Benchmarks continue weak trade; Sensex slips below 27,100 mark

Indian equity markets continued their weak trade in the early afternoon session on broad based selling with frontline gauges trading below their crucial 27,100 (Sensex) and 8,400 (Nifty) levels. Domestic sentiment was hit by weakness in Asian markets, as investors feared higher interest rates under incoming President Donald Trump will spark capital outflows from the region. A falling rupee also dented the market mood on Friday as the currency crashed by 52 paise on account of strong demand of dollar. Despite a rally in the domestic equity market on Thursday, foreign institutional investors were net sellers, which further weighed in Friday’s fall. They offloaded shares worth of Rs 2,044.52 crore with gross sales and gross purchases of Rs 7,220.38 crore and 5,175.86 crore, respectively. Further, the losses in Consumer Durables, Realty, Auto, FMCG and TECK stocks also aided to pessimistic milieu. Investors failed to get any sense of relief with International Monetary Fund (IMF) supporting Prime Minister Narendra Modi's efforts to fight corruption through the currency control measures and illegal financial flows in India, but it has stressed taking care to minimise disruptions in the economy. In scrip specific development, TCS declined by around 2 percent as Tata Sons removed Cyrus Mistry from the chairman's role at the company.

The BSE Sensex is currently trading at 27075.49, down by 442.19 points or 1.61% after trading in a range of 27045.09 and 27344.85. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.73%, while Small cap index was down by 2.46%.

The top losing sectoral indices on the BSE were Consumer Durables down by 4.51%, Realty down by 4.38%, Auto down by 3.16%, FMCG down by 2.21% and TECK down by 1.89%, while there were no gainers on the BSE sectoral front.

The few gainers on the Sensex were Sun Pharma up by 4.77%, ONGC up by 0.40% and HDFC Bank up by 0.14%. On the flip side, Hero MotoCorp down by 4.97%, GAIL India down by 4.24%, Maruti Suzuki down by 4.00%, Adani Ports &Special down by 3.95% and ICICI Bank down by 3.66% were the top losers.

Meanwhile, in a move to help banks recover their bad loans, Reserve Bank of India (RBI) revised norms under the Scheme for Sustainable Structuring of Stressed Assets (S4A) by allowing lenders to treat sustainable debt as standard asset, subject to certain conditions. RBI has said that the changes in the Scheme are based on the experience gained as well as feedback received from stakeholders, and taking into consideration the requirements of the construction sector. It has given lenders additional time up to 180 days for hammering out a restructuring package under the scheme, previously the time limit was 90 days.

Under S4A, the debt is divided into two parts. Part A will includes debt which can be serviced from the existing operation, while remaining is classified as Part B. The sustainable portion of Part A may optionally be treated as 'Standard' upon implementation of the resolution plan by all banks. This would be subject to provisions made upfront by the lenders being at least the higher of 50 percent of the amount held in part B or 25 percent of the aggregate outstanding (sum of Part A and part B). For this purpose, the provisions already held in the account can be reckoned.

RBI also said that those assets considered non-performing would continue to be classified as non-performing investment and provided for as a non-performing asset as per extant prudential norms, as long as such instruments remain in Part B. The scheme has been introduced to further strengthen the ability of lenders to tackle stressed assets and provide an avenue for reworking the financial structure of entities facing genuine problems. Recently, the RBI has taken various regulatory measures to strengthen the lenders ability to deal with stressed assets. 

The CNX Nifty is currently trading at 8370.50, down by 155.25 points or 1.82% after trading in a range of 8370.35 and 8460.60. There were 3 stocks advancing against 48 stocks declining on the index.

The few gainers on Nifty were Sun Pharma up by 4.72%, BHEL up by 0.75% and ONGC up by 0.27%. On the flip side, Hero MotoCorp down by 5.19%, Ultratech Cement down by 5.00%, Adani Ports &Special down by 4.57%, Ambuja Cement down by 4.42% and GAIL India down by 4.21% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 279.09 points or 1.22% to 22,560.02, Taiwan Weighted was down by 194.42 points or 2.12% to 8,957.76, Jakarta Composite declined 160.99 points or 2.95% to 5,289.32, KOSPI Index decreased 18.17 points or 0.91% to 1,984.43 and FTSE Bursa Malaysia KLCI shed 16.6 points or 1% to 1,636.14.

On the flip side, Shanghai Composite increased 21.9 points or 0.69% to 3,193.19, Nikkei 225 was up by 30.37 points or 0.18% to 17,374.79.