Benchmarks continue to trade firm in noon session

Indian frontline indices continued to trade firm in noon session on increased buying by funds and retail investors, tracking positive global cues. Investors’ sentiments around the globe turned optimistic after Emmanuel Macron was elected French president with a business-friendly vision of European integration, defeating Marine Le Pen, a far-right nationalist who threatened to take France out of the European Union. On the domestic front, sentiments got a boost after Finance Minister Arun Jaitley said the goods and services tax (GST) will not have an inflationary impact since the tax on goods may actually reduce. The GST, which seeks to replace multiple central taxes and state taxes with a single levy, is scheduled to be introduced from July 1 but the constitution permits the government time to go up to September 15 for its roll out. The finance minister chaired GST council is scheduled to finalise and approve the rates of different commodities and services on May 18-19. Adding the optimism among investors, Revenue Secretary Hasmukh Adhia is hopeful of a smooth transition to the GST regime and says it will help domestic firms to become more competitive apart from streamlining the taxation for all business activities.  Explaining GST's importance for giving a boost to the manufacturing sector, he said, Cascading taxes along with non-availability of input credit meant that domestically produced goods found it harder to compete with imported ones. Some support also came with the report that India is planning to revamp its foreign trade policy and relook at incentives to give a leg up to the export sector, which is hurt by lower global demand as well as an appreciating rupee. The government proposes to come out with a mid-term review of the Foreign Trade Policy (FTP) 2015-20 in September. However, gains remained capped with the report that India's FDI inflow momentum may slow down this year and exports too may not revive with ‘full gusto’ as domestic bottlenecks remain. FDI inflows doubled to $ 46 billion in 2016 from $ 22 billion in 2013.

On the global front, Asian markets were trading mostly higher on Monday, tracking the gains on Wall Street following the release of better-than-expected US jobs data. Japan's Nikkei share average hit a level not seen in nearly 17 months after Emmanuel Macron was elected president of France, as a business-friendly vision of European integration helped boost investor confidence. However, chinese equities extended declines that have wiped more than $400 billion from the value of local shares. Meanwhile, the euro hit a six-month high and oil extended gains despite disappointing trade figures from China, while gold held steady amid dollar weakness.

Back home, stocks from Realty, Banking and Basic Materials counters were supporting the markets’ uptrend, while those from Metal, FMCG and Oil & Gas counters were adding to the underlying cautious undertone. In scrip specific development, Transport Corporation of India gained after the company signed a Letter of Intent (LOI) with National Highways Authority of India (NHAI) for the Development and furthering of 'Multi-Modal Logistics Parks'. Moreover, shares of ACC and Ambuja Cements, a part of the world's largest cement producer LafargeHolcim, rallied on merger plan. ACC's board of directors at its meeting May 5, 2017 decided to commence an evaluation of a potential merger between the company and Ambuja Cements.

The market breadth remained optimistic, as there were 1541 shares on the gaining side against 888 shares on the losing side, while 134 shares remained unchanged.

The BSE Sensex is currently trading at 29955.07, up by 96.27 points or 0.32% after trading in a range of 29877.41 and 30016.04. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.58%, while Small cap index up by 0.60%.

The top gaining sectoral indices on the BSE were Realty up by 1.30%, Bankex up by 1.04%, Basic Materials up by 0.97%, Auto up by 0.82% and Consumer Durables up by 0.67%, while Metal down by 0.55%, FMCG down by 0.14%, Oil & Gas down by 0.01% and Energy down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.75%, ONGC up by 1.88%, Tata Motors up by 1.22%, Axis Bank up by 1.17% and SBI up by 1.03%. On the flip side, Adani Ports & SEZ down by 1.22%, Hindustan Unilever down by 0.59%, Power Grid down by 0.41%, Tata Steel down by 0.39% and Larsen & Toubro down by 0.37% 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 9323.40, up by 38.10 points or 0.41% after trading in a range of 9297.95 and 9338.70. There were 33 stocks advancing against 17 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Ambuja Cement up by 8.76%, ACC up by 4.73%, ICICI Bank up by 2.76%, Eicher Motors up by 2.60% and Ultratech Cement up by 2.49%. On the flip side, Adani Ports &Special down by 1.43%, Hindalco down by 1.32%, BPCL down by 1.03%, Grasim Industries down by 0.70% and IOC down by 0.63% were the top losers.

Most of the Asian markets were trading in green, FTSE Bursa Malaysia KLCI was up by 0.12%, Taiwan Weighted gained 0.38%, KOSPI Index increased by 1.96%, Jakarta Composite was higher by 0.69%, Hang Seng added 0.55% and Nikkei 225 surged by 2.44%. On the other hand, Shanghai Composite declined by 0.7%.