Key gauges pare initial gains to trade in red terrain

Local equity benchmarks pared all of their initial gains and were trading into red terrain in morning session, as traders remained concerned with a report that International Monetary Fund (IMF) has cautioned India it should not rely on global financial markets to finance its current account deficit (CAD) when it goes above 3% of gross domestic product (GDP). The Fund basically advised India to rely more on stable sources of foreign inflow - foreign direct investment (FDI). Shares of Bharti Airtel, NTPC and Coal India fell over 1%, while Adani Ports, Vedanta and Yes Bank were the top gainers. Sentiments turned cautious ahead of July series F&O expiry scheduled tomorrow amid mixed quarterly earnings. Some cautiousness also came with a private report which state that India’s low trade-to-gross domestic product (GDP) ratio, favourable demographics, high commodity imports and pro-reform government will shield it to a large extent should trade tensions escalate and lead to a global economic slowdown. Traders took note of a report that India’s imports from the US jumped a massive 38% in the first quarter of this fiscal to $8.53 billion, while those from China dropped 4% from a year before.

On the global front, Asian markets were trading mostly in green, following gains on Wall Street and hopes that China will boost fiscal support for its economy, while long-term US yields hovered near six-week highs on speculation the Bank of Japan could be less accommodative. Beside, in scrip specific development, Oil India surged on inking JV agreement for construction of North-East Gas Grid Pipeline. Besides, HDFC rises on planning to gained funds worth Rs 35,000 crore via NCDs.
The BSE Sensex is currently trading at 36819.85, down by 5.25 points or 0.01% after trading in a range of 36809.45 and 36928.06. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.04%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Metal up by 1.18%, Basic Materials up by 0.49%, Industrials up by 0.19%, Energy up by 0.16% and Capital Goods was up by 0.11%, while Telecom down by 2.05%, Power down by 0.82%, Consumer Durables down by 0.75%, Utilities down by 0.72% and Realty was down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 2.08%, Vedanta up by 1.67%, Yes Bank up by 1.18%, ONGC up by 1.18% and Bajaj Auto was up by 1.02%. On the flip side, Bharti Airtel down by 3.34%, NTPC down by 2.35%, Coal India down by 1.03%, Maruti Suzuki down by 0.87% and Kotak Mahindra Bank was down by 0.82% were the top losers.

Meanwhile, Minister of state for finance Shiv Pratap Shukla has said that the gross bad loans of public sector banks (PSBs) hit 15% of advances in last financial year (FY18). The gross non-performing assets (NPA) ratio for PSBs stood at 14.6% in 2017-18.  IDBI Bank topped the list in terms of gross bad loans at 28% of gross advances followed by Indian Overseas Bank (25.3%); UCO Bank (24.6%); United Bank of India (24.1%); Dena Bank (22%); Central Bank of India (21.5 %); Bank of Maharashtra (19.5 %) and Punjab National Bank (18.4%).  Country's largest lender SBI had gross NPAs to the tune of 10.9% of gross advances as on March 31, 2018.

Except for Vijaya Bank, with gross NPA of 6.3% as also the lowest amongst all PSBs during the financial year and Indian Bank at 7.4%, the rest of the lenders had their NPAs in double digits.   In the last 25 financial years, the gross NPA ratio for PSBs was highest in 1993-94 at 24.8% and was also higher in six other financial years.

Considering the rising bad loans, the minister highlighted that the RBI had asked banks for Asset Quality Review (AQR) in 2015, adding that the exercise revealed high incidence of non-NPAs in PSBs. Under AQR, the expected losses on stressed loans, not provided for earlier under flexibility given to restructured loans, were reclassified as NPAs and provisions were made against them.  Meanwhile, he said banks have set up a committee on resolution of stressed assets and have adopted a five-pronged strategy to clean up their balance sheets. Besides, he underlined  ‘A number of measures have been taken to streamline recovery...The Insolvency and Bankruptcy Code, 2016 (IBC) has been enacted to create a unified framework for resolving insolvency and bankruptcy matters’.

The CNX Nifty is currently trading at 11124.50, down by 9.80 points or 0.09% after trading in a range of 11118.20 and 11153.00. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.24%, Bajaj Finserv up by 2.60%, Vedanta up by 1.85%, Adani Ports & SEZ up by 1.85% and Hindalco was up by 1.78%. On the flip side, Bharti Airtel down by 3.62%, HCL Tech down by 2.81%, NTPC down by 2.54%, HPCL down by 2.27% and Grasim Industries was down by 1.84% were the top losers.

Asian market were trading mostly in green; Nikkei 225 gained 90.74 points or 0.4% to 22,601.22, Straits Times surged 27.10 points or 0.82% to 3,319.75, Hang Seng advanced 220.69 points or 0.76% to 28,883.26, Shanghai Composite rose 2.58 points or 0.09% to 2,908.14 and Jakarta Composite was up by 4.77 points or 0.08% to 5,936.61.

On the other side, KOSPI slipped 7.69 points or 0.34% to 2,272.51 and Taiwan Weighted was down by 32.57 points or 0.3% to 10,962.82.