Bears take full control of Dalal Street; Nifty breaches 9,900 mark

Bears took full control of Dalal Street in early deals on Monday with markets making gap-down start, breaching their crucial 31,700 (Sensex) and 9,900 (Nifty) levels on subdued global cues.  Sentiments remained dampened as investors turned jittery on expectation of government to tinker its fiscal deficit target for FY18 by announcing an economic stimulus to revive the economy. Sentiment turned cautious also on account of the derivatives expiry due on Thursday and the recent spike in tensions on the Korean peninsula. Traders paid no heed towards report that Prime Minister Narendra Modi would unveil the much-awaited stimulus package during a scheduled speech to the BJP national executive meeting later today.

Global cues too remained sluggish with most of the regional counterparts trading in red at this point of time. However, the Japanese market was up as yen declined on speculation Japan’s prime minister will press for a stimulus package alongside his expected call for a snap election later in the day. The US markets extended their lackluster trade in the last session and made a mixed closing on geopolitical concerns.

Back home, insurance stocks remained buzzing as a report from industry body Assocham has said that the insurance industry in the country is undergoing multiple disruptions in its functioning and the trend will accelerate in the future. Meanwhile, Capacite Infraprojects made a stellar listing on the bourses with a gain of around 60%.

The BSE Sensex is currently trading at 31638.96, down by 283.48 points or 0.89% after trading in a range of 31632.13 and 32016.52. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index tumbled 1.96%, while Small cap index was down by 2.51%.

The top losing sectoral indices on the BSE were Basic Materials down by 2.29%, Metal down by 2.06%, Industrials down by 1.97%, Capital Goods down by 1.86% and Consumer Durables was down by 1.74%, while there were no losers on the BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.36%, Cipla up by 0.93%, Hindustan Unilever up by 0.84%, TCS up by 0.50% and NTPC up by 0.33%. On the flip side, Adani Ports down by 3.23%, Tata Steel down by 2.93%, Axis Bank down by 2.43%, Lupin down by 2.13% and SBI down by 2.02% were the top losers.

Meanwhile, terming rising stressed assets in the banking system as a ‘core area of concern’, Finance Minister Arun Jaitley has said that government will expeditiously work with the banking system to strengthen it. He added that the Centre is working towards strengthening its ability to support the banks through greater resource mobilization. He assured top bankers that when it comes to finding resources to support the banking system, which provides a lifeline to the Indian economy, the government will always be there with them.

Jaitley further stated that the government has been very supportive with interventions like promulgating the Insolvency and Bankruptcy Code (IBC), and amending or altering other provisions in statutes in consultation with the Reserve Bank of India (RBI). On the IBC, where RBI has mandated banks to resolve 12 large accounts representing over a fifth of the total stock of NPAs, Jaitley said he expects some early harvests soon because of the institutional mechanisms being created. Besides, he also asked stakeholders to repose trust in the institutions being created, and added that speed is of essence while dealing with the stressed asset problem.

These statements came in the context of public sector banks needing capital to provide for the rising bad loans as well as to comply with Basel-III norms, which are aimed at improving the banking sector’s ability to absorb shocks arising from financial and economic stress. Banks are facing mounting non-performing assets (NPAs) or bad loans to the tune of Rs 8 lakh crore of which public sector banks (PSBs) alone account for Rs 6 lakh crore. The bank NPAs are skirting the double digit mark at present and expected to grow further.

The CNX Nifty is currently trading at 9860.60, down by 103.80 points or 1.04% after trading in a range of 9858.35 and 9960.50. There were 9 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 1.69%, Tata Power up by 1.24%, Hindustan Unilever up by 0.84%, Bharti Infratel up by 0.76% and Cipla up by 0.67%. On the flip side, Indiabulls Housing down by 5.14%, Adani Ports down by 3.12%, Tata Steel down by 2.95%, ACC down by 2.62% and Ambuja Cement down by 2.54% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 290.46 points or 1.04% to 27,590.07, Taiwan Weighted dropped 95.9 points or 0.92% to 10,353.78, Shanghai Composite shed 11.86 points or 0.35% to 3,340.67, KOSPI Index decreased 11.83 points or 0.5% to 2,376.88, Jakarta Composite slipped 10.48 points or 0.18% to 5,901.22 and FTSE Bursa Malaysia KLCI was down by 1.59 points or 0.09% to 1,769.45. On the flip side, Nikkei 225 was up by 80.94 points or 0.4% to 20,377.39.