Rally continues on Dalal Street; Nifty inching towards 11,500 mark

Strong rally continued on the street in late afternoon session, with Sensex and Nifty gaining more than 300 and 100 points, respectively, supported by firm European markets. Gaining momentum in broader markets too pushed the trade near day’s high points. Realty, Basic Materials and Power were the major contributors to the gains, while Vedanta emerged as top gainer among all the major industry leaders in late noon deals. Domestic sentiments remained cheerful, as India’s Wholesale price index (WPI) inflation eased for the second straight month in August 2018, supported by declining minerals prices. According to the latest data released by the government, WPI slowed down to 4.53% in August from 5.09% in July and 3.24% during the corresponding month of the previous year. Traders took note of the prime minister's economic advisory panel member’s statement that India needs to be extremely vigilant to check weakness in the rupee and the task was to minimise volatility and avoid contagion to other macro policies.

On the global front, European markets were trading in green, even though France's consumer prices grew at a steady pace in August. The final data from the statistical office Insee showed that consumer price inflation came in at 2.3%, the same rate as registered in July. Asian markets were also trading in green, with news of a possible new round of US-China trade talks in coming days and easing concerns about the state of emerging markets helping underpin investor sentiment. Back home, in scrip specific development, Suven Life Sciences soared after the company secured one product patent from New Zealand and one product patent from Sri Lanka corresponding to the New Chemical Entity for the treatment of disorders associated with Neurodegenerative diseases.

The BSE Sensex is currently trading at 38045.10, up by 327.14 points or 0.87% after trading in a range of 37859.52 and 38081.48. There were 25 stocks advancing against 5 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.36%, while Small cap index was up by 1.33%.

The top gaining sectoral indices on the BSE were Realty up by 2.52%, Basic Materials up by 2.34%, Power up by 2.29%, Metal up by 2.10% and Consumer Durables up by 2.02%, while IT down by 0.62% and TECK down by 0.49% were the only losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 4.04%, Power Grid Corporation up by 3.65%, Yes Bank up by 3.47%, Asian Paints up by 3.02% and Indusind Bank up by 2.91%. On the flip side, Infosys down by 1.26%, Coal India down by 1.19%, Wipro down by 0.40%, Hindustan Unilever down by 0.37% and TCS down by 0.30% were the top losers.

Meanwhile, with non-performing assets (NPAs) worth over Rs 50,000 crore under the RBI’s independent credit evaluation (ICE) framework, a joint study carried out by industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) and rating agency Crisil has revealed that banks may need to take a haircut in the range of 40-60 percent to get a rating of RP4 for implementation of any resolution plan. It also said that the average sustainable debt for these assets is around 50 percent.

According to the report, as on June 30, the National Company Law Tribunal (NCLT) had approved resolution of 32 stressed assets under the corporate insolvency resolution process, aggregating Rs 50,000 crore against total claims of Rs 89,400 crore admitted by financial and operational creditors. It noted that the average resolution timeline for these accounts was 260 days, as against the stipulated 270 days. It also believed that an improvement in the recovery rate and reduction in timeline for resolution will increase investor confidence in the domestic corporate bond market.

The ASSOCHAM- Crisil study further stated that the IBC is expected to promote a market for unsecured financing and that is because the distribution waterfall of recoveries following liquidation gives unsecured financial creditors (apart from all secured creditors) precedence over government dues. Adding further, it said that some of the challenges in effective implementation of IBC are infrastructure issues, adherence to resolution timelines, liquidation impact, criticality of the role of the committee of creditors (CoC), and limited development of the secondary market. It added that these would need to be addressed systematically and soon for successful implementation of the IBC over the medium term and achieve the intended outcome.

The CNX Nifty is currently trading at 11485.95, up by 116.05 points or 1.02% after trading in a range of 11430.55 and 11499.15. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 6.41%, BPCL up by 5.04%, UPL up by 4.32%, Vedanta up by 4.18% and HPCL up by 4.08%. On the flip side, HCL Technologies down by 1.73%, Infosys down by 1.40%, Coal India down by 1.15%, Hindustan Unilever down by 0.42% and Wipro down by 0.38% were the top losers.

Asian markets were trading mostly in green; Hang Seng soared 271.92 points or 1% to 27,286.41, Jakarta Composite increased 56.59 points or 0.96% to 5,914.86, KOSPI gained 32.02 points or 1.38% to 2,318.25, Taiwan Weighted surged 140.91 points or 1.3% to 10,868.14, Nikkei 225 jumped 273.35 points or 1.18% to 23,094.67 and Straits Times was up by 29.33 points or 0.93% to 3,161.10. On the flip side, Shanghai Composite was down by 4.93 points or 0.18% to 2,681.65.

All European markets were trading in green; UK’s FTSE 100 increased 7.63 points or 0.1% to 7,289.20, France’s CAC rose 20.59 points or 0.38% to 5,348.71 and Germany’s DAX was up by 47.23 points or 0.39% to 12,102.78.