Massacre continues on Dalal Street

Languishing at day’s low, local equity markets were trading with nasty cut of over 2% each, with Sensex and Nifty lingering below their crucial 36,900 and 10,950 levels, respectively. Meanwhile, broader indices too capitulating to selling pressure were trading with heavy losses of around 2.30% each. Feeble global cues coupled with increasing Covid-19 cases dented the trading sentiments. A series of warnings from the US central bank officials about a recovery from the coronavirus pandemic hurt investor sentiment globally. Sentiments also got a hit with the Department for Promotion of Industry and Internal Trade (DPIIT) in its latest data has showed that foreign direct investment (FDI) equity inflows into India contracted by 60 per cent to $6.56 billion (Rs 49,820 crore) in first quarter of current financial year (Q1FY21).

On the global front; All Asian markets were under pressure following the overall dullness in the global market in midst of surging covid-19 cases and worries about potential lockdown measures while uncertainty about economic recovery persists. Back home; in scrip specific developments, Oil and Natural Gas Corporation (ONGC) tumbled after a massive fire broke out at the state-owned exploration & production company‘s plant in Surat, Gujarat. Meanwhile, the overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1959:472; while 127 shares remained unchanged.

The BSE Sensex is currently trading at 36866.17, down by 802.25 points or 2.13% after trading in a range of 36866.12 and 37304.26. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 2.30%, while Small cap index was down by 2.35%.

The top losing sectoral indices on the BSE were IT down by 3.24%, Auto down by 3.16%, TECK down by 2.98%, Metal down by 2.64% and Realty was down by 2.61%, while there were no gaining sectoral indices on the BSE.

The only gainers on the Sensex were Hindustan Unilever up by 0.35% and Nestle was up by 0.03%. On the flip side, Bajaj Finance down by 5.21%, Mahindra & Mahindra down by 4.99%, TCS down by 4.70%, Indusind Bank down by 4.64% and Tata Steel was down by 3.92% were the top losers.

Meanwhile; Indian Banks' Association (IBA) chief executive Sunil Mehta has said that banks are working together in removing hurdles and speeding up the process of execution of inter-creditor agreement (ICA) in order to ensure faster resolution of bad assets amid COVID-19 pandemic. He said a draft on the same has been already given to banks for their suggestions. As per the RBI, in cases where a resolution has to be implemented, all lenders will have to enter ICA within a review period. The ICA shall provide that any decision agreed by lenders representing 75 percent by value of total outstanding credit facilities (fund-based as well as non-fund based) and 60 percent of lenders by number shall be binding upon all the lenders.

Mehta said ‘the point is we want to go for a system where bottlenecks in execution of the ICA are removed. The moment threshold levels reached 60 percent by number and 75 percent by value, as per the RBI regulatory guidelines, the ICA can be executed immediately, maybe, within a few weeks. The outer limit is one month’. He also said that this ICA should be binding on the remaining lenders who may not have opted for that resolution but since they are part of that consortium or multiple lending framework, they have to abide by that resolution framework.

He further said the IBA has prepared a rough draft on ICA which the member bank can accept and it has already been circulated to the member banks for their suggestions. He also said ‘it is already work in progress and a larger consensus has already been achieved and I hope we will be able to pave a way for quicker resolution of bad loans’. Talking about the recent financial parameters required for one-time loan recast, he said these ratios are not benchmarks for becoming eligible for restructuring but are benchmarks for eligibility of a restructuring to pass through.

The CNX Nifty is currently trading at 10901.60, down by 230.25 points or 2.07% after trading in a range of 10901.60 and 11015.30. There were 2 stocks advancing against 48 stocks declining on the index.

The only gainers on Nifty were Bharti Infratel up by 3.14% and Hindustan Unilever was up by 0.36%. On the flip side, Bajaj Finance down by 5.25%, Mahindra & Mahindra down by 5.04%, Tata Motors down by 4.95%, Indusind Bank down by 4.73% and TCS was down by 4.68% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 448.75 points or 1.89% to 23,293.76, Jakarta Composite lost 86.24 points or 1.75% to 4,831.72, Taiwan Weighted dropped 319.50 points or 2.54% to 12,264.38, Straits Times trembled 29.45 points or 1.19% to 2,451.69, Nikkei 225 slipped 258.67 points or 1.11% to 23,087.82, Shanghai Composite declined 56.67 points or 1.73% to 3,223.04 and KOSPI was down by 60.54 points or 2.59% to 2,272.70.