.47% and IT up by 0.46%, while Consumer Durables down by 0.58% and Capital Goods down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.69%, Hindustan Unilever up by 2.13%, Bajaj Auto up by 1.93%, Hero MotoCorp up by 1.91% and ICICI Bank up by 1.28%. On the flip side, Bharti Airtel down by 1.65%, Lupin down by 1.46%, Adani Ports &Special down by 1.12%, GAIL India down by 1.09% and TCS down by 0.84% were the top losers.

Meanwhile, working on the references received from Non Banking Finance Companies (NBFCs) and the Department of Banking Operations and Development on Framework for Revitalising Distressed Assets in the Economy - Refinancing of Project Loans, Sale of NPA and Other Regulatory Measures and Refinancing of Project Loans, respectively, the Reserve Bank of India (RBI) has allowed NBFCs to refinance any existing infrastructure and other project loans by way of take-out financing, without it being considered as restructuring.

As per the notification, NBFCs may refinance any existing infrastructure and other project loans by way of take-out financing, without a pre-determined agreement with other lenders, and fix a longer repayment period, the same would not be considered as restructuring. However, such loans should be standard in the books of the existing lenders, and should have not been restructured in the past. “Such loans should be substantially taken over (more than 50% of the outstanding loan by value) from the existing financing lenders.” The central bank further said that the repayment period should be fixed by taking into account the life cycle of the project and cash flows from the project.

The RBI has further notified that for existing project loans where the aggregate exposure of all institutional lenders is minimum Rs 1,000 crore, NBFCs may refinance such loans by way of full or partial take-out financing, even without a pre-determined agreement with other lenders, and fix a longer repayment period, and the same would not be considered as restructuring in the books of the existing as well as taking over lenders, if it satisfies the condition that the project should have started commercial operation after achieving Date of Commencement of Commercial Operation (DCCO); the repayment period should be fixed by taking into account the life cycle of and cash flows from the project, and, Boards of the existing and new lenders should be satisfied with the viability of the project. Further, the total repayment period should not exceed 85% of the initial economic life of the project / concession period in the case of PPP projects.

It also stated that such loans should be 'standard' in the books of the existing lenders at the time of the refinancing; in case of partial take-out, a significant amount of the loan (a minimum 25% of the outstanding loan by value) should be taken over by a new set of lenders from the existing financing lenders; and the promoters should bring in additional equity, if required, so as to reduce the debt to make the current debt-equity ratio and Debt Service Coverage Ratio (DSCR) of the project loan acceptable to the NBFCs.

The CNX Nifty is currently trading at 8247.15, up by 28.20 points or 0.34% after trading in a range of 8240.90 and 8262.00. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 2.67%, Hindustan Unilever up by 2.25%, Tata Power up by 2.01%, Bajaj Auto up by 1.96% and Hero MotoCorp up by 1.79%. On the flip side, Idea Cellular down by 9.78%, Bharti Airtel down by 1.69%, Lupin down by 1.36%, Hindalco down by 1.18% and GAIL India down by 1.00% were the top losers.

Asian markets were trading mostly in green, FTSE Bursa Malaysia KLCI was up by 0.3%, Taiwan Weighted up by 0.19%, Nikkei 225 up by 0.16%, Jakarta Composite up by 0.22% and Hang Seng was up by 0.39%. On the flip side, KOSPI Index was down by 0.08% and Shanghai Composite was down by 0.01%.