Benchmarks trade at record highs in early deals

Indian equity benchmarks made an optimistic start and are trading at their all-time high levels with key indices surpassing 39,200 (Sensex) and 11,750 (Nifty) levels in early deals on Wednesday. Sentiments remained up-beat with a report that India’s exports are likely to register an all-time high of $330 billion in FY19, amid slowing global merchandise trade growth. Besides, March exports are expected to be above $30 billion, buoyed by strong performances by engineering and pharmaceuticals sectors. Investors remained hopeful ahead of the outcome of Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC), which started on April 02, to be announce on April 04. There are expectations of a cut in key lending rate by another 25 basis points to boost economic activities. Market participants shrugged off private report that the Central Board of Direct Taxes (CBDT) has collected Rs 1,117,416.5 crore (11.17 lakh crore) in total direct taxes in FY 2018-19, a shortfall of around Rs 83,000 crore or 7.4 percent of the Rs 12 lakh crore collection target.

Global cues too remained supportive with Asian markets rallying at this point of time, as investors looking for more concrete developments out of ongoing US-China trade talks set to continue in Washington. The US markets ended mixed on Tuesday, as investors looked for more signs of strength in the economy in the wake of growth worries.

Back home, telecom sector stocks remained in focus with report that Cellular Operators Association of India (COAI), an industry body representing telecom companies, has sought implementation of the National Digital Communications Policy 2018 from the new government. The policy approved by the Cabinet in September last year aims to attract $100 billion investment and create 4 million jobs in the sector by 2022. In scrip specific developments, Mahindra Finance gained on incorporating wholly owned subsidiary company. However, Jet Airways declined on grounding additional 15 aircraft due to non-payment of lease rentals.

The BSE Sensex is currently trading at 39258.26, up by 201.61 points or 0.52% after trading in a range of 39141.09 and 39262.05. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.53%, while Small cap index was up by 0.45%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.09%, Auto up by 0.68%, Realty up by 0.66%, Bankex up by 0.66% and Telecom was up by 0.62%, while Oil & Gas down by 0.29%, IT down by 0.22% and TECK was down by 0.15% were the feww losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.54%, Tata Motors - DVR up by 1.78%, HDFC up by 1.72%, Indusind Bank up by 1.52% and Yes Bank up by 1.28%. On the flip side, Infosys down by 0.73%, Hindustan Unilever down by 0.47%, Coal India down by 0.36% and Larsen & Toubro down by 0.10% were the top losers.

Meanwhile, in a major relief to distressed power companies, the Supreme Court has quashed a tough 2018 Reserve Bank of India (RBI) circular on resolving bad debt under which a company is declared bankrupt even if it misses repayment schedule by a day. But, this could delay bankruptcy proceedings. An early resolution of stressed loans impacted by the circular is expected to be hit following the verdict that gives flexibility to lenders to restructure debts.

The court, in its 84-page verdict, held that the generic circular directing banks to take recourse to Insolvency and Bankruptcy Code (IBC) was beyond the powers of Section 35AA of the Banking Regulation Act. It said reference to IBC can be made only on a case to case basis, and there cannot be a general direction in this regard. The circular has prescribed rules for recognising one-day defaults by large corporates and initiating insolvency action as a remedy.

The RBI on February 12, 2018, had issued a circular on the resolution of stressed assets revised framework -- commonly known as February 12 circular. According to the circular, lenders had to classify a loan account as stressed if there was even a day of default. The bankers had to mandatorily refer all accounts with over Rs 2,000 crore loans to the National Company Law Tribunal (NCLT) or the bankruptcy court if they failed to resolve the problem within 180 days of default. The circular also said that if a resolution was not found by August 27, Non-Performing Asset (NPA) accounts should be sent to bankruptcy courts. Power sector was the worst hit by the circular and so were companies in the steel, textile, sugar and shipping sector.

Besides, Moody's Investors Service has said that voiding of the circular is credit negative for Indian banks. It said the circular had significantly tightened stressed loan recognition and resolution for large borrowers. But, with the voiding, this may now have to be watered down. The resolution of stressed loans impacted by the circular will be further delayed as the process may have to be started afresh.

The CNX Nifty is currently trading at 11751.30, up by 38.10 points or 0.33% after trading in a range of 11731.10 and 11761.00. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing up by 2.45%, Tata Motors up by 2.37%, Indusind Bank up by 1.91%, Adani Ports & SEZ up by 1.71% and HDFC up by 1.53%. On the flip side, BPCL down by 2.76%, Eicher Motors down by 1.57%, Infosys down by 1.22%, Tech Mahindra down by 0.88% and Indian Oil Corporation down by 0.76% were the top losers.

All the Asian markets are trading in green; Nikkei 225 jumped 187.73 points or 0.87% to 21,693.04, Straits Times gained 27.39 points or 0.84% to 3,307.17, Hang Seng surged 254.54 points or 0.86% to 29,879.21, Taiwan Weighted rose 18.95 points or 0.18% to 10,709.25, KOSPI increased 11.60 points or 0.53% to 2,188.78 and Shanghai Composite was up by 7.36 points or 0.23% to 3,184.18.