Benchmarks trade in fine fettle in early deals

Indian equity benchmarks have made a positive start to the new week and are trading in fine fettle in early deals on Monday amid supportive global cues. Traders took some encouragement with Finance Minister Arun Jaitley ruling out any surprises in the tax rates in the Goods and Services Tax (GST) that is proposed to be rolled out on July 1 and also asserting that there will be no cascading in goods and commodities, which can even see tax rates coming down a little. The minister also ruled out the possibility of levying tax on agriculture. Some support also came with report that that Foreign exchange reserves rose $1.594 billion to touch a life-time high of $372.73 billion in the week to April 28, supported by increase in foreign currency assets (FCAs). The reserves had gone up $1.250 billion to $371.14 billion in the previous week.

Global cues remained supportive with most of the Asian counters trading in green at this point of time after Emmanuel Macron's victory in the French presidential election signaled a “new beginning for Europe.” The US markets moved higher in the last session on getting upbeat jobs data and also as the oil rebounded from its series of fall.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. The market breadth remained in favour of advances, as there were 1,355 shares on the gaining side against 646 shares on the losing side while 92 shares remain unchanged.

The BSE Sensex is currently trading at 29955.32, up by 96.52 points or 0.32% after trading in a range of 29877.41 and 29958.65. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.68%, while Small cap index was up by 0.68%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.02%, Basic Materials up by 0.97%, Bankex up by 0.85%, Auto up by 0.74% and Consumer Disc up by 0.64%, while Metal down by 0.52%, Realty down by 0.21%, FMCG down by 0.20% and Utilities down by 0.12% were the few losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 1.99%, SBI up by 1.40%, Lupin up by 1.25%, Hero MotoCorp up by 1.11% and ONGC up by 0.98%. On the flip side, ITC down by 0.85%, Adani Ports down by 0.84%, Tata Steel down by 0.79%, Power Grid down by 0.77% and GAIL India down by 0.66% were the top losers.

Meanwhile, in a bid to tackle the big bad loans problem, the government has given wide- ranging legislative powers to the Reserve Bank of India (RBI) to issue directions to lenders to initiate insolvency proceedings. Non-performing assets (NPAs) or bad loans of public sector banks (PSBs) have reached unacceptably high levels of over Rs 6 lakh crore, the bulk of which are in sectors such as power, steel, road infrastructure and textiles.

The much-awaited Ordinance to amend the Banking Regulation Act which got promulgated by President Pranab Mukherjee authorises the ‘RBI to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016’. It has also empowered RBI to issue directions to banks for resolution of stressed assets.

As per the Ordinance, RBI has been given powers to specify one or more authorities or committees to advise banking companies on a resolution of stressed assets. The law will also empower RBI to set up sector related oversight panels that will shield bankers from later action by probe agencies looking into loan recasts. Banks have been reluctant to resolve NPAs through settlement schemes or sell bad loans with hair cut to asset reconstruction companies for fear of 3Cs -- CBI, CAG and CVC.

With the enactment of amendment, RBI will be able to give specific solutions with regard to hair cut for specific cases and also, if required, look at providing relaxation in terms of current guidelines. Besides, the Ordinance will ensure effective use of IBC 2016 for resolution of stressed assets and give a big boost to the government's efforts to cut down NPAs in the banking sector. The ordinance, which amends Section 35A of the Banking Regulation Act 1949, will be placed in Parliament for approval in the upcoming monsoon session. It has inserted Section 35AA and Section 35 AB in the Act.

The CNX Nifty is currently trading at 9316.35, up by 31.05 points or 0.33% after trading in a range of 9297.95 and 9324.20. There were 34 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 7.40%, ACC up by 4.40%, Eicher Motors up by 2.83%, Ultratech Cement up by 2.36% and ICICI Bank up by 1.99%. On the flip side, Hindalco down by 1.64%, ITC down by 0.92%, Adani Ports down by 0.88%, Tata Steel down by 0.83% and GAIL India down by 0.82% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 2.18 points or 0.12% to 1,764.92, Taiwan Weighted gained 4.82 points or 0.05% to 9,904.76, KOSPI Index increased 14 points or 0.62% to 2,255.24, Jakarta Composite surged 40.93 points or 0.72% to 5,724.31, Hang Seng added 85.71 points or 0.35% to 24,562.06 and Nikkei 225 was up by 434.83 points or 2.24% to 19,880.53. On the flip side, Shanghai Composite was down by 28.49 points or 0.92% to 3,074.55.