Benchmarks trade cautiously ahead of RBI’s policy announcement

Indian equity benchmarks are trading slightly in red in early deals on Tuesday, as traders opted to remain on sidelines, ahead of last monetary policy review by the outgoing RBI Governor Raghuram Rajan. Though, the expectations are that governor will leave interest rates unchanged, but traders will be eyeing his views on economy. However, losses remained capped as some support came after the Lok Sabha late last night, unanimously passed the amendments to the GST Bill recommended by the Rajya Sabha, all 443 members present in the house voted in favour of the bill.

Global cues too remained sluggish, with most of the Asian counters were trading in red at this point of time after Wall Street pulled back from a record high and with oil prices unable to consolidate their overnight gains as markets speculated about possible production cuts. US stocks ended flat with negative bias on Monday weighed down by healthcare stocks even as energy stocks firmed up tracking gains in crude oil prices.

Back home, telecom stocks were trading under pressure, as the Telecom Department has announced that bidding rounds for the biggest-ever spectrum auction will begin from September 29. The sale will include mobile airwaves worth Rs 5.63 lakh crore at the base price value. IT majors witnessed profit taking after gains in the previous session on the back of encouraging US jobs data.

The BSE Sensex is currently trading at 28173.43, down by 9.14 points or 0.03% after trading in a range of 28116.03 and 28289.96. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.05%, while Small cap index was down by 0.03%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.71%, Utilities up by 0.82%, Power up by 0.81%, PSU up by 0.52% and Bankex was up by 0.21%, while FMCG down by 0.85%, Realty down by 0.23%, TECK down by 0.21%, Consumer Durables down by 0.16% and IT down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 1.74%, ONGC up by 1.33%, NTPC up by 0.91%, ICICI Bank up by 0.84% and Cipla up by 0.82%. On the flip side, ITC down by 1.16%, HDFC down by 0.69%, Asian Paints down by 0.47%, Reliance Industries down by 0.45% and TCS down by 0.43% were the top losers.

Meanwhile, global credit rating agency Moody's Investors Services in its latest report has said that the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Bill, 2016 and the Insolvency and Bankruptcy Code, 2016 (bankruptcy) is a credit positive for the Indian banks, as it aims to expedite the recovery and resolution of bad debts. While the bankruptcy law, the Enforcement of Security Interest and Recovery of Debts Bankruptcy Code, 2016 has to be passed by the Rajya Sabha after it was cleared by the Lok Sabha.

Moody’s said that weakness in current processes for bad debt resolution has been a key structural credit challenge for Indian banks. There are currently about 70,000 cases pending in debts recovery tribunals (DRTs) and these cases have been pending for many years owing to various adjournments and prolonged hearings. Further, the provisions relating to promotion of asset reconstruction companies for banks to off-load their non-performing assets (NPA) and priorities debt due to secured creditors over all other debts and claims including government claims are credit positive features for the Indian banks.

Rating agency further said that the Enforcement of Security Interest and Recovery of Debts Bankruptcy Code, 2016, proposed electronic filing of all proceedings, time limit for filing appeals against decisions of DRTs reduced to 30 days from 45 and debtors to deposit 50 per cent of the amount of debt payable before filing an appeal are positive for Indian banks.

The CNX Nifty is currently trading at 8704.20, down by 7.15 points or 0.08% after trading in a range of 8686.75 and 8728.35. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 4.60%, Lupin up by 1.72%, ONGC up by 1.22%, Tata Motors - DVR up by 0.90% and NTPC up by 0.84%. On the flip side, Idea Cellular down by 4.70%, ITC down by 1.20%, Ambuja Cement down by 0.98%, Eicher Motors down by 0.73% and Tech Mahindra down by 0.72% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 42.5 points or 0.19% to 22,452.26, Taiwan Weighted slipped 13.07 points or 0.14% to 9,137.19, Jakarta Composite shed 10.86 points or 0.2% to 5,448.12 and FTSE Bursa Malaysia KLCI was down by 3.18 points or 0.19% to 1,669.50.

On the flip side, Shanghai Composite increased 8.61 points or 0.29% to 3,012.89, KOSPI Index rose 9.94 points or 0.49% to 2,041.06 and Nikkei 225 was up by 64.98 points or 0.39% to 16,715.55.