Benchmarks extend losses in morning session

Indian equity benchmarks extended their losses in morning session on account of selling in frontline blue chip counters. The rupee opened higher at 64.89 against the greenback on sustained selling of the American currency by banks and exporters. Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 620.08 crore on Tuesday, as per provisional data released by the stock exchanges. On the other hand, Domestic Institutional Investors (DIIs) sold shares worth a net Rs 734.33 crore. Banking stocks were under pressure on media report that the extent of the unraveling fraud at India’s state-run Punjab National Bank could rise beyond the nearly $2 billion mark so far outlined by the lender. Separately, a foreign brokerage expects that PSU banks will report treasury loss of Rs 20K crore in Q4. It is of the view that the bond hit will add to Q4 woes while over ownership will weigh on earnings. Meanwhile, following the new norms on stressed assets issued by the RBI last month, power companies fear that two-thirds of private thermal power capacity is at high risk of being declared as non-performing assets (NPA). Severe impact is expected on 51,000-Mw existing power generation capacity set up with investments of more than Rs 4 lakh crore, and another 28,000-Mw plants are under construction.

The street shrugged off private report enlightening that the Indian economy is likely to recover gradually to 7.1 per cent in the 2018-19 financial year, as GST-related disruptions have eased and consumption levels have improved. The report added that gradual recovery is underway and the country has started to recuperate from the cyclical and structural bottlenecks witnessed over the past two years. Investors took note that the government will pitch for a sovereign rating upgrade with global agency Fitch, highlighting reform push in taxation and PSU banks and its plans to gradually lower government debt. The representatives from Fitch are scheduled to meet Chief Economic Advisor Arvind Subramanian and Economic Affairs Secretary Subhash Chandra Garg and other finance ministry officials today.

Traders were seen buying in FMCG, IT and TECK stocks, while selling was witnessed in Metal, Bankex and Realty sectors stocks. In scrip specific development, Bank of Baroda was trading under pressure on report that the lender may have to provide for a potential loss of Rs 120 crore on loans to the Gupta family companies in South Africa after the brothers, who are facing corruption charges, fled the country and the companies filed for bankruptcy. The development gains significance in the backdrop of the bank’s plan to exit the country by closing its operations at the end of this financial year.

On the global front, Asian markets were trading mostly in red. Masazumi Wakatabe, one of the government’s two nominees for BOJ deputy governor said that the Bank of Japan can come up with a new policy framework if needed to achieve its inflation target. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 33,300 and 10,250 levels respectively. The market breadth on BSE was negative in the ratio of 620:1669, while 96 scrips remained unchanged.

The BSE Sensex is currently trading at 33220.85, down by 96.35 points or 0.29% after trading in a range of 33172.25 and 33331.21. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.42%, while Small cap index was down by 0.76%.

The top gaining sectoral indices on the BSE were FMCG up by 0.55%, IT up by 0.54%, TECK up by 0.35%, Auto up by 0.16% and Consumer Durables up by 0.14%, while Metal down by 1.03%, Bankex down by 1.00%, Realty down by 0.92%, PSU down by 0.92% and Capital Goods down by 0.81% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.85%, ITC up by 1.13%, Dr. Reddy’s Lab up by 0.75%, Maruti Suzuki up by 0.68% and Tata Motors - DVR up by 0.66%.

On the flip side, SBI down by 2.14%, ICICI Bank down by 1.85%, Adani Ports & Special Economic Zone down by 1.80%, Mahindra & Mahindra down by 1.59% and ONGC down by 1.21% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has stated that public sector banks (PSBs) have written-off loans worth Rs 81,683 crore in the financial year 2016-17, including Rs 20,339 crore by the State Bank of India. He indicated that, the amount written off by nationalized banks was Rs 28,781 crore during the current fiscal (up to September, 2017). Besides, he noted that writing-off of loans is done for tax benefit as well as capital optimization. However, he clarified that borrowers of such loans continued to be liable for repayment.

As per the Reserve Bank of India (RBI) guidelines and policy approved by bank Boards, non-performing loans, including those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of write-off. The minister further said that recovery of dues takes place on ongoing basis under legal mechanisms, which include, the Secularisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, Debts Recovery Tribunals and Lok Adalats. Therefore, he said that write-off does not benefit borrowers.

Besides, Minister of State for Finance Shiv Pratap Shukla has said that in the five-financial years since April 1, 2013, banks have reported 13,643 cases of fraud involving a total amount of Rs 52,717 crore. On a query regarding benami deals, he said that over 1,000 properties have been attached provisionally under the Prohibition of Benami Properties Transactions Act till January 31, 2018. He added that the value of properties under provisional attachment is over Rs 38 billion.

The CNX Nifty is currently trading at 10207.20, down by 42.05 points or 0.41% after trading in a range of 10193.65 and 10243.35. There were 18 stocks advancing against 31 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Tata Motors up by 1.89%, HCL Tech up by 1.63%, ITC up by 1.01%, Dr. Reddy’s Lab up by 0.80% and Maruti Suzuki up by 0.66%.

On the flip side, Indiabulls Housing Finance down by 2.59%, SBI down by 2.22%, Adani Ports & Special Economic Zone down by 2.09%, Hindalco down by 1.97% and ICICI Bank down by 1.88% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 170.94 points or 0.56% to 30,339.79, Nikkei 225 decreased 135.81 points or 0.63% to 21,281.95, Jakarta Composite decreased 79.72 points or 1.23% to 6,420.39, Taiwan Weighted decreased 20.53 points or 0.19% to 10,763.81, FTSE Bursa Malaysia KLCI decreased 9.41 points or 0.51% to 1,838.96 and KOSPI Index decreased 2.34 points or 0.1% to 2,409.07.

On the other hand, Shanghai Composite increased 1.88 points or 0.06% to 3,291.52.