Post Session: Quick Review

Indian equity benchmarks traded in fine fettle for most part of the day but failed to remain in the green territory and ended with losses of over half percent, on the back of uncertainty over outcome of general elections and ongoing trade tensions between US and China. Markets have made a positive start and traded with marginal gains, as traders remained optimistic with rating agency Crisil’s report that recovery of stressed assets through the Insolvency and Bankruptcy Code (IBC) was two-times at Rs 70,000 crore compared to that through other mechanisms in 2018-19 but resolution timelines for bad loans still remains an issue. Buying further crept in with private report that the Indian private equity (PE) market remained a hotbed for deal making in 2018 with investments across 793 deals at $26.3 billion, which was the second highest in the last decade in terms of total investment value.

However, markets failed to protect gains and entered into negative territory in the last leg of trade, as traders turned wary with a report that dampening prospects of higher farm and economic growth in the $2.6 trillion economy, monsoon rains are expected to hit Kerala coast on June 4 and deliver less rainfall than average in 2019. The country is likely to receive 93% rainfall of the long period average. The Street remained disappointed with a private report stating that venture investments in the country declined marginally to $26.3 billion in 2018, even though there was a surge in number of deals announced. Investments by venture capital and private equity funds in the country declined in 2018 from $26.8 billion in the previous year.

On the global front, Asian markets ended mostly in green on Wednesday after U.S. President Donald Trump hinted at the possibility of a trade deal with China in the future. Sentiment was also boosted by hopes of Beijing unveiling more stimulus measures. European markets were trading in red, as Finland's economy expanded at a slightly slower pace in the first three months of the year. Back home, majority of sugar stocks were trading in red with report that India's sugar production is likely to decline 8.4 percent to 30.3 million tonnes for the second straight year in the 2019-20 marketing year that would begin from October because of likely fall in sugarcane output.

The BSE Sensex ended at 37084.37, down by 234.16 points or 0.63% after trading in a range of 37047.87 and 37559.67. 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 0.79%, while Small cap index was down by 0.53%. (Provisional)

The few gaining sectoral indices on the BSE were Realty up by 0.38% and FMCG up by 0.01%, while Telecom down by 2.36%, Metal down by 2.27%, Utilities down by 1.74%, Power down by 1.69% and Auto down by 1.48% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Finance up by 4.40%, Kotak Mahindra Bank up by 0.83%, ITC up by 0.82%, HCL Tech. up by 0.21% and Infosys up by 0.10%. (Provisional)

On the flip side, Yes Bank down by 8.55%, Tata Motors down by 7.38%, Tata Motors - DVR down by 6.02%, Indusind Bank down by 3.86% and Coal India down by 3.30% were the top losers. (Provisional)

Meanwhile, rating agency Crisil in its latest report has said that recovery of stressed assets through Insolvency and Bankruptcy Code (IBC) doubled to Rs 70,000 crore in 2018-19, as against Rs 35,000 crore recovered using other resolution mechanism including Debt Recovery Tribunal (DRT), Securitisation and Reconstruction of Financial Assets (Sarfaesi), Enforcement of Securities Interest Act, and Lok Adalat. As per the report, the recovery rate for the 94 cases resolved through IBC by FY2018-19 is 43%, compared with 26.5% through earlier resolution mechanisms.

According to a report available on the Insolvency and Bankruptcy Board of India (IBBI) website, almost Rs 2.02 lakh crore of debt pertaining to 4,452 cases were disposed of even before admission into the IBC process, as the borrowers made good the amounts in default to the creditors. As per Crisil, this gets reflected in slower accretion of new non-performing assets (NPAs) in the banking system. They estimate the banking sectors gross NPA has declined to around 10% in end-March 2019 from 11.5% the year before on the same date. It further said the resolution timelines under the IBC are still an issue.

The report noted that while the average resolution timeline for cases resolved through IBC is 324 days, which is better than 4.3 years earlier, it is still above the 270 days set out in the code. As on March 31, 2019, there were 1,143 cases outstanding under the IBC of which resolution in 32 per cent of the cases was pending for more than 270 days. There are also a few big-ticket accounts for which resolution has not been finalised for over 400 days. Other challenges such as burden on the National Company Law Tribunal to resolve a large number of cases, clarity on priority of claims, limited number of information utilities, and creation of a secondary asset market, also need to be addressed.

The CNX Nifty ended at 11144.95, down by 77.10 points or 0.69% after trading in a range of 11136.95 and 11286.80. There were 12 stocks advancing against 38 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bajaj Finance up by 4.38%, Eicher Motors up by 4.11%, Indian Oil Corp. up by 1.74%, UPL up by 1.55% and Bajaj Finserv up by 1.15%. (Provisional)

On the flip side, Yes Bank down by 8.82%, Tata Motors down by 7.40%, Zee Entertainment down by 7.19%, JSW Steel down by 4.88% and Indusind Bank down by 3.98% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 5.15 points or 0.07% to 7,236.45, France’s CAC fell 24.91 points or 0.47% to 5,316.44 and Germany’s DAX was down by 52.99 points or 0.44% to 11,938.63.

Asian markets ended mostly in green on Wednesday after US President downplayed the scope of the trade war with China and said dialogues would continue. Sentiment was also boosted by hopes of Beijing unveiling more stimulus measures. Chinese shares ended higher as weak data reinforced expectations that the government will launch stimulus measures to support the economy. China's industrial production and retail sales growth eased more-than-expected in April, suggesting weak economic activity at the start of second quarter. Industrial production advanced 5.4 percent year-on-year in April, following March's 8.5 percent increase. The growth rate was forecast to slow moderately to 6.5 percent. Likewise, annual growth in retail sales eased to 7.2 percent from 8.7 percent a month ago. Sales were expected to expand 8.6 percent. Further, Japanese shares ended higher on expectations that Beijing will boost stimulus spending and bank lending to boost slowing growth.