Sensex, Nifty turn red in early noon deals

Indian equity benchmarks erased all gains to turn negative in early noon session, on account of heavy selling by investors in the blue chips counters. Selling appeared in Utilities, Power and Bankex stocks which dragged the Sensex and Nifty by 192 and 49 points respectively. Traders turned pessimistic with the International Monetary Fund’s (IMF) communications director Gerry Rice’s statement that India's economy looks weaker than the IMF projected earlier in January and the government needs to focus on more ambitious structural and financial sector reform measures. Traders took a note of report that Chief Economic Advisor Krishnamurthy Subramanian said he expects consumer price index (CPI)-based inflation to come down to sub-4.5 per cent levels by July, a day after headline inflation was stated to have touched its highest level in 68 months.

On global front, Asian Markets were trading mostly higher amid anticipations for more dovish policy measures by the governments to curtail strain on global economy with the coronavirus. Closer home, on sectoral front, telecom stocks were trading mixed on report that the Supreme Court rejected the plea seeking new schedule of AGR payments. In scrip specific developments, Avenue Supermarts edged lower post OFS launch; promoters to offload 2.3% stake and Page Industries slipped on disappointing December quarter results. 

The BSE Sensex is currently trading at 41267.30, down by 192.49 points or 0.46% after trading in a range of 41183.13 and 41702.36. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index lost 0.25%, while Small cap index was up by 0.02%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.27%, Basic Materials up by 0.25%, Healthcare up by 0.17%, IT up by 0.10% and Industrials was up by 0.06%, while Utilities down by 1.23%, Power down by 1.22%, Bankex down by 1.06%, Telecom down by 0.79% and PSU was down by 0.69% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.35%, HCL Tech up by 0.73%, Ultratech Cement up by 0.59%, Asian Paints up by 0.57% and Nestle was up by 0.47%. On the flip side, Indusind Bank down by 2.32%, NTPC down by 1.39%, HDFC Bank down by 1.35%, Power Grid Corporation down by 1.34% and Axis Bank was down by 1.31% were the top losers.

Meanwhile, Moody's Investors Service in its latest report has said that the Reserve Bank of India's (RBI) revised asset recognition norms for bank loans to the real estate sector are credit negative for Indian banks as it would defer the recognition of such loans. On February 7, the RBI loosened asset quality recognition norms for Indian banks by allowing them not to treat real estate loans as restructured for one year if a project is delayed for reasons beyond the real estate developer's control. The RBI harmonized guidelines for deferment of date of commencement of commercial operations (DCCO) for projects in non-infrastructure and commercial real estate (CRE) sectors.

According to the report, the revisions of the date of DCCO and consequential shift in repayment schedule for the equal or shorter duration will not be treated as restructuring provided the revised DCCO falls within the period of one year from the original DCCO stipulated at the time of financial closure for CRE projects. It also said in case of CRE projects delayed for reasons beyond the control of the promoter, banks may restructure them by way of revision of DCCO up to another one year and retain the 'standard' asset classification if the account continues to be serviced.

The report said while this will alleviate near-term asset quality risk to the banks from the real estate sector, it will not address the credit issues facing real estate developers. It pointed out that developers are facing funding challenges because nonbank financial institutions (NBFIs), the key lenders to the sector, are facing funding challenges of their own. It added that tight funding conditions are straining developers' ability to complete projects, and by extension their solvency.

The CNX Nifty is currently trading at 12125.00, down by 49.65 points or 0.41% after trading in a range of 12097.90 and 12246.70. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 5.24%, BPCL up by 2.81%, Tata Motors up by 2.04%, UPL up by 1.92% and Bajaj Auto was up by 1.28%. On the flip side, Bharti Infratel down by 4.86%, Indusind Bank down by 2.21%, Eicher Motors down by 2.09%, ONGC down by 1.57% and Axis Bank was down by 1.49% were the top losers.

Asian Markets were trading mostly higher, Straits Times advanced 0.82 points or 0.03% to 3,220.91, Hang Seng increased 103.20 points or 0.37% to 27,833.20, Shanghai Composite gained 4.44 points or 0.15% to 2,910.51, KOSPI rose 10.44 points or 0.47% to 2,243.40, Taiwan Weighted was up by 14.20 points or 0.12% to 11,805.98.

On the other hand, Nikkei 225 slipped 165.61 points or 0.7% to 23,662.12 and Jakarta Composite was down by 3.40 points or 0.06% to 5,868.55.