Benchmarks trade in fine fettle in early deals; Sensex reclaims 31,600 mark

Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals on Monday with frontline gauges recapturing their crucial 31,600 (Sensex) and 9,850 (Nifty) levels, as traders opted to buy beaten down but fundamentally strong stocks after last session’s steep fall. Buying in banking counters too aided sentiments, as the Centre is looking to set up a new mechanism to speed up decisions on possible mergers among PSBs. The new process will be along the lines of the alternative mechanism that's been adopted for strategic disinvestments, which involves a small group of cabinet ministers.

On the global front, Asian markets were trading mostly in red at this point of time eyeing the key meeting of global central bankers at Jackson Hole, Wyoming. The US markets once again ended in red in the last session following the sell-off seen in the previous one.

Back home, Infosys’ buyback announcement failed to enthuse investors as the stock fell around 3%. The company had announced on Saturday that it would buy back shares of up to Rs 13,000 crore, or 4.92% from investors at Rs 1,150 per share. On the sectoral front, stocks related to infra space remained in focus with a flash report by the Ministry of Statistics and Programme Implementation (MoSPI) stating that as  many as 322 infrastructure projects, each worth Rs150 crore or above, have seen a total cost overrun of Rs 1.71 lakh crore by March 2017.

The BSE Sensex is currently trading at 31633.79, up by 109.11 points or 0.35% after trading in a range of 31519.50 and 31641.81. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.41%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Metal up by 1.90%, Oil & Gas up by 1.12%, PSU up by 1.11%, Basic Materials up by 1.02% and Energy was up by 0.95%, while IT down by 0.50%, TECK down by 0.43% and Healthcare was down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.12%, Tata Steel up by 1.90%, ICICI Bank up by 1.66%, Coal India up by 1.50% and Hero MotoCorp up by 1.17%. On the flip side, Infosys down by 2.40%, Cipla down by 0.70%, Lupin down by 0.50%, Asian Paints down by 0.35% and Tata Motors down by 0.29% were the top losers.

Meanwhile, the Finance Minister Arun Jaitley has said that the key objective of the non-performing asset (NPA) resolution is not liquidation of assets but to save businesses. He also said that the new insolvency law has significantly reversed defaulting debtor-creditor relationship and added that the old regime of lenders chasing borrowers and being unable to recover anything is over. Describing the rationale for the new insolvency and bankruptcy code (IBC), he said, this was necessitated by the failure of debt recovery tribunals to effectively perform their duty after the initial success.

Jaitley said that the Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, when enacted, had succeeded in getting down NPAs drastically in the initial two-three years. But then the debt recovery tribunals began to be less effective as envisaged which led to the new law. He also said ‘The old regime by which the creditor would get tired chasing the debtor and end up recovering nothing, is now over. If a debtor has to survive, he will have to service his debt, or he will have to make way for somebody else. I think this is the only correct way by which businesses would now be done and this message has to go loud and clear.’

Calling for speedy and time-bound resolution of the bad loans issue which has become a major regulatory overhang, the FM expressed the hope that the mandated timelines will be adhered to so that implementation is effective. The gross NPAs have crossed 9.6% as of March 2017, while the stressed loans ratio is over 12%. Following this, the RBI has named 12 of the largest defaulters in June, which together owe more than Rs 2.5 trillion to banks. Almost all of them are under National Company Law Tribunal, and may face liquidation if the promoters fail to come up with a sustainable resolution and capital infusion.

The CNX Nifty is currently trading at 9876.80, up by 39.40 points or 0.40% after trading in a range of 9846.40 and 9884.35. There were 41 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.18%, Vedanta up by 1.94%, Tata Steel up by 1.93%, BPCL up by 1.78% and Hindalco up by 1.61%. On the flip side, Infosys down by 2.72%, Cipla down by 0.69%, Asian Paints down by 0.53%, Zee Entertainment down by 0.50% and Hindustan Unilever down by 0.43% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 70.96 points or 0.36% to 19,399.45, Jakarta Composite declined 25.61 points or 0.43% to 5,868.23, FTSE Bursa Malaysia KLCI slipped 3.56 points or 0.2% to 1,772.66 and KOSPI Index was down by 1.32 points or 0.06% to 2,357.05.

On the flip side, Taiwan Weighted rose 3.48 points or 0.03% to 10,324.81, Shanghai Composite increased 7.77 points or 0.24% to 3,276.50 and Hang Seng was up by 141.45 points or 0.52% to 27,189.02.