Markets trade firm in early deals; Energy stocks lead

Indian equity benchmarks made optimistic start on Thursday following gains in global markets. Domestic indices are trading firm in early deals with gains of over half a percent each. Buying in all the sector indices, barring Telecom, supported the markets. Sentiments got a boost with Finance Minister Nirmala Sitharaman’s statement that banks are going to be the catalysts for economic revival. Some support also came in with report that the government is planning to save about Rs 35,000 crore to help manage the fiscal load put by the production-linked incentive (PLI) and phased manufacturing program (PMP) schemes, its initiatives to attract investment into the country. Traders took note of report that Niti Aayog CEO Amitabh Kant said India was the youngest country with a vibrant startup eco-system and it must convert the present (COVID-19) crisis into an opportunity.

On the global front, most of the Asian markets were trading higher following a tech-led rebound overnight on Wall Street and higher commodity prices. Investors now look ahead to the European Central Bank's monetary policy decision due later in the day. The ECB is unlikely to announce any big changes to its policy, but might well indicate that it is prepared to loosen policy if required.

Back home, recording its worst-ever single-day spike of 95,529 coronavirus cases, India's tally has surged past the 4.4-million mark to 4,462,965. On the sectoral front, financial stocks were in focus as the Supreme Court will resume the hearing hearing on two petitions seeking an extension of the moratorium period on repayment of loans and to waive off the interest on the loan amount.

The BSE Sensex is currently trading at 38477.67, up by 283.75 points or 0.74% after trading in a range of 38367.07 and 38517.36. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.91%, while Small cap index was up by 1.74%.

The top gaining sectoral indices on the BSE were Energy up by 1.87%, Realty up by 1.40%, Industrials up by 1.40%, Power up by 1.32%, Capital Goods up by 1.23%, while Telecom down by 0.13% was the sole losing index on BSE.

The top gainers on the Sensex were Indusind Bank up by 3.23%, Reliance Industries up by 1.99%, Bajaj Finserv up by 1.74%, SBI up by 1.72% and Bajaj Finance up by 1.45%. On the flip side, Bajaj Auto down by 0.82%, Tech Mahindra down by 0.38%, Bharti Airtel down by 0.32%, Hindustan Unilever down by 0.25% and Titan Company down by 0.17% were the top losers.

Meanwhile, domestic rating agency ICRA in its latest report has said that banks and non-bank lenders will restructure up to Rs 10 lakh crore in debt or 8 percent of outstanding loans under the Reserve Bank of India’s one-time loan restructuring scheme. It said the RBI has operationalized guidelines based on K V Kamath-led panel's recommendations, which give relief to 26 listed sectors affected by the pandemic and stress on banks factoring-in leverage, liquidity and debt serviceability before admitting a case.

The report felt that the overall restructured portfolio will come at 5-8 percent of the overall loans. In value terms, it said the total quantum of the debt which can get restructured will be between Rs 6 lakh crore and Rs 10 lakh crore, specifying that banks have an asset book of Rs 100 lakh crore and another Rs 35 lakh crore is from the non-bank lenders. It noted that the estimate on the amount of portfolio to be restructured is based on an assumption that the overall assets under moratorium came down to 20-25 percent by the close of the six-month relief in August. It added that a part of the assets enjoying the moratorium are special mention accounts where repayments were due for 31 to 89 days, which cannot be restructured under the new guidelines.

According to the report, the lenders will be immediately adhere on the metric of total outstanding liabilities to adjusted tangible net worth. However, it said some sectors may face challenges on meeting other metrics such as total debt to operating profit, debt service coverage ratio and average debt service coverage ratio. For sectors like textiles, construction, trading and ferrous metals, it said the total debt to EBITDA threshold specified by the committee is such that the BB rating hurdle will be difficult to cross.

The CNX Nifty is currently trading at 11353.25, up by 75.25 points or 0.67% after trading in a range of 11327.40 and 11367.35. There were 37 stocks advancing against 12 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Indusind Bank up by 3.36%, Tata Motors up by 2.43%, BPCL up by 2.13%, HDFC Life Insurance up by 2.07% and Reliance Industries up by 2.02%. On the flip side, UPL down by 1.03%, Bharti Infratel down by 0.83%, Bajaj Auto down by 0.62%, Tech Mahindra down by 0.60% and Britannia Industries down by 0.57% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 rose 146.58 points or 0.64% to 23,179.12, Hang Seng gained 9.76 points or 0.04% to 24,478.69, Taiwan Weighted added 73.04 points or 0.58% to 12,681.62, KOSPI advanced 21.06 points or 0.89% to 2,396.87 and Shanghai Composite was up by 9.56 points or 0.29% to 3,264.19. On the other hand, Straits Times slipped 4.95 points or 0.20% to 2,494.38 and Jakarta Composite lost 257.50 points or 5.00% to 4,891.88.