Local equities continue firm trade

Local equity benchmarks added some more points to continue firm trade in the morning session on account of buying in front line counters. Both, Sensex and Nifty were trading above their crucial 39,600 and 11,850 marks, respectively. Traders remained encouraged with industry body Ficci’s President Sandip Somany’s statement that India should cut interest rates further and adopt consistent policies for the export of agricultural produce to enable Indian exporters to take advantage of the current US-China trade war. Traders took note of report that Niti Aayog vice-chairman Rajiv Kumar has stressed on the revamp and modernisation of the Indian statistical system so that real-time data is captured and used for policy analysis. Meanwhile, Reserve Bank of India’s (RBI) report showed that non-food bank credit grew by 13.01% year-on-year (y-o-y) for the fortnight ended May 10, but marginally slower than 13.13% y-o-y reported in the previous fortnight. Besides, a private report stated that US escalation of trade tensions won’t solve any of its problems but will create volatility in global markets and hurt the world economy.

On the global front, Asian markets were trading mixed as investors waited for any new developments in the trade war between the United States and China. Bank home, a report stated that a single authority for sanctioning and processing GST refunds is in the offing as the Finance Ministry looks to speed up and simplify the process for exporters. The current mechanism entails a twin refund sanctioning authority of the central and state tax officers but that could well change by August when the proposed new structure involving a single authority comes in place.

The BSE Sensex is currently trading at 39607.19, up by 172.47 points or 0.44% after trading in a range of 39353.16 and 39669.99. There were 20 stocks advancing against 10 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.71%, while Small cap index was up by 1.15%.

The top gaining sectoral indices on the BSE were Power up by 2.71%, Utilities up by 2.46%, Capital Goods up by 1.70%, Realty up by 1.66% and PSU was up by 1.39%, while Telecom down by 0.47%, Energy down by 0.38% and Healthcare was down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were NTPC up by 4.57%, Yes Bank up by 4.32%, Tata Steel up by 2.94%, Power Grid up by 1.94% and Larsen & Toubro was up by 1.82%. On the flip side, IndusInd Bank down by 1.44%, Bharti Airtel down by 1.40%, Asian Paints down by 0.87%, Bajaj Auto down by 0.87% and Tata Motors was down by 0.82% were the top losers.

Meanwhile, Public sector banks (PSBs) have recovered around Rs 1.2 lakh crore form bad loans during the last financial year (FY19) as compared to 74,562 crore in financial year 2018 (FY18) mainly helped by resolution under the Insolvency and Bankruptcy Code (IBC). During the first half of FY19, banks recovered Rs 60,713 crore from stressed assets. Due to non-resolution of some big accounts referred under NCLT (National Company Law Tribunal), PSBs could not achieve the resolution target of Rs 1.80 lakh crore. But, these accounts should be resolved in the current financial year. Banks recovered close to Rs 55,000 crore from the NCLT resolution.

Two large accounts of Essar Steel and Bhushan Power & Steel are still pending to be resolved. It is expected that these two accounts should be resolved in the next few months and recoveries from these could be around Rs 50,000 crore.  JSW Steel had revised its offer from Rs 11,000 crore to Rs 18,000 crore and later to over Rs 19,000 crore, whereas Tata Steel's last offer was at Rs 17,000 crore after it had refused to revise its bid. ArcelorMittal has made a bid of Rs 42,000 crore for Essar Steel.

Besides, there are issues with both solvency and liquidity in these companies. The government and the Reserve Bank of India will take adequate measures to address the issues plaguing the NBFC sector. Many NBFCs, including DHFL and Indiabulls Finance, came under severe liquidity pressure compelling them to bring down their reliance on commercial papers.

The CNX Nifty is currently trading at 11888.15, up by 44.05 points or 0.37% after trading in a range of 11812.40 and 11900.35. There were 31 stocks advancing against 18 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were NTPC up by 4.49%, Yes Bank up by 4.25%, Tata Steel up by 2.92%, Cipla up by 2.09% and Larsen & Toubro was up by 1.96%. On the flip side, JSW Steel down by 1.65%, Tech Mahindra down by 1.54%, IndusInd Bank down by 1.39%, Bharti Airtel down by 1.39% and Zee Entertainment was down by 1.30% were the top losers.

Asian markets were trading mixed; Nikkei 225 surged 58.53 points or 0.28% to 21,175.75, Jakarta Composite soared 44.59 points or 0.74% to 6,101.94, Shanghai Composite gained 7.51 points or 0.26% to 2,860.50 and Taiwan Weighted was up by 0.53 points or 0.01% to 10,328.81.

On the other hand; KOSPI fell 6.20 points or 0.3% to 2,039.11, Straits Times trembled 8.33 points or 0.26% to 3,161.56 and Hang Seng was down by 148.36 points or 0.54% to 27,205.57.