Benchmarks trade flat in early deals; Nifty holds 10,000 mark

Indian equity benchmarks have made a cautious start and are trading flat in early deals on Friday amid lack of any major cues. Investors remained on the edge, as the Street remained disappointed with Reserve Bank of India’s 25 bps rate cut. Traders also remained concerned with Finance Minister Arun Jaitley’s statement that lending rate of 14-15 per cent will make India uncompetitive in the global market and industry cannot invest at such higher interest rates. He said at a time when inflation was running high at 10 per cent bank deposit rates were high at 9 per cent. But loans were extended by banks at 14-15 per cent interest rate and with such high interest rates global industrial investments will not come in.

On the global front, Asian markets were trading mostly in green at this point of time ahead of the monthly US jobs report and on buzz that U.S. Special Counsel Robert Mueller was said to have impaneled a grand jury in the ongoing Russia probe. The US markets made a mixed closing in last session ahead of the monthly jobs data.

Back home, stocks related to textile sector remained on buyers’ radar, as foreign direct investment (FDI) in textile sector more than doubled to $618.95 million during 2016-17 from $230.13 million in the previous fiscal. Banking sector stocks too remained in action, as the Lok Sabha passed the Banking Regulation (Amendment) Bill, 2017, after Finance Minister Arun Jaitley declared that criminal and recovery proceedings will be started against defaulters of bank loans who divert money and asserted that no one can claim equality in not repaying loans to the banks.

The BSE Sensex is currently trading at 32231.46, down by 6.42 points or 0.02% after trading in a range of 32161.68 and 32252.45. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.03%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.37%, Metal up by 1.29%, Basic Materials up by 0.77%, PSU up by 0.66% and Realty was up by 0.59%, while Healthcare down by 1.38%, Telecom down by 0.50% and Energy was down by 0.20% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.51%, Hindustan Unilever up by 1.17%, Tata Motors up by 1.09%, Tata Motors - DVR up by 1.01% and Power Grid Corporation up by 0.86%. On the flip side, Sun Pharma down by 2.31%, Dr. Reddys Lab down by 1.94%, Lupin down by 1.60%, Cipla down by 1.38% and ONGC down by 0.99% were the top losers.

Meanwhile, a joint study carried out by the industry body Associated Chambers of Commerce & Industry of India (ASSOCHAM) and rating agency CRISIL has stated that in order to absorb any losses, banks may require an incremental provisioning of 20 percent for 50 large stressed assets worth over Rs 4.3 lakh crore. These 50 large accounts are from the sectors such as construction, power and metals, among others and constitute about half of the gross non-performing assets (NPAs) of the banking sector. It also noted that while banks may have already provisioned for a part of these exposures, they need to adequately capitalise to absorb such losses which could fuel credit growth and support the next leg of economic growth.

The report titled ‘IBC - Protecting stakeholders, improving ease of doing business’ has said that there is a need to address various challenges such as inter-credit conflicts, ability of large corporates to delay the recovery process and burden on the National Company Law Tribunal (NCLT)/Debt Recovery Tribunal (DRT). It also said that roll-out of the ecosystem including adequate number of tribunals, insolvency professionals and information utilities, a limited timeline for the formulation of resolutions and access to the secondary market are needed in case of liquidation for successful implementation of the IBC.

ASSOCHAM-CRISIL study noted that the success of the code hinges on strengthening its ecosystem, which will help in protecting the interest of stakeholders, instilling financial discipline among borrowers and create a robust platform to attract investors. It said though the IBC is expected to face teething troubles before fully taking off, its stakeholders are expected to reap greater benefit in the long run. It added that along with banks and asset reconstruction companies (ARCs), the IBC will benefit corporates, professionals and employees, boost investor confidence, and facilitate deepening of the domestic corporate bond market.

The CNX Nifty is currently trading at 10021.20, up by 7.55 points or 0.08% after trading in a range of 9991.10 and 10026.80. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corporation up by 3.36%, Vedanta up by 1.79%, Tata Steel up by 1.56%, Hindalco up by 1.49% and ACC up by 1.13%. On the flip side, Sun Pharma down by 2.36%, Aurobindo Pharma down by 1.92%, Dr. Reddys Lab down by 1.86%, Lupin down by 1.56% and Cipla down by 1.51% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.08 points or 0% to 1,771.98, KOSPI Index gained 3.88 points or 0.16% to 2,390.73, Shanghai Composite increased 7.83 points or 0.24% to 3,280.76, Hang Seng advanced 10.7 points or 0.04% to 27,541.71, Jakarta Composite added 18.51 points or 0.32% to 5,799.09 and Taiwan Weighted was up by 32.06 points or 0.31% to 10,501.94.

On the flip side, Nikkei 225 was down by 66.13 points or 0.33% to 19,963.13.