Benchmarks make optimistic start on positive global cues

Extending their previous session’s northward journey, Indian equity benchmarks have made a positive start on Tuesday, tracking positive trend in Asian markets after the S&P 500 and the Dow Jones on Wall Street hit record highs overnight thanks to a rebound in technology shares. On the domestic front, traders took some encouragement with India, pitching for a greater engagement with BRICS (Brazil, Russia, India, China and South Africa) nations on issues the international community addressed during BRICS Foreign Ministers meeting in Beijing. Meanwhile, Revenue Secretary Hasmukh Adhia has said that traders and dealers who have not completed their registration process can continue to do their business under the GST regime from July 1 using the provisional ID, adding that the 15-digit provisional ID would work as the Goods and Services Taxpayer Identification Number (GSTIN) for the first initial few months.

However, gains remained capped on reports that foreign institutional investors remained net sellers to the tune of Rs 250 crore on June 19, 2017. On the sectoral front, oil companies remained in action on report that India has surpassed China to become the largest contributor to incremental oil consumption in 2016, accounting for 21.8 per cent of it. India's oil consumption grew 8.3 per cent to 212.7 million tonnes in 2016 compared with global growth of 1.5 per cent, making it the third-largest oil consuming nation in the world. Aviation stocks remained on buyers’ radar on report that the domestic airlines flew 101.74 lakh passengers in May this year, registering a 17.36 per cent increase over the 86.69 lakh passengers flown during the same period in the previous year.

The BSE Sensex is currently trading at 31359.32, up by 47.75 points or 0.15% after trading in a range of 31318.87 and 31392.53. There were 16 stocks advancing against 14 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index gained 0.43%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.88%, IT up by 0.78%, Industrials up by 0.65%, TECK up by 0.64% and Oil & Gas up by 0.60%, while Realty down by 0.10% and Bankex down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.48%, Infosys up by 1.68%, Tata Motors - DVR up by 1.54%, Tata Steel up by 1.00% and Cipla up by 0.91%. On the flip side, HDFC down by 1.11%, Lupin down by 0.85%, Bajaj Auto down by 0.65%, NTPC down by 0.56% and TCS down by 0.49% were the top losers.

Meanwhile, the global credit rating agency Moody's Investors Service in its latest report has said that the Reserve Bank of India’s (RBI) plans to resolve 12 large bank loan accounts, which account for 25% of the banking system's non-performing assets (NPA), is credit positive for the banks as any meaningful resolution will improve their overall asset quality. It will also set a precedent for resolving non-performing loans from smaller borrowers.

The rating agency further said that given the strict timeline under the Insolvency and Bankruptcy Code (IBC) of 180 days, which is further extendable to 270 days, after which a company will be liquidated, resolution process will get accelerate and help in loan recoveries. However, the strict timelines may force some companies into liquidation and may have a negative effect on banks, particularly in cases where little collateral is available.

According to Moody's, though the RBI has not yet provided details of the provisioning norms, the directive is expected to negatively affect banks' profitability over the next year if they need to take large write-downs relative to their existing loan-loss reserves for those assets. This also will accentuate the capital needs of weaker public sector banks, which may require a large capital infusion from the Indian government.

The CNX Nifty is currently trading at 9669.20, up by 11.65 points or 0.12% after trading in a range of 9655.60 and 9674.80. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 3.59%, Tata Motors up by 2.49%, Tata Motors - DVR up by 1.66%, Infosys up by 1.51% and Indian Oil Corporation up by 1.14%. On the flip side, Bank of Baroda down by 1.22%, HDFC down by 1.08%, Lupin down by 0.90%, NTPC down by 0.84% and SBI down by 0.64% were the top losers.

Asian markets were trading mostly in green; KOSPI Index rose 1.21 points or 0.05% to 2,372.11, Shanghai Composite gained 1.88 points or 0.06% to 3,146.25, Jakarta Composite jumped 10.27 points or 0.18% to 5,752.18, Taiwan Weighted added 78.39 points or 0.76% to 10,328.99 and Nikkei 225 was up by 230.45 points or 1.15% to 20,298.20.

On the flip side, Hang Seng decreased 20.73 points or 0.08% to 25,903.82 and FTSE Bursa Malaysia KLCI was down by 7.8 points or 0.44% to 1,781.10.