Markets trade jubilantly in late afternoon session

Indian equity benchmarks were trading jubilantly in late afternoon session on account of buying in frontline blue chip stocks. Emergence of buying interest among investors and funds, brokers coupled with a firm trend in other regional markets following an unexpected fall in a US manufacturing index boosted sentiment in domestic markets. Sentiments also got some support with private report stating that India’s current account deficit is likely to stay below 1 per cent of GDP this year, largely due to a sharp fall in the trade deficit as against last year. On sectoral front, logistics and capital goods companies gained momentum ahead of the three days meeting of the GST Council that will take place later in the day. The government plans to implement GST by April 1, 2017. In scrip specific development, Marksans Pharma was trading higher after the company received approval by US Food and Drug Administration (USFDA) for an Abbreviated New Drug Application (ANDA) for Paricalcitol Capsules 1 mcg, 2 mcg and 4 mcg.

On the global front, European shares edged higher on Tuesday, with commodities-related stocks leading the market higher after prices of major industrial metals and crude oil rose on a softer dollar.

The BSE Sensex is currently trading at 27969.18, up by 439.21 points or 1.60% after trading in a range of 27652.76 and 27978.95. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.58%, while Small cap index was up by 1.20%.

The top gaining sectoral indices on the BSE were Bankex up by 2.03%, Capital Goods up by 1.84%, Realty up by 1.35%, FMCG up by 1.34%, IT up by 1.33%, while there were no losers on the BSE sectroal front.

The top gainers on the Sensex were Adani Ports &Special up by 4.54%, ICICI Bank up by 4.20%, HDFC up by 3.51%, Tata Steel up by 2.69% and Larsen & Toubro up by 2.53%. On the flip side, Asian Paints down by 0.88% and ONGC down by 0.77% were the top losers.

Meanwhile, global rating agency, Moody's in its latest report titled 'Banks - India: Draft Bill on Resolution Will Enhance Systemic Stability' said that the draft bill on the resolution of financial firms in India is a credit positive for Indian banks because it is an important step to having a comprehensive framework in place for the resolution of financial firms. The agency, however, observed that this draft Bill will have to go through multiple steps before becoming law, and hence, may be subject to changes and delays. Currently, the resolution of financial firms in India is based on minor parts of legislation enacted for other purposes.

Moody's Investors Service report further said that based on the draft bill, bail-ins do not seem to be the preferred form of resolution, with significant restrictions in place for their usage. These restrictions include contractual bail-in clauses for instruments that may be bailed in and requirements that bail-ins should be used only after attempts at recovery have been made.

The rating agency said that the bill ranks depositors above senior unsecured creditors in a liquidation scenario. In contrast, under existing laws, senior unsecured creditors rank pari passu with uninsured depositors. This change is therefore a credit negative for senior unsecured creditors. Such a depositor preference is enshrined into law in other jurisdictions like Singapore, Malaysia and Indonesia.  In those systems, senior debt ratings are on par with deposit ratings, except where they are impacted by different country ceilings. It also expects a similar outcome for Indian banks.

The report said that under the draft bill, public sector banks will be brought under the ambit of the resolution framework. By contrast, according to existing laws, public sector bank resolution can only happen under the direction of the government. Moody's does not expect this change to have an impact on Moody's assumption of the level of systemic support for public sector banks, because the banks' core public sector character would remain unchanged.

It added that the draft bill also provides for a significant delineation of regulatory powers between the Reserve Bank of India and the proposed Resolution Corporation. This situation will be particularly apparent with respect to some key supervisory powers over banks, including criteria for classifying banks into the various risk categories. Such a scenario would represent a change compared to the current structure, where the powers rest almost fully within India's central bank. Consequently, there could be some execution risk, as the system transitions to the new arrangement.

The CNX Nifty is currently trading at 8647.55, up by 127.15 points or 1.49% after trading in a range of 8555.90 and 8652.15. There were 46 stocks advancing against 4 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Adani Ports &Special up by 4.61%, ICICI Bank up by 4.04%, HDFC up by 3.54%, Tech Mahindra up by 3.18% and Yes Bank up by 3.01%. On the flip side, Bharti Infratel down by 1.31%, Asian Paints down by 1.04%, ONGC down by 0.74% and BPCL down by 0.27% were the top losers.

Asian market were trading in green; KOSPI Index increased 12.82 points or 0.63% to 2,040.43, FTSE Bursa Malaysia KLCI jumped 13.86 points or 0.84% to 1,667.57, Jakarta Composite was up by 32.52 points or 0.6% to 5,442.82, Shanghai Composite surged 42.71 points or 1.4% to 3,083.88, Taiwan Weighted increased 46.36 points or 0.51% to 9,222.58, Nikkei 225 climbed 63.49 points or 0.38% to 16,963.61 and Hang Seng shined 356.85 points or 1.55% to 23,394.39.

European markets were trading in green; France’s CAC increased 57.03 points or 1.28% to 4,507.26, UK’s FTSE 100 surged 73.93 points or 1.06% to 7,021.48 and Germany’s DAX climbed 116.24 points or 1.11% to 10,619.81.