Indian equity benchmarks extended their gains in morning session on account of buying in frontline blue chip counters. The rupee opened up against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 728.71 crore on February 14, as per provisional data released by the stock exchanges. Domestic Institutional Investors (DIIs) sold shares worth a net Rs 152.39 crore. Traders took some encouragement after CRISIL Ratings in its latest report enlightened that the Central Bank’s revised framework for expeditious resolution of bad loans is a long-term positive for banks and has the potential to bring about a big change in the approach of banks to monitor exposures and resolution of Non-Performing Assets (NPAs). Investors took note of Chief Economic Advisor Arvind Subramanian’s statement that although India has made a lot of progress towards achieving financial inclusion, a lot more needs to be done. He added that providing essential goods and services to citizens was only the first policy step towards financial inclusion.
Meanwhile, a private report highlighted that consumption is reviving as the effect of demonetization fades and companies get used to the Goods and Services Tax (GST), with some recording multi-quarter highs in volume and sales in the October-December period, exceeding street expectations. Separately, a report showed that India Inc reported strong earnings growth in the December 2017 quarter after declines in the previous two quarters. This was largely expected given the lower base effect due to demonetization in the year-ago quarter. In the December quarter, net profit of a sample of 2,043 companies rose to a six quarter high of 27.5% year-on-year. Net sales rose by 11.5%. After excluding oil and gas companies along with banks and finance entities, sales and profit growth in the December 2017 quarter was 8.8% and 25%, respectively.
Traders were seen piling position in Metal, Basic Materials and IT sector stocks, while selling was witnessed in Consumer Durables sector stocks. In scrip specific development, Punjab National Bank (PNB) continued its second session of downfall after it detected transaction fraud worth $1.8 billion (Rs 11,333 crore). Apart from PNB, some jewellery companies also involved in the fraud, which include Gitanjali Gems was trading in red.
On the global front, the Asian markets were trading in green. Japan’s core machinery orders tumbled in December at the fastest pace in more than three years and companies expect orders to rise only marginally in January-March, raising concerns that recent gains in capital expenditure may taper off. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,400 and 10,550 levels respectively. The market breadth on BSE was positive in the ratio of 1352:1046 while 93 scrips remained unchanged.
The BSE Sensex is currently trading at 34405.51, up by 249.56 points or 0.73% after trading in a range of 34194.67 and 34425.65. There were 24 stocks advancing against 7 stocks declining on the index.
The broader indices were trading in green; the BSE Mid cap index was up by 0.70%, while Small cap index was up by 0.38%.
The top gaining sectoral indices on the BSE were Metal up by 2.08%, Basic Materials up by 1.40%, IT up by 1.38%, TECK up by 1.18% and Bankex up by 0.84%, while Consumer Durables down by 0.02% was the sole losing index on BSE.
The top gainers on the Sensex were ICICI Bank up by 2.54%, Infosys up by 2.50%, Yes Bank up by 2.01%, Adani Ports & Special Economic Zone up by 1.85% and SBI up by 1.26%.
On the flip side, Hero MotoCorp down by 0.94%, Asian Paints down by 0.93%, Hindustan Unilever down by 0.37%, Wipro down by 0.32% and Kotak Mahindra Bank down by 0.22% were the top losers.
Meanwhile, days after the Reserve Bank of India (RBI) notified a revised framework for expeditious resolution of bad loans, credit ratings agency, Crisil Ratings in its latest report has stated that the Central Bank’s revised framework is a long-term positive for banks and has the potential to bring about a big change in the approach of banks to monitor exposures and resolution of Non-Performing Assets (NPAs). It believes that the upshot of the strong statement of intent by RBI will be structural streamlining, standardising and harmonising of the resolution process leading to greater transparency, credibility and efficiency.
According to the report, the RBI is establishing an ecosystem where NPAs would get recognised on time and their resolutions will be structurally quicker than before, by mandating weekly information on large delinquent accounts, by directing that a resolution plan be scripted immediately after default, and by setting stringent timelines for referring an account to the Insolvency and Bankruptcy Code process. It added that independent credit evaluation of the residual debt in resolution plans, and minimum investment grade rating for any upgrade of NPAs, will improve investor and other stakeholder confidence over the long term.
Crisil also said that in order to resolve the stressed assets situation, several steps such as corporate debt restructuring (CDR), sustainable structuring of stressed assets (S4A), strategic debt restructuring (SDR) were conceived in recent years, but to limited success. It highlighted that the RBI’s move has come at the right hour because the asset quality pressures are near their peak and it will improve the ability of banks to transit to the new regime. Besides, the Central Bank had discontinued programmes for banks to restructure their defaulted loans such as CDR, S4A, SDR, among others, and made the Insolvency and Bankruptcy Code as the main tool to deal with defaulters.
The CNX Nifty is currently trading at 10584.65, up by 83.75 points or 0.80% after trading in a range of 10518.65 and 10588.75. There were 37 stocks advancing against 13 stocks declining on the index.
The top gainers on Nifty were Hindalco up by 3.62%, Vedanta up by 3.36%, Infosys up by 2.52%, ICICI Bank up by 2.51% and Bajaj Finance up by 2.34%.
On the flip side, Indiabulls Housing finance down by 1.15%, Hero MotoCorp down by 0.84%, Asian Paints down by 0.80%, Aurobindo Pharma down by 0.58% and Wipro down by 0.58% were the top losers.
The Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 3.35 points or 0.18% to 1,838.28, Jakarta Composite increased 4.36 points or 0.07% to 6,598.76, Nikkei 225 increased 341.75 points or 1.62% to 21,495.92 and Hang Seng increased 599.83 points or 1.97% to 31,115.43.
China, South Korea and Taiwan stock exchanges were closed on account of National holiday.
