Local equities magnify losses; Nifty trades below 11,900 mark

Local equity markets have magnified their losses in morning deals and hovering near the lowest point of the day on account of selling in frontline counters. The frontline indices have drifted below the psychological 39,800 (Sensex) and 11,900 (Nifty) levels. Traders remain concerned with former Chief Economic Advisor Arvind Subramanian’s statement that country’s growth has been overestimated by nearly 2.5 per cent under both UPA and NDA rule. The actual growth is likely to be lower, at nearly 4.5 per cent, down from 7 per cent between 2011-12 and 2016-17. The market participants failed to take support with a report that based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the Reserve Bank of India (RBI) has decided to conduct purchase of six Government securities under OMOs for an aggregate amount of Rs 150 billion on June 13, 2019 through multi-security auction using the multiple price method. Besides, a private report state that India and South American nation Colombia will soon finalize terms of reference of Partial Scope Agreement. On the sector front, ICRA reported that Indian IT services sector is expected to register a growth of 6-8 per cent in US dollar terms during 2019-20. It added Indian IT firms could also see higher wage bills and lower margins on account of increased onsite hiring as they tackle tighter visa scrutiny and reduction in H1-B visa approvals.

On the global front, Asian markets were trading mostly in red; as Hong Kong slipped more than one per cent as a huge protest paralysed key roads in the city and a number of local businesses shut up shop. Back home, a report stated that the Steel Ministry has suggested its commerce counterpart to bring certain changes in norms used for imposing anti-dumping duties with a view to making them more effective for protecting domestic players from cheap imports.

The BSE Sensex is currently trading at 39704.12, down by 246.34 points or 0.62% after trading in a range of 39703.27 and 39982.10. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.41%, while Small cap index was down by 0.18%.

The top gaining sectoral indices on the BSE were Metal up by 1.25%, Oil & Gas up by 0.43%, Energy up by 0.28%, Utilities up by 0.27% and Basic Materials was up by 0.15%, while Telecom down by 1.13%, Realty down by 1.01%, TECK down by 0.91%, BANKEX down by 0.90% and IT was down by 0.90% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.50%, Vedanta up by 1.74%, Sun Pharma up by 0.95%, ONGC up by 0.80% and Asian Paints was up by 0.60%. On the flip side, Yes Bank down by 2.66%, Bajaj Finance down by 1.69%, Bajaj Auto down by 1.59%, Maruti Suzuki down by 1.56% and Hero MotoCorp was down by 1.51% were the top losers.

Meanwhile, State Bank of India (SBI) in its research report ‘Ecowrap’ has underlined Reserve Bank of India’s (RBI) new guidelines to deal with bad loans will provide lenders the headroom and flexibility for resolution of large ticket stressed asset cases under the Insolvency and Bankruptcy Code (IBC). The RBI came out with a revised prudential framework for resolution of stressed assets after its February 2018 circular in this regard was struck down by the Supreme Court.

The report also highlighted that the new prudential framework provides some leeway to lenders and encourages them to refer cases to IBC. The report further said under the current and revised dispensation, an additional provisioning of 20 percent would have to be made in case resolution plan is not implemented within 180 days from the end of the review period, which is after 210 days of default.

Earlier, 100 percent consensus was required there, but with new framework in place 75 percent lenders by value and 60 per cent by numbers would be required for resolution. Further, lenders are to enter into inter-credit agreement.

The CNX Nifty is currently trading at 11895.35, down by 70.25 points or 0.59% after trading in a range of 11894.75 and 11962.45. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.56%, Vedanta up by 1.68%, Hindalco up by 1.18%, GAIL India up by 1.11% and Sun Pharma was up by 0.92%. On the flip side, Indiabulls Housing down by 6.32%, Yes Bank down by 2.90%, Bharti Infratel down by 2.07%, Bajaj Finance down by 1.86% and Maruti Suzuki was down by 1.63% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 452.48 points or 1.63% to 27,336.86, Jakarta Composite lost 35.30 points or 0.56% to 6,270.69, Shanghai Composite declined 16.65 points or 0.57% to 2,909.07, Nikkei 225 slipped 11.88 points or 0.06% to 21,192.40, Taiwan Weighted dropped 4.55 points or 0.04% to 10,603.21 and KOSPI fell 3.81 points or 0.18% to 2,108.00. On the other hand; Straits Times was up by 5.78 points or 0.18% to 3,215.36.