Indian Benchmarks continue to hold their head above water

The local equity markets continue to trade modestly in green in the noon session, tracking firm global cues as oil prices hit three-week highs on hopes that OPEC members will agree to a supply-cut deal at a meeting later this month. Markets also got some support after Moody’s Investors Service in its latest report, on non-financial corporate stated that Indian corporate sector is expected to log healthy profit growth in 2017 on the back of sustained economic growth, capacity additions and higher commodity prices. Some support also came with Commerce and Industry Minister Nirmala Sitharaman’s statement that FDI went up 60% to $77.86 billion after the launch of Make in India initiative in September 2014. In scrip specific development, realty firm Sobha tumbled around 4 percent on reporting a one percent decline in Q2 consolidated net profit.

On the global front, Asian markets were trading in green after US stocks closed at new record highs overnight, following the surge in crude oil prices, though investors were wary of chasing prices higher until President-elect Donald Trump picks his economic team. Back home, at present, Sensex and Nifty were holding the crucial 25,500 and 7,900 levels respectively.

The BSE Sensex is currently trading at 25809.27, up by 44.13 points or 0.17% after trading in a range of 25765.51 and 26039.70. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.10%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Metal up by 1.74%, FMCG up by 0.72%, Auto up by 0.62%, Oil & Gas up by 0.49% and TECK up by 0.47%, while Power down by 1.32%, Capital Goods down by 1.28%, Realty down by 1.19%, Bankex down by 0.47% and PSU down by 0.45% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.07%, Hindustan Unilever up by 1.99%, Maruti Suzuki up by 1.86%, Hero MotoCorp up by 1.43% and Tata Steel up by 1.24%. On the flip side, SBI down by 2.29%, Larsen & Toubro down by 1.91%, Power Grid Corpn. down by 1.81%, GAIL India down by 1.34% and NTPC down by 1.23% were the top losers.

Meanwhile, a joint study carried out by the Associated Chambers of Commerce & Industry of India (Assocham) and rating agency, Crisil, has stated that the successful implementation of Insolvency and Bankruptcy Code can potentially release about Rs 25,000 crore capital over next 4-5 years currently locked in bad loans. The study highlighted that the code if implemented successfully will help India’s banking sector to catch up with or even exceeds the recovery rates of 32% and average time taken of 2.8 years in other emerging markets. It said that the released capital can be deployed for other productive lending, which in turn could help in credit expansion.

The Assocham-Crisil study titled ‘Insolvency and Bankruptcy Code 2016: A game changer’ noted that the Reserve Bank of India (RBI) has already tightened norms for wilful defaulters, which, together with implementation of the code, will enhance recoveries from such borrowers and improve overall credit discipline as this code will also contain slippages into NPAs by spawning better credit discipline. Though it added considering that institutionalising the code will be a long-drawn affair, it may not provide any material capital relief to banks over short term.

The study also said that this legislation could improve recovery rate of asset reconstruction companies (ARCs) which has been low at an average of 36%, with resolution taking about five years, more so as timely recovery remains key to long-term sustainability of ARCs. It added that the new code along with 100% foreign direct investment (FDI) in ARCs through the automation route is expected to boost capital flows. The joint study highlighted that with the implementation of the code, India’s position in World Bank’s ease of doing business ranking will improve, attracting more foreign investors.

The insolvency and Bankruptcy Code, 2016, seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner. Over a period of time, the code will help promote entrepreneurship and increase the role of professionals from various fields such as law, accountancy and finance.

The CNX Nifty is currently trading at 7952.80, up by 23.70 points or 0.30% after trading in a range of 7938.15 and 8018.45. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.26%, Zee Entertainment up by 2.97%, Hindustan Unilever up by 2.28%, Bajaj Auto up by 2.24% and Ultratech Cement up by 2.04%. On the flip side, BHEL down by 3.84%, SBI down by 2.02%, Power Grid Corpn. down by 1.78%, Larsen & Toubro down by 1.77% and GAIL India down by 1.45% were the top losers.

All the Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 4.1 points or 0.25% to 1,631.38, Jakarta Composite jumped 15.01 points or 0.29% to 5,163.33, KOSPI Index increased 17.42 points or 0.89% to 1,983.47, Shanghai Composite advanced 23.24 points or 0.72% to 3,241.39, Nikkei 225 increased 56.92 points or 0.31% to 18,162.94, Taiwan Weighted surged 92.28 points or 1.02% to 9,133.39 and Hang Seng was up by 302.87 points or 1.35% to 22,660.65.