Markets make gap-down opening; Sensex breaches 38,700 mark

Indian equity benchmarks have made a gap-down opening and are trading in red terrain in early deals with frontline gauges breaching their crucial 38,700 (Sensex) and 11,650 (Nifty) levels. Traders remained cautious with report that in a first in recent history of tax filings, income tax e-filings in FY2019 have dropped. Income tax e-filings in FY 2018-19 was 6.68 crore, down from 6.74 crore in the previous fiscal. This is surprising given that post demonetisation it was expected that the tax base would continue to increase. Market participants also remained on sidelines ahead of Services PMI data for the month of April to be out later in the day. Traders failed to get any sense of relief with the Reserve Bank of India’s (RBI) data showing the country's foreign exchange reserves soared by $4.368 billion to $418.515 billion in the week to April 26, helped by the second dollar-rupee swap auction. In the swap auction conducted on April 23, the RBI had received bids worth $18.65 billion against $5 billion on offer. It accepted just five bids worth $5 billion.

On the global front, all the Asian markets are trading in red at this point of time as trade negotiations between China and the US deteriorated suddenly, reversing apparent progress made in recent months. The US markets rose on Friday after surprisingly the data showed strong payroll gains in April and the lowest unemployment rate since 1969.

Back home, banking sector stocks remained in focus with a report that banks have taken a huge 57 percent haircut in the 94 large accounts worth Rs 1.75 lakh crore which were resolved in FY19, recovering just Rs 75,000 crore or only 43 percent of the admitted claims. TV broadcasting industry related stocks also remained buzzing with report that Telecom Regulatory Authority of India (TRAI) has roped in state-owned Broadcast Engineering Consultants India (BECIL) for conducting audits to ensure that cable TV and DTH companies are complying with its new regulatory norms.

The BSE Sensex is currently trading at 38660.22, down by 303.04 points or 0.78% after trading in a range of 38509.79 and 38719.33. There were 3 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index decreased 0.46%, while Small cap index was down by 0.27%.

The lone gaining sectoral index on the BSE was Oil & Gas up by 0.05%, while Metal down by 2.37%, Basic Materials down by 1.33%, Bankex down by 0.88%, Auto down by 0.75% and Industrials was down by 0.70% were the top losing indices on BSE.

The few gainers on the Sensex were Asian Paints up by 0.58%, Power Grid Corporation up by 0.53% and TCS was up by 0.43%. On the flip side, Tata Motors down by 4.11%, Tata Motors - DVR down by 3.19%, Yes Bank down by 2.56%, Tata Steel down by 2.52% and HDFC was down by 1.75% were the top losers.

Meanwhile, a joint study carried out by the industry body Associated Chambers of Commerce & Industry of India (ASSOCHAM) and rating agency CRISIL stated that banks have taken a huge 57% haircut in the 94 large accounts worth Rs 1.75 lakh crore which were resolved in FY19, recovering just Rs 75,000 crore or only 43% of the admitted claims under the insolvency process approved by the various national company law tribunals (NCLTs).

The numbers assume importance as the bankruptcy law enters the third year this month. As of March, there were 1,143 cases pending at various bankruptcy tribunals, and 32% of them are pending for over 270 days. The average resolution timeline for these 94 cases resolved was 324 days as against the stipulated timeline of 270 days. The study said these 94 companies were liquidated, the recovery would have been just 22% which is significantly lower than the recovery rate through normal resolution process.

ASSOCHAM-CRISIL study further said there are a few big-ticket accounts for which resolution has not been finalised for over 400 days as IBC framework is still a work in progress. According to study, some of the key issues that need to be addressed for successful implementation of IBC are adherence to timelines, adequate judicial infrastructure, creditor classification and prioritising, among others.

The CNX Nifty is currently trading at 11619.15, down by 93.10 points or 0.79% after trading in a range of 11585.10 and 11629.80. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.33%, Tech Mahindra up by 0.87%, Wipro up by 0.72%, Dr. Reddys Lab up by 0.53% and Asian Paints up by 0.38%. On the flip side, Tata Motors down by 4.61%, Hindalco down by 3.44%, JSW Steel down by 3.35%, Yes Bank down by 3.16% and Tata Steel down by 2.60% were the top losers.

Asian markets are trading in red; Straits Times declined 121.29 points or 3.58% to 3,271.00, Hang Seng dropped 994.81 points or 3.31% to 29,086.74, Taiwan Weighted shed 206.75 points or 1.86% to 10,889.55, Shanghai Composite tumbled 159.69 points or 5.19% to 2,918.65 and Jakarta Composite was down by 71.41 points or 1.13% to 6,248.05.