Benchmarks trim losses, but remain in red

The Indian equity benchmarks trimmed some of their losses in late afternoon session, but continue to trade below the neutral lines. Traders took some support with report that Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman will again meet on April 24 to finalise a second stimulus package for industry, the poor and farmers. However, markets remained in red with the Confederation of Indian Industry’s (CII) report that India's GDP is likely to range between a decline of 0.9% and a growth of 1.5% in the current financial year, with the economy undergoing a turbulent phase caused by the coronavirus-induced lockdown. Sector wise, hospital sector remained in focus with ICRA’s report that the Covid-19 epidemic has not just impacted the functioning of hospital sector, but has also dragged down the short- term outlook to negative on account of a sharp fall in volumes both at the out- patient department (OPD) and the in-patient department (IPD).

On the global front, European markets were trading lower as the region’s leaders struggled to agree to a long-term plan for cushioning the economic blow from the coronavirus. U.S. equity futures and Asian shares also slipped while Treasuries and the dollar gained. Back home, in scrip specific development, SBI Cards and Payment Services traded in green on the BSE and Mangalam Organics shined on incorporating WOS company.

The BSE Sensex is currently trading at 31675.68, down by 187.40 points or 0.59% after trading in a range of 31278.27 and 31842.24. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.95%, while Small cap index was down by 0.72%.

The top gaining sectoral indices on the BSE were Energy up by 4.51%, Healthcare up by 2.00%, Oil & Gas up by 0.43%, Capital Goods up by 0.37% and FMCG was up by 0.02%, while Realty down by 3.19%, TECK down by 2.58%, IT down by 2.55%, Bankex down by 2.05% and Telecom was down by 1.86% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 6.46%, Sun Pharma up by 3.42%, Hero MotoCorp up by 3.25%, ONGC up by 2.53% and Nestle up by 1.80%. On the flip side, Bajaj Finance down by 6.46%, Indusind Bank down by 4.84%, ICICI Bank down by 3.90%, Axis Bank down by 3.39% and TCS down by 3.35% were the top losers.

Meanwhile, in a major relief for corporate borrowers hit hard by the coronavirus pandemic, the government has decided to amend the insolvency law to suspend up to one year provisions that trigger insolvency proceedings against defaulters. The amendments to the IBC (Insolvency and Bankruptcy Code) would pave the way for banks to restructure loans. An ordinance would be promulgated to suspend three sections of IBC for up to one year and a decision in this regard was taken by the Union Cabinet.

Section 7, 9 and 10 of the IBC would be suspended for six months and the suspension time can be extended up to one year. An enabling provision with respect to extending the time would be part of the ordinance. Suspension of these provisions could be extended up to one year based on the economic situation going forward. The effective date of the amendments coming into force would be the date of promulgation of the ordinance.

Section 7 and 9 pertain to initiation of corporate insolvency proceedings by a financial creditor and an operational creditor, respectively. Section 10 relates to filing an application for insolvency resolution by a corporate. The coronavirus outbreak and the nationwide lockdown to curb spreading of infections have significantly impacted economic activities and the latest decision in a way provides more leeway for corporate borrowers in repaying their loans.

As per existing norms, if a payment default exceeds 90 days then the lender concerned has to refer the account for resolution under IBC or any other mechanism permitted by the Reserve Bank of India (RBI). The lender does not have the option to restructure the loan. Currently, the Reserve Bank of India (RBI) norms prohibit restructuring of loans and resolution has to be done under IBC.

The CNX Nifty is currently trading at 9262.20, down by 51.70 points or 0.56% after trading in a range of 9145.00 and 9296.90. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 6.45%, Britannia Inds up by 4.29%, Hero MotoCorp up by 3.27%, Sun Pharma Inds. up by 3.27% and ONGC up by 2.60%. On the flip side, Bharti Infratel down by 7.83%, Zee Entertainment down by 7.20%, Bajaj Finance down by 6.41%, Indusind Bank down by 4.83% and Bajaj Finserv down by 4.66% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 74.42 points or 1.28% to 5,752.19, France’s CAC decreased 65.32 points or 1.47% to 4,385.68 and Germany’s DAX was down by 160.95 points or 1.53% to 10,352.84.