Bourses manage to trade above neutral lines in afternoon session

Key Indian benchmarks managed to trade above their neutral lines in early afternoon session, on account of buying in frontline blue chip counters. Investors were taking support from Union Minister Nitin Gadkari’s statement that the government is in the process of launching Digital data-based credit ratings of Micro, Small and Medium Enterprises (MSME), to help entrepreneurs to get bank loans on the basis of these credit ratings. However, gains remain capped as anxiety remained among the local traders with report that Indian government think tank NITI Aayog has cautioned the government that the path to a $5-trillion economy by 2025 is plagued with several hindrances. In the currency front, the rupee moved higher in early trade, rising to 71.59 against the US dollar, as compared to the previous close of 71.74. On the sectoral front, food processing sector remained in focus after an inter-ministerial approval committee, headed by Food Processing Minister Harsimrat Kaur Badal, has cleared projects worth Rs 271 crore to boost processing and preservation capacities. The projects were sanctioned under the Creation/ Expansion of Food Processing & Preservation Capacities (CEFPPC) scheme.

On the global front, Asian markets were trading mixed, as investors tracked developments in the China-US trade talks. Back home, the BSE Sensex is currently trading at 40959.43, up by 70.20 points or 0.17% after trading in a range of 40888.18 and 41120.28. There were 18 stocks advancing against 13 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index rose 0.11%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.66%, Bankex up by 0.54%, Consumer Durables up by 0.44%, Energy up by 0.23% and Oil & Gas was up by 0.12%, while Telecom down by 4.01%, TECK down by 0.79%, Realty down by 0.66%, Metal down by 0.31% and Capital Goods was down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.22%, ONGC up by 1.72%, ICICI Bank up by 1.51%, Tata Steel up by 0.97% and ITC was up by 0.91%. On the flip side, Bharti Airtel down by 3.48%, Power Grid down by 1.61%, Tata Motors - DVR down by 1.31%, Hindustan Unilever down by 0.91% and Larsen & Toubro was down by 0.66% were the top losers.

Meanwhile, Global rating agency Moody’s Investors Service in its latest report has said that the inclusion of Non-banking financial companies (NBFCs) into the Insolvency and Bankruptcy Code (IBC) is credit positive for banks (NBFCs' biggest source of funds) because IBC provides for the orderly resolution of a stressed NBFC company. 

According to the report, the close involvement of the Reserve Bank of India (RBI) in the resolution process indicates the importance of the NBFC sector to overall financial stability, including the direct effect of any systemically important NBFC's failure on banks and other credit providers. It said “we expect the RBI to selectively approach the IBC to resolve NBFCs with severe liquidity or solvency issues, or to resolve companies whose weak corporate governance is deterring potential buyers.” It also expects banks and the RBI to utilize other debt restructuring options before approaching the IBC.

Recently, the government had empowered RBI to refer stressed NBFCs and housing finance companies (HFCs) having assets worth of at least Rs 500 crore to insolvency courts after notifying Section 227 of the IBC. Prior to this, the only resolution framework available for stressed NBFCs was liquidation. Section 227 of IBC empowers the government to notify, in consultation with financial sector regulators, insolvency and liquidation proceedings. The section specifies that RBI can initiate the bankruptcy process for an NBFC or a housing finance company.

The CNX Nifty is currently trading at 12085.10, up by 11.35 points or 0.09% after trading in a range of 12063.00 and 12132.45. There were 28 stocks advancing against 21 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Yes Bank up by 3.06%, ONGC up by 1.64%, ICICI Bank up by 1.52%, Dr. Reddys Lab up by 1.35% and GAIL India was up by 1.27%. On the flip side, Bharti Infratel down by 6.78%, Zee Entertainment down by 5.44%, Bharti Airtel down by 3.44%, Grasim Industries down by 2.25% and JSW Steel was down by 2.08% were the top losers.

Asian market were trading mixed; Hang Seng decreased 53.11 points or 0.2% to 26,939.93, Jakarta Composite lost 20.81 points or 0.34% to 6,049.95, Straits Times trembled 6.33 points or 0.2% to 3,214.30 and KOSPI was down by 2.15 points or 0.1% to 2,121.35.

On the flip side, Shanghai Composite gained 2.92 points or 0.1% to 2,909.09, Taiwan Weighted strengthened 15.24 points or 0.13% to 11,576.82 and Nikkei 225 was up by 80.51 points or 0.35% to 23,373.32.