Local equities trade with marginal gains

Local equity benchmarks are trading with marginal gains in morning session, following gains in Metal, IT and Basic Materials stocks amid positive global sentiment. Among heavy-weights Vedanta, ONGC and Tata Motors have exhibited a smart performance. Some optimism came with a report that the Non-Performing Assets stock has declined massively to 9.3% in FY19, much faster than the Reserve Bank's estimate and steeply down from 11.5% the year before. Traders took note of a report that the Modi government have re-affirmed its commitment to ensure and secure the autonomy and independence of the statistical system to produce appropriate and reliable data by adhering to internationally-agreed professional and scientific standards. However, gains remain capped with Commerce and Industry Minister Piyush Goyal’s statement that slowdown in global trade and investment is of serious concern as it adversely affects economic growth, development and job creation. He has called for de-escalating trade tensions and reviving confidence in the rules-based multilateral trading system.

On the global front, Asian markets were trading in green; as China released better-than-expected trade data for May and US removed the threat of tariffs against Mexican imports. Back home, a report stated that the Ministry of Micro, Small and Medium Enterprises is planning to set up enterprise facilitation centres across the country to make MSMEs more competitive and help them integrate with big enterprises.

The BSE Sensex is currently trading at 39848.73, up by 64.21 points or 0.16% after trading in a range of 39760.02 and 39933.64. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.32%, while Small cap index was up by 0.06%.

The top gaining sectoral indices on the BSE were Metal up by 0.78%, IT up by 0.58%, TECK up by 0.53%, Basic Materials up by 0.46% and Consumer Durables was up by 0.46%, while Healthcare down by 0.47%, Capital Goods down by 0.16%, Realty down by 0.12% and FMCG was down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.48%, Tata Motors - DVR up by 2.41%, ONGC up by 2.37%, Tata Motors up by 2.23% and Yes Bank was up by 2.21%. On the flip side, Sun Pharma down by 3.83%, Mahindra & Mahindra down by 0.90%, Bharti Airtel down by 0.73%, HDFC down by 0.61% and Hindustan Unilever was down by 0.45% were the top losers.

Meanwhile, Moody's Investors Service has said the Reserve Bank of India’s (RBI) revised framework for the resolution of stressed assets is credit positive, because it brings back the focus on the need for the timely resolution of such assets, and the buildup of loan loss provisioning against those assets. However, it added that the slower-than-expected progress under the Insolvency and Bankruptcy Code (IBC) remains the key hurdle to the timely resolution of stressed assets. The cleanup of the bank's balance sheets could therefore still take another two to three years.

It mentioned that extension of the circular to non-bank finance companies (NBFCs) will help align the loan loss provisioning norms for the large stressed accounts of NBFCs with commercial banks.

The RBI recently issued a prudential framework for resolution of stressed assets, which give lenders 30 days to review a borrower account before labelling it as a non-performing asset (NPA) in case of default. This framework replaces the earlier circular which mandated lenders to start resolution even if there was one day default. This circular was quashed by the Supreme Court in April.

The CNX Nifty is currently trading at 11937.25, up by 14.55 points or 0.12% after trading in a range of 11904.35 and 11959.95. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.72%, Yes Bank up by 2.61%, ONGC up by 2.49%, HCL Tech. up by 2.08% and Tata Motors was up by 1.81%. On the flip side, Indiabulls Housing down by 4.20%, Sun Pharma down by 3.74%, BPCL down by 1.48%, Mahindra & Mahindra down by 1.04% and Bharti Airtel was down by 0.98% were the top losers.

All Asian markets were trading in green; Hang Seng increased 235.97 points or 0.86% to 27,814.61, Nikkei 225 surged 66.27 points or 0.31% to 21,200.69, Shanghai Composite gained 53.31 points or 1.87% to 2,905.44, Taiwan Weighted strengthened 44.26 points or 0.42% to 10,610.73, Straits Times advanced 15.17 points or 0.48% to 3,203.28, KOSPI rose 9.51 points or 0.45% to 2,109.00 and Jakarta Composite was up by 7.36 points or 0.12% to 6,296.97.