Markets show sluggish movement in noon trade

Indian equity markets are showing lackadaisical movements in the noon session on Monday, lacking investors’ conviction to pile up fresh positions ahead of wholesale price-based inflation for March to be announced later in the day. The benchmarks continue to move sideways in a narrow range as corporate India started showing its fourth quarter report card and investors are indulging only in stock specific activities. Sentiments remained subdued on a Reserve Bank of India report that credit growth plunged to a whopping six-decade low of 5.08% in the financial year 2016-17, as against 10.7% a year ago. However, losses remained capped with the report that growth in exports of goods from India reached its peak in the last month of fiscal 2016-17 with a 27.59% increase, year-on-year, to $29.23 billion in March 2017. After two continuous years of decline, exports in April-March 2016-17 posted an increase of 4.71 per cent to $274.64 billion compared to the previous fiscal.

On the global front, Asian markets were trading mostly lower on Monday as soft US economic data added to investors’ concerns. While North Korea’s failed ballistic missile launch Sunday eased immediate concerns, it hasn’t prompted the Trump administration to deviate from its plan to curtail Pyongyang’s missile launches. The U.S. administration is leaning on China, North Korea’s main ally and benefactor and seeking to bolster South Korea and Japan allies’ defense systems. However, Japan's Nikkei index edged higher despite the strong yen weighing on exporters and weak US yields dragging down financial stocks.

Back home, stocks from Realty, Consumer Durables and Oil & Gascounters were supporting the markets, while those from Telecom, TECK and Metal counters were adding to the underlying cautious undertone. In scrip specific development, Bharat Heavy Electricals (BHEL) gained after the company commissioned two units of 270 MW at Rattanlndia Nasik Power’s 5x270 MW thermal power project, located at Sinnar in Nasik District of Maharashtra. However, DCB Bank declined after the company posted a fall of 23.98 % in its net profit at Rs 52.86 crore for the quarter ended March 31, 2017 as compared to Rs 69.53 crore for the same quarter in the previous year.

The market breadth remained positive, as there were 1298 shares on the gaining side against 1243 shares on the losing side, while 137 shares remained unchanged.

The BSE Sensex is currently trading at 29422.82, down by 38.63 points or 0.13% after trading in a range of 29363.28 and 29494.08. There were 12 stocks advancing against 17 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 0.10%, while Small cap index up by 0.28%.

The top gaining sectoral indices on the BSE were Realty up by 3.73%, Consumer Durables up by 0.66%, Oil & Gas up by 0.46%, Utilities up by 0.30% and Consumer Disc up by 0.20%, while Telecom down by 0.93%, TECK down by 0.58%, Metal down by 0.55%, IT down by 0.47% and Power down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.99%, Dr. Reddy’s Lab up by 1.80%, HDFC up by 0.81%, Power Grid up by 0.70% and Reliance Industries up by 0.60%. On the flip side, Sun Pharma down by 2.47%, NTPC down by 1.94%, Coal India down by 1.25%, Asian Paints down by 1.09% and TCS down by 0.88% were the top losers.

Meanwhile, going by its promise to issue new guidelines to resolve the problem of banks' mounting non-performing assets (NPAs), the Reserve Bank of India (RBI) has issued the revised Prompt Corrective Action (PCA) framework with a view to tighten the norms on bank performance. The new provisions of the revised PCA framework will be effective from April 1, 2017 based on the financials of each bank as of March 2017, and override the existing PCA framework. Besides, the new framework will also be reviewed after three years.

As per the RBI notification the risk thresholds has been classified into three categories and breach of any risk threshold would result in invocation of PCA. Risk Threshold 1 will include action of restriction on dividend distribution/remittance of profits. In Risk Threshold 2, in addition to mandatory actions of Threshold 1, restriction on branch expansion; domestic and/or overseas can be taken, while in Risk Threshold 3, in addition to mandatory actions of Threshold 1, restriction on branch expansion; domestic and/or overseas can be taken, along with restriction on management compensation and directors’ fees, as applicable

Breach of risk threshold 3 will invite mandatory actions of threshold 1 & 2, along with restrictions on management compensation and directors' fees and any other corrective actions such as removal of managerial persons, superseding the board or suppression of the board. It also said that in the case of a default on the part of a bank in meeting the obligations to its depositors, possible resolution processes may be resorted to without reference to the PCA matrix.

The PCA framework would apply without exception to all banks operating in India including small banks and foreign banks operating through branches or subsidiaries based on breach of risk thresholds of identified indicators. Furthermore, based on the audited financial results and RBI's supervisory assessment, a bank will be placed under PCA framework. However, RBI may impose PCA on any bank during the course of a year, including migration from one threshold to another, in case the circumstances so warrant.

The CNX Nifty is currently trading at 9139.75, down by 11.05 points or 0.12% after trading in a range of 9120.25 and 9160.00. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.77%, Dr. Reddy’s Lab up by 1.68%, Grasim Industries up by 1.37%, HDFC up by 0.88% and HCL Tech up by 0.81%. On the flip side, Bharti Infratel down by 3.97%, Sun Pharma down by 2.48%, NTPC down by 1.79%, Hindalco down by 1.34% and Coal India down by 1.24% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 0.21%, Shanghai Composite declined 1.15%, Taiwan Weighted slipped 0.17%, Jakarta Composite shed 0.22% and Nikkei 225 was down by 0.07%. On the flip side, FTSE Bursa Malaysia KLCI increased 0.22% and KOSPI Index was up by 0.49%.