Indices continue to trade deep in red; Sensex dives 231 points

Local equity markets continued to trade deep in the red in the early noon session, due to concerns of a spill-over from a crisis-hit Turkey. Heavy selling activity in Bankex, Energy and PSU sector stocks were dragging the markets lower. Apart from these sectors Oil & Gas was also losing as Oil prices increased amid concerns that US sanctions against Iran may tighten oil supply. Traders opted to sell their holding in shares of heavyweight companies such as Vedanta and SBI. Sentiments weakened as foreign institutional investors (FIIs) sold shares worth a net Rs 510.66 crore on August 10, 2018. Meanwhile, rupee weakened to a record low against US dollar, which also dented investors’ sentiments. The broader indices were trading in negative zone and overall market breadth on BSE was in the favour of declines.  Besides, investors cautiously await CPI inflation data for the month of July due later today. Traders paid no heed towards CII-ASCON Industry Survey report which highlighted that India’s economic growth will improve further in the coming quarters due to recovery in domestic demand as also the investment cycle.

On the global front, all the Asian markets slipped and the euro hit one-year lows as a renewed rout in the Turkish lira infected the South African rand and drove demand for safe harbours, including the U.S. dollar, Swiss franc and yen. Back home, in scrip specific development, L&T gained with construction arm bagging order worth Rs 3,028 crore from GHIAL, while IOC fell despite reporting 50% jump in Q1 net profit.

The BSE Sensex is currently trading at 37637.65, down by 231.58 points or 0.61% after trading in a range of 37559.26 and 37693.19. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index dipped 0.33%, while Small cap index down by 0.55%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.50%, IT up by 0.49%, Consumer Durables up by 0.26%, FMCG up by 0.19% and TECK up by 0.18%, while Bankex down by 1.16%, Energy down by 1.04%, PSU down by 1.02%, Oil & Gas down by 0.87% and Basic Materials down by 0.66% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.61%, Sun Pharma up by 1.32%, Larsen & Toubro up by 0.88%, Mahindra & Mahindra up by 0.78% and Bharti Airtel up by 0.57%. On the flip side, Vedanta down by 3.44%, SBI down by 2.84%, Tata Motors - DVR down by 2.07%, Yes Bank down by 1.89% and HDFC down by 1.63% were the top losers.

Meanwhile, a survey conducted by a Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks’ Association (IBA) has said that Insolvency and Bankruptcy Code (IBC) has put debt recovery process on fast track and improved the position of banks.  It noted that banks which participated in the survey highlighted that IBC has also increased promoters’ willingness to come forward for resolution at an early stage of default.

The seventh round of the FICCI-IBA survey has stated that to improve the resolution process, bankers suggested further enhancing of capacity, strengthening of the judiciary and empowerment of local level government officials. It noted that 22 bankers suggested that extension of moratorium beyond 270 days should not be permitted. Adding further, it said they also suggested increasing the tenor of debt for companies that have viable businesses but are currently suffering from over-leveraged balance sheets, along with a moratorium period.

As per the survey, the IBC has shown success with the resolution of stressed assets even as the law continues to evolve. It also said that banks continue facing challenges in lending even as GDP growth has bounced back while CPI inflation faces upward risks in the form of rising oil prices and increasing government expenditure. Besides, it highlighted that 67% of the participating banks have reported tightening of standards, sharply increasing from 28% in the previous round of the survey.

The CNX Nifty is currently trading at 11360.05, down by 69.45 points or 0.61% after trading in a range of 11340.30 and 11377.55. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 3.84%, Tech Mahindra up by 2.52%, Coal India up by 1.65%, Grasim Industries up by 1.34% and HCL Tech up by 1.21%. On the flip side, Vedanta down by 3.35%, Indiabulls Housing down by 3.29%, SBI down by 2.94%, BPCL down by 2.51% and Eicher Motors down by 2.27% were the top losers.

All the Asian markets were trading in red; Straits Times decreased 33.39 points or 1.03% to 3,251.39, Nikkei 225 plunged 440.65 points or 2.02% to 21,857.43, KOSPI declined 36.31 points or 1.62% to 2,246.48, Taiwan Weighted slipped 234.76 points or 2.18% to 10,748.92, Hang Seng dropped 436.64 points or 1.56% to 27,929.98, Shanghai Composite decreased 28.27 points or 1.02% to 2,767.04 and Jakarta Composite was down 200.13 points or 3.41% to 5,877.04.