Post Session: Quick Review

Benchmark indices erased all their intraday gains and ended Wednesday’s session at day’s low points, on the back of last hour selling pressure. Key indices opened at a record high, buoyed by positive movement in global markets. Traders took encouragement 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. Traders remain energized with Asian Development Bank’s report that India's growth is set to pick up and is expected to grow 7.2% in the current fiscal on strengthening consumption. 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 announced on April 04. There are expectations of a cut in key lending rate by another 25 basis points to boost economic activities.

However, sharp selling in last leg of trade mainly played spoil sports for domestic bourses and dragged them to their intraday lows, as traders turned pessimistic after private weather forecaster Skymet said India’s monsoon rains were seen below normal this year. According to Skymet Weather, monsoon in 2019 was likely to be ‘below normal’ to the tune of 93 per cent of the long period average (LPA) of 887 mm for the fourth-month period from June to September. Sentiments also got spooked with International Monetary Fund (IMF) Managing Director Christine Lagarde’s statement that global growth has lost momentum amid rising trade tensions and tighter financial conditions, but pauses in rate hikes will help boost activity in the second half of 2019. Adding pessimism among investors, the Asian Development Bank latest report said that trade tensions between China and the United States are putting a drag on Asian economies, with growth likely to continue to slow in the coming two years.

On the global front, Asian markets ended higher on Wednesday, while European markets were trading in green as market participants monitored signs of progress in U.S.-China trade talks. Back home, banking stocks ended in red after ICRA’s Vice President & Sector Head - Financial Sector Ratings, Anil Gupta stating that Supreme Court’s decision to quash RBI circular can lead to negative impact for banks if the loans are not resolved. Telecom sector stocks too were 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.

The BSE Sensex ended at 38868.25, down by 188.40 points or 0.48% after trading in a range of 38826.56 and 39270.14. There were 6 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.85%, while Small cap index was down by 0.92%. (Provisional)

The top losing sectoral indices on the BSE were Oil & Gas down by 2.12%, PSU down by 1.58%, Energy down by 1.44%, Capital Goods down by 1.43% and Telecom down by 1.32%, while there were no gainers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 2.72%, HCL Tech. up by 1.29%, HDFC up by 0.88%, Tata Steel up by 0.70% and Hero MotoCorp up by 0.44%. (Provisional)

On the flip side, Yes Bank down by 2.30%, SBI down by 2.24%, Larsen & Toubro down by 2.11%, Sun Pharma down by 1.92% and Bharti Airtel down by 1.79% were the top losers. (Provisional)

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 ended at 11638.05, down by 75.15 points or 0.64% after trading in a range of 11629.15 and 11761.00. There were 13 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing Finance up by 3.35%, Maruti Suzuki up by 2.72%, Bajaj Finserv up by 1.65%, HCL Tech. up by 0.95% and JSW Steel up by 0.84%. (Provisional)

On the flip side, BPCL down by 4.61%, Zee Entertainment down by 3.62%, Indian Oil Corp. down by 3.13%, GAIL India down by 2.63% and SBI down by 2.39% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 0.44 points or 0.01% to 7,391.56, France’s CAC rose 39.11 points or 0.72% to 5,462.58 and Germany’s DAX added 159.05 points or 1.35% to 11,913.84.

Asian markets ended in green on Wednesday as optimism about US-China trade talks helped investors shrug off concerns surrounding Brexit. Some support came in after reports that the US and China have resolved most of the outstanding issues and are drawing closer to a final trade agreement. Robert Lighthizer, US trade representative, Liu He, China's vice-premier, and Steven Mnuchin, US Treasury secretary, are scheduled to resume talks today. Chinese shares ended up, more than one-year high, with sentiment aided by signs of economic recovery and progress in trade talks.