Benchmarks manage to keep head above water in early deals

Indian equity benchmarks have made a cautious start, but managed to keep their head above water in early deals on Thursday, as traders taking some support with rating agency Moody's in its latest report expecting an improvement in the credit profiles of India Inc next year, driven by better sales as it expects GST-related disruptions to wane, leading to an all-round recovery in economic activities. However, traders remained cautious on report that the government is likely to tighten the Insolvency and Bankruptcy Code (IBC) through an ordinance to ensure that wilful defaulters and promoters of companies in loan default over an extended period of time won’t be able to get their hands back on assets during the resolution process. Also, there will be buzz with the Cabinet giving its nod for constitution of the 15th Finance Commission that will decide the tax-sharing formula between the Centre and states for five years beginning FY21. Its recommendations will have to be in place before April 1, 2020.

On the global front, Asian markets were trading mostly in green at this point of time as the latest Federal Reserve meeting minutes highlighted a dovish tilt that showed divisions over the future path for U.S. monetary policy. Hong Kong’s benchmark gauge for stocks moved past the 30,000 level for the first time in a decade. The US markets made a mixed closing in the last session; the trade remained light ahead of the holiday.

Back home, the government has constituted a task force for redrafting the 50-year old income tax law in sync with the economic needs of the country. The aviation stocks remained in focus, as to provide a major boost to air connectivity in the Northeast, 92 new routes will be opened in the region in the second round of the government’s ‘Udaan’ scheme.

The BSE Sensex is currently trading at 33589.37, up by 27.82 points or 0.08% after trading in a range of 33522.07 and 33606.70. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.20%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Telecom up by 0.92%, Basic Materials up by 0.80%, Metal up by 0.68%, Oil & Gas up by 0.63% and Energy up by 0.51%, while Auto down by 0.02%, Consumer Durables down by 0.02% and Bankex down by 0.02% were the few losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.19%, ONGC up by 0.97%, Bharti Airtel up by 0.88%, Infosys up by 0.81% and Lupin up by 0.74%. On the flip side, Dr. Reddys Lab down by 1.86%, Asian Paints down by 0.75%, Kotak Mahindra Bank down by 0.61%, Adani Ports down by 0.41% and HDFC down by 0.34% were the top losers.

Meanwhile, in order to block potential loopholes in the new corporate turnaround regime and to ensure rescued companies remain in reliable hands, the Union cabinet has cleared the ordinance for making changes to the Insolvency and Bankruptcy Code (IBC). The Code, which became operational in December 2016, provides for a market-determined and time-bound insolvency resolution process.

The Corporate Affairs Minister Arun Jaitley has said that changes to the IBC have been proposed through an ordinance that’s awaiting presidential assent. He said changes are designed to prevent wilful defaulters from bidding for stressed assets. The move comes at a time when there are concerns in certain quarters about various aspects of the law, including the possibility of promoters wresting back control of a company under the insolvency process.

The ministry has already set up a 14-member committee to identify and suggest ways to address issues faced in implementation of the law. The Insolvency Law Committee, chaired by Corporate Affairs Secretary Injeti Srinivas, will take stock of the implementation of the Code. More than 300 cases have been admitted for resolution under the Code by the National Company Law Tribunal (NCLT). A case is taken up for resolution under the Code only after receiving approval of the NCLT for the same.

The CNX Nifty is currently trading at 10359.45, up by 17.15 points or 0.17% after trading in a range of 10331.30 and 10361.30. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 1.66%, Eicher Motors up by 1.33%, HPCL up by 1.29%, Ambuja Cement up by 1.20% and Sun Pharma up by 1.18%. On the flip side, Dr. Reddys Lab down by 1.71%, Asian Paints down by 0.81%, Kotak Mahindra Bank down by 0.71%, Zee Entertainment down by 0.42% and Adani Ports down by 0.42% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.84 points or 0.05% to 1,724.38, Hang Seng increased 20.51 points or 0.07% to 30,024.00, Taiwan Weighted gained 46.47 points or 0.43% to 10,869.06 and Nikkei 225 was up by 106.67 points or 0.48% to 22,523.15.

On the flip side, Shanghai Composite decreased 29.6 points or 0.86% to 3,400.87, Jakarta Composite shed 9.19 points or 0.15% to 6,060.60 and KOSPI Index was down by 1.56 points or 0.06% to 2,538.95.