Indices snap 6-day losing streak, Sensex up by over 50 points

Key Indian indices snapped 6-day losing streak on Friday and ended the session in green terrain. After a cautious start, markets traded volatile, amid reports that despite heavy buying by foreign investors in the last month of 2018-19 (FY19), foreign portfolio investors remained net sellers of $5.5 billion in the market. An announcement of increase in surcharge on the super-rich in the Union Budget FY20 has weighed on portfolio investors and witnessed outflows, especially in the equity segment. Sentiments remained muted, amid a private report stating that India Inc's deal activity in the first six months of this year encompassing both M&A and private equity transactions, stood at $32.1 billion, down 57 per cent over last year.

Despite volatility, key indices managed to remain in green terrain for the most part of the session, as rating agency CRISIL in its latest report said that the Reserve Bank's newly introduced guidelines curbing working capital limits may lead to better financial discipline. Some support also came with Niti Aayog CEO Amitabh Kant’s statement that India was pursuing a policy of import substitution so far, and in future, the country's policy will essentially focus on export-led growth. He said India has huge potential to become a global manufacturing hub for electronics products. Some relief also came with the Employees' State Insurance Corporation (ESIC) payroll data report that around 12.66 lakh jobs were created in May, a tad higher than 11.15 lakh jobs in April this year.

On the global front, European markets were trading in green, as France's consumer confidence rose to the highest level in one-and-a-half years in July. The survey data from INSEE showed that the consumer confidence rose to 102 in July from 101 in June. The latest confidence index was the highest since January last year, when it was 105. Asian markets ended in red, after Singapore's industrial production declined further in June. The data from the Economic Development Board showed that manufacturing output dropped 6.9 percent year-on-year in June, following a 2.0 percent fall in May.

Back home, gems and jewellery companies stocks remained in watch, after the Gems and Jewellery Export Promotion Council of India (GJEPC) said that the government's decision to give relief from IGST on re-import of goods after exhibition would help in promoting shipments of gems and jewellery. Besides, stocks related to non-banking financial companies (NBFCs) also remained in focus, as rating agency Fitch said that the government measures to provide partial credit guarantee to public sector bank on their asset purchases from NBFCs can ease funding pressure only for the short-term.

Finally, the BSE Sensex gained 51.81 points or 0.14% to 37,882.79, while the CNX Nifty was up by 32.15 points or 0.29% to 11,284.30.

The BSE Sensex touched a high and a low of 37,978.07 and 37,690.47, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.53%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Auto up by 1.98%, Consumer Disc up by 1.05%, Bankex up by 1.03%, Capital Goods up by 0.95% and Healthcare up by 0.93%, while Energy down by 1.01%, IT down by 0.87%, TECK down by 0.68%, Oil & Gas down by 0.64% and Utilities down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 9.64%, Bajaj Finance up by 7.20%, Hero MotoCorp up by 3.21%, Mahindra & Mahindra up by 3.08% and Bajaj Auto up by 2.92%. On the flip side, Vedanta down by 4.26%, Reliance Industries down by 1.48%, Bharti Airtel down by 1.46%, ONGC down by 1.39% and HDFC down by 1.24% were the top losers.

Meanwhile, global rating agency Moody’s Investors Service in its latest report has said that the government’s proposed seven amendments to the Insolvency and Bankruptcy Code (IBC) will improve its effectiveness and three of the seven proposals are credit positive in general and particularly for Indian banks as they restore the primacy of secured creditors.  Recently, the government had cleared seven amendments to the IBC that will enforce a strict 330-day timeline for corporate resolution process, including litigation and other judicial processes, as well as make resolution plan binding on all stakeholders. 

The rating agency has stated that cases in the IBC have taken much longer to resolve than the originally envisaged 270 days, in large part because concerned parties have repeatedly appealed to higher courts. However, it said the poor track record of resolving cases on time means that actual implementation will be required before the process can be said to have been definitively speeded up. It noted that the amendments also give the committee of creditors explicit authority over the distribution of proceeds in the resolution process, thereby maintaining the accepted hierarchy of creditors.

Under the IBC, the report said homebuyers in a real estate project are treated on a par with secured creditors, which means that their approval is required before the committee can approve the resolution plan. It noted that because homebuyers in a large project are likely to be relatively numerous, obtaining the approval of all the affected homebuyers has proved a logistical challenge. With the proposed change, it said only the approval of a majority of those present will be required for the resolution to be approved. 

The CNX Nifty traded in a range of 11,307.60 and 11,210.05. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 9.07%, Bajaj Finance up by 7.40%, Bajaj Finserv up by 7.33%, Eicher Motors up by 4.19% and Bharti Infratel up by 3.44%. On the flip side, Vedanta down by 4.29%, Indian Oil Corporation down by 3.27%, Bharti Airtel down by 1.61%, HDFC down by 1.38% and Tech Mahindra down by 1.19% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 33.57 points or 0.45% to 7,522.62, France’s CAC rose 21.12 points or 0.38% to 5,599.17 and Germany’s DAX was up by 37.84 points or 0.31% to 12,399.94.

Asian markets ended mostly lower on Friday as waning expectations of a hefty rate cut by the Fed dampened investor sentiment. Investors pared expectations for aggressive Federal Reserve interest rate cuts after the European Central Bank unexpectedly held rates steady and noted that the risk of recession was relatively low. Japanese shares ended lower as investors elected to book profit on following a weak lead from Wall Street overnight and on mixed earnings reports. Further, Seoul shares closed down as weak earnings, concerns over trade uncertainty with Japan, and ECB President Draghi's less dovish stance dented sentiment. Though, Chinese shares ended higher on expectations that a less-regulated market for initial public offerings (IPOs) and stock trading could help keep China's economy competitive at a time of trade tensions with the US.