Benchmarks continue to trade higher in noon session

Indian benchmark indices faced resistance at crucial psychological levels and are now trading in a tight range. Both the benchmark indices - BSE Sensex and NSE Nifty are trading above their crucial levels of 29,600 and 9,150. Sentiments got a boost after Lok Sabha passed 4 GST-related laws, marking another step towards the rollout of the single national tax on July 1. The unified tax regime is expected to boost economic growth by about 0.5 percentage points in its first year of implementation. While the model law is available, few fundamental aspects, such as the states where tax has to be paid by service providers having multiple offices, treatment of current excise incentives, offset of tax already paid on transition stock, etc, are still unclear. The four bills, passed by the lower house, would now be presented before the upper house of parliament. Further, inventors got some confidence with Union Minister Arjun Ram Meghwal’s statement that the Insolvency and Bankruptcy Code is a key economic reform that will facilitate the ease of doing business. The code provides for a market determined, time-bound mechanism for orderly resolution of insolvency, wherever possible, and ease of exit, wherever required. Meanwhile, markets may see volatility towards the series expiry with traders rolling over their positions to the next series. Market-wide rollovers stood at 58% till Wednesday, which were lower than the average of 60% seen in the last three series while the Nifty rollovers were at 57% marginally higher than the average 55% seen in last three series.

On the global front, Asian equity benchmarks are trading in red on Thursday, tracking mixed cues overnight from Wall Street and as the UK began the formal process of exiting the European Union. On Wednesday, British Prime Minister Theresa May's historic letter invoking Article 50 of the Lisbon Treaty was delivered to the European Council President Donald Tusk in Brussels, thus triggering the Brexit process. The formal process of exiting the EU must conclude in two years. Further, Shanghai Composite Index headed for the biggest decline since December, while equities in Japan, South Korea and Singapore also fell.

Back home, stocks from Realty, Consumer Durables and Capital Goods counters were supporting the markets’ uptrend, while those from Telecom counters were adding to the underlying cautious undertone. In scrip specific development, Aurobindo Pharma gained after the company received final approval from the US Food & Drug Administration (USFDA) to manufacture Abacavir Sulfate and Lamivudine tablets, 600 mg/300 mg. Furthermore, Sadbhav Engineering surged after the company inked EPC agreement with Sadbhav Bangalore Highway (a step down subsidiary) worth Rs 855 crore for maintenance and repair work during the development period and construction period for 170.92 kms of BRT Tiger Reserve Boundary to Bangalore section of NH-209.

The market breadth remained optimistic, as there were 1656 shares on the gaining side against 691 shares on the losing side, while 183 shares remained unchanged.
The BSE Sensex is currently trading at 29608.03, up by 76.60 points or 0.26% after trading in a range of 29521.65 and 29645.88. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index up by 0.88%.

The top gaining sectoral indices on the BSE were Realty up by 2.36%, Consumer Durables up by 1.30%, Industrials up by 0.75%, Capital Goods up by 0.71% and Consumer Disc up by 0.63%, while Telecom down by 0.18% was the sole losing index on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 3.98%, SBI up by 1.39%, TCS up by 0.84%, Hero MotoCorp up by 0.80% and Reliance Industries up by 0.71%. On the flip side, Power Grid down by 0.66%, Axis Bank down by 0.63%, Coal India down by 0.49%, Bharti Airtel down by 0.48% and Tata Motors down by 0.44% were the top losers.

Meanwhile, Chief Economic Advisor Arvind Subramanian has termed the rising problem of non-performing assets (NPAs) as India’s number one macroeconomic challenge and has said that the twin balance sheet problem- over-leveraged companies and bad-loan-encumbered banks - is perhaps India’s top macroeconomic challenge at the moment and how much of haircut the banks will have to take is at the core of the problem. He added that in a view of urgency to tackle this issue, the government is also finding a solution and timing would be decided over the next few weeks.

Noting that the heart of the problem is the extent of the haircuts that the banks would need to take, Subramanian has said that in any democratic political system, it is difficult to write down debts of the private sector. Further, he noted that the situation in India has been aggravated by the involvement of few large private sector companies and tight monitoring by the judiciary and investigation agencies. However, regarding idea of bad bank creation advocated by him in the Economic Survey earlier this year, Subramanian said that at present, it is not a perfect solution as creating a new institution takes time and therefore the government has to work within this constraint.

Total stressed assets (gross non-performing assets or NPAs and restructured standard advances) of scheduled commercial banks were to the tune of Rs 9.64 lakh crore as of December 31, 2016. Gross non-performing assets (NPAs) of public sector banks increased to Rs 606,911 crore.

The CNX Nifty is currently trading at 9160.50, up by 16.70 points or 0.18% after trading in a range of 9136.35 and 9169.65. There were 26 stocks advancing against 24 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Adani Ports & SEZ up by 3.88%, Indusind Bank up by 1.27%, Aurobindo Pharma up by 1.21%, SBI up by 1.21% and Kotak Mahindra Bank up by 0.89%. On the flip side, Power Grid down by 0.86%, Axis Bank down by 0.79%, Ambuja Cement down by 0.59%, Wipro down by 0.59% and Hindalco down by 0.57% were the top losers.

Asian markets were trading in red; Hang Seng decreased 0.31%, Nikkei 225 shed 0.83%, Shanghai Composite declined 0.78%, Jakarta Composite dropped 0.49%, Taiwan Weighted slipped 0.08%, KOSPI Index dipped 0.22% and FTSE Bursa Malaysia KLCI was down by 0.2%.