Benchmarks continue to trade in green terrain

Indian equity benchmarks continued their trade in positive territory in late morning session, with the Sensex and Nifty gaining more than 110 and 40 points, respectively, despite faltering Asian markets as US tariffs on $34 billion in Chinese imports took effect on June 6. Besides, the Indian rupee weakened marginally against the US dollar and was trading past 69 a dollar. Investors remained optimistic on a report that the government was working on a comprehensive strategy to boost exports amid ‘challenging times’. The total exports including services from India touched $500 billion last year, registering a growth of 13.5%. Traders took encouragement with a private report stating that the Indian engineering exports have managed to grow by close to 20% for the April-May, 2018, reflecting a so far so good scenario even as the US - China tariff war has spread to some key trading markets in Europe, Canada and Mexico and shows no early signs of abating.

On the global front, Asian markets were trading mixed on the last trading day of the week, with investors bracing for developments on the trade front as a deadline for tariffs from the US and China to take effect passed on June 6. Investors remained concerned on Trump decision to add additional $16 billion of Chinese products will be subject to tariffs in two weeks, also adding that he was considering more duties on $500 billion in Chinese goods. Back on domestic turf, in scrip specific development, Indian Bank advanced after it revised the interest rates on Foreign Currency Non-Resident term deposits with immediate effect. The bank has revised interest rates to 3.59% for deposits of one year and above, but less than two years, from the existing 3.51%.

The BSE Sensex is currently trading at 35,692.94, up by 118.39 points or 0.33% after trading in a range of 35,532.21 and 35,692.94. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.71%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Realty up by 1.66%, Energy up by 1.33%, Oil & Gas up by 1.23%, Auto up by 1.15% and Industrials was up by 1.03%, while Telecom down by 0.32% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.15%, Tata Motors - DVR up by 2.54%, Bajaj Auto up by 1.83%, Yes Bank up by 1.52% and Reliance Industries was up by 1.50%. On the flip side, Wipro down by 0.94%, NTPC down by 0.69%, Bharti Airtel down by 0.65%, Asian Paints down by 0.47% and ICICI Bank was down by 0.41% were the top losers.

Meanwhile, with an intention of fast-tracking NPA resolution, bankers have finalized the inter-creditor agreement (ICA) framework that envisages effective communication among lenders and are working on details of an asset management company as part of a five-pronged mechanism they have identified to resolve the issue of mounting non-performing assets (NPAs) under Project Sashakt. The ICA mechanism is expected to be enforced this month itself. The non-performing assets (NPAs) in the banking sector crossed Rs 9 lakh crore at the end of December 2017 and the RBI has warned of further worsening of the situation.

Under Project Sashakt, financial institutions will enter into an inter-creditor agreement to authorise the lead bank to implement a resolution plan in 180 days. The agreement is the bedrock of the bank-led resolution approach (BLRA) for loans between Rs 50-500 crore. This inter-creditor agreement will be a legal document and enforceable in any court of law. 

Punjab National Bank chairman Sunil Mehta, who headed a committee of bankers that drew up the NPA resolution strategy, has said “It makes sure that there is effective, good communication amongst banks and if anyone has a difference, then they will resolve it among themselves”. Regarding setting of Asset Management Companies under the Project Sashakt, Mehta said that the matter is being looked into and next step will be discussed in the future.

The CNX Nifty is currently trading at 10,791.35, up by 41.60 points or 0.39% after trading in a range of 10,735.05 and 10,794.60. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 3.15%, HPCL up by 3.04%, Bajaj Auto up by 2.51%, BPCL up by 2.11% and Indian Oil Corporation was up by 1.81%. On the flip side, Zee Entertainment down by 1.21%, NTPC down by 0.76%, Bharti Airtel down by 0.62%, Wipro down by 0.57% and ICICI Bank was down by 0.46% were the top losers.

Asian markets were trading mixed; Taiwan Weighted slipped 30.75 points or 0.29% to 10,581.06, Straits Times fell 72.51 points or 2.28% to 3,184.20, Shanghai Composite lost 9.18 points or 0.34% to 2,724.70 and Jakarta Composite was down by 36.05 points or 0.63% to 5,703.28.

On the other side, Nikkei 225 gained 287.32 points or 1.32% to 21,834.31, Hang Seng surged 194.54 points or 0.69% to 28,376.63, KOSPI was up by 5.59 points or 0.25% to 2,263.14.