Benchmarks trade with caution in early deals

Indian equity benchmarks made a cautious start and are managing to keep their head above water in early deals on Friday. Traders are getting some support with India’s Oil Minister Dharmendra Pradhan conveying India’s concerns when he met ambassadors of OPEC countries in India over high international oil prices. Meanwhile, after implementing GST from July 1, 2017, the government had allowed use of stickers with revised rates, alongside the printed MRP for pre-packaged items to reflect changes in selling price for three months till September 30. The deadline has been extended several time and the latest was April 30. However, gains remained capped on private report that the record low equity risk premium and the gap between earnings yield and the bond yields are making it cautious on the Indian equity market.

On the global front, Asian markets are trading mostly in red on Friday as investors awaited developments on the trade front ahead of the expected unveiling of US tariffs targeting China. The US markets ended mostly higher on Thursday, after the European Central Bank said it would avoid raising interest rates until mid-2019, and data showed US economic strength.

Back home, stocks related to Healthcare, private banks, technology, consumer and auto sector stocks remained in focus on report that the reshuffle of the S&P BSE Sensex composition effective from June 18 will hit these sectors. In scrip specific developments, Dr. Reddy’s Lab soared on receives approval for Buprenorphine and Naloxone Sublingual Film and Infosys surged on partnering with Rhode Island School of Design.

The BSE Sensex is currently trading at 35631.39, up by 31.57 points or 0.09% after trading in a range of 35522.63 and 35666.07. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.14%, while Small cap index was up by 0.25%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.38%, IT up by 0.61%, Consumer Durables up by 0.54%, Realty up by 0.51% and TECK was up by 0.50%, while Power down by 0.68%, Utilities down by 0.63%, PSU down by 0.45%, Oil & Gas down by 0.33% and Auto down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 2.94%, Sun Pharma up by 1.80%, ICICI Bank up by 1.00%, Reliance Industries up by 0.96% and TCS up by 0.68%. On the flip side, NTPC down by 1.48%, Power Grid Corporation down by 0.95%, Hero MotoCorp down by 0.71%, Hindustan Unilever down by 0.68% and HDFC Bank down by 0.65% were the top losers.

Meanwhile, the Financial Stability and Development Council (FSDC) Sub-Committee headed by the Reserve Bank of India (RBI) Governor Urjit Patel has reviewed the insolvency resolution process under the Insolvency and Bankruptcy Code (IBC), amid mounting stressed loans. It also reviewed major developments on the global and domestic fronts that impinge on the financial stability of the country.

The Sub-Committee has reviewed the status of Corporate Insolvency Resolution Process, functioning of State Level Coordination Committee (SLCCs) in various States/ Union Territories (UTs) and activities of its various Technical Groups. IBC had came into effect in 2016. Following this, 12 top stressed accounts with Non-Performing Asset (NPA) over Rs 5,000 crore were identified by RBI for the National Company Law Tribunal (NCLT) proceedings. Therefore, Banks referred Bhushan Steel, Bhushan Power & Steel, Essar Steel, Jaypee Infratech, Lanco Infratech, Monnet Ispat & Energy, Jyoti Structures, Electrosteel Steels, Amtek Auto, Era Infra Engineering, Alok Industries and ABG Shipyard to NCLT. These accounts together have total outstanding loan of Rs 1.75 lakh crore.

The FSDC Sub-Committee further discussed issues related to framework for Systemically Important Financial Institutions (SIFI), Common Stewardship Code for financial sector, single entity undertaking multiple activities and status of Central KYC Registry (CKYCR). The other issues like Investor Education and Protection Fund (IEPF), action taken against Shell companies, legal framework for cross border insolvency and issues regarding acceptance of deposits under Companies Act were discussed by the committee.

The CNX Nifty is currently trading at 10814.90, up by 6.85 points or 0.06% after trading in a range of 10788.90 and 10823.80. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 3.02%, Cipla up by 2.88%, Sun Pharma up by 2.37%, Lupin up by 1.88% and UPL up by 1.62%. On the flip side, NTPC down by 1.64%, HPCL down by 1.29%, Indian Oil Corporation down by 1.19%, Hero MotoCorp down by 1.13% and Grasim Industries down by 1.05% were the top losers.

Asian markets are trading mostly in red; Hang Seng slipped 40.25 points or 0.13% to 30,399.92, Shanghai Composite declined 27.59 points or 0.91% to 3,016.57 and KOSPI Index decreased 10.95 points or 0.45% to 2,412.53.

On the flip side, Taiwan Weighted increased 12.17 points or 0.11% to 11,026.15 and Nikkei 225 was up by 87.78 points or 0.39% to 22,826.39.