Markets continue to trade in red; Sensex below 32,150 mark

Indian equity benchmarks continued to trade in red in the late morning session and were trading below their psychologically important mark of 32,150 (Sensex) and 10,050 (Nifty). The broader market indices were also underperforming in line with the major indices. Investors remained cautious 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. Besides, persistent selling by investors after recent gains amid muted earnings numbers by some companies, also weighed on the sentiments. The indices were also pulled lower by Sun Pharma, Lupin, Bharti Airtel, Dr Reddy’s and Reliance Industries.

On the global front, Asian markets were trading mostly in green, after a technology-led drop on Wall Street, while US Treasury yields and the dollar were pressured by news Special Counsel Robert Mueller had issued grand jury subpoenas in his investigation of alleged Russian interference in the 2016 US elections.

Back home, in scrip specific development, State Bank of India (SBI) was trading higher on plan to raise Rs 2,000 crore by allotting 20,000 AT1 Basel-III compliant non-convertible, perpetual, subordinated bonds in the nature of debentures to various investors. Bonds will carry a coupon rate of 8.15 per cent per annum with a call option after 5 years or the anniversary date thereafter. The committee of directors accorded its approval on August 3, 2017, for the same.

The BSE Sensex is currently trading at 32149.72, down by 88.16 points or 0.27% after trading in a range of 32107.99 and 32252.45. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.34%, while Small cap index was down by 0.24%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 4.02%, Metal up by 0.88%, PSU up by 0.52%, Basic Materials up by 0.43% and IT up by 0.21%, while Healthcare down by 1.77%, Telecom down by 1.54%, Energy down by 0.81%, Capital Goods down by 0.35% and Power down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.28%, Hindustan Unilever up by 1.51%, Tata Steel up by 1.43%, Tata Motors up by 1.24% and TCS up by 0.92%. On the flip side, Dr. Reddy’s Lab down by 3.04%, Sun Pharma down by 2.89%, Bharti Airtel down by 2.19%, Reliance Industries down by 1.95% and Lupin down by 1.87% were the top losers.

Meanwhile, the Lok Sabha has passed the Banking Regulation (Amendment) Bill, 2017, which gives RBI the power to direct banking companies to resolve specific stressed assets by initiating insolvency resolution process. The bill, introduced by Finance Minister Arun Jaitley, replaces Banking Regulation (Amendment) Ordinance, 2017 promulgated in May this year in the absence of an ongoing Parliament session.

The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution. Moving on fast-track, the RBI in June had identified 12 large loan defaulters who account for 25 percent of the total bad loans in the banking sector and started the process of resolution of stressed assets. Non-performing assets (NPAs) of banks have risen to over Rs 9 lakh crore and so it had become necessary for the RBI to intervene.

Besides, Finance Minister Arun Jaitley has said that the new legislation will help activate the Asset Reconstruction Companies (ARCs) which will take over the stressed assets of companies to make them turn around as performing assets. He also said that the government is also taking action against the loan defaulters.

The CNX Nifty is currently trading at 10000.85, down by 12.80 points or 0.13% after trading in a range of 9988.35 and 10026.80. There were 26 stocks advancing against 24 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Indian Oil Corporation up by 4.72%, Hero MotoCorp up by 2.40%, Vedanta up by 1.93%, Hindustan Unilever up by 1.54% and Tata Steel up by 1.49%. On the flip side, Sun Pharma down by 2.98%, Dr. Reddy’s Lab down by 2.62%, Aurobindo Pharma down by 2.51%, Tata Power down by 2.42% and Bharti Airtel down by 2.17% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.07 points or 0% to 1,771.97, KOSPI Index increased 9.13 points or 0.38% to 2,395.98, Jakarta Composite increased 10.88 points or 0.19% to 5,791.45, Shanghai Composite increased 12.8 points or 0.39% to 3,285.73, Hang Seng increased 20.67 points or 0.08% to 27,551.68 and Taiwan Weighted increased 36.94 points or 0.35% to 10,506.82.

On the flip side, Nikkei 225 decreased 71.68 points or 0.36% to 19,957.58.