Markets gain traction in late morning deals

Indian equity benchmarks gained traction in late morning deals, with both Sensex and Nifty holding strong gains, despite negative cues from other Asian markets. Domestic sentiments remained positive, as the finance ministry expanded the scope of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which will now offer concessional loans to hospitals for setting up on-site oxygen generation plants. Adding more comfort among traders, the Ministry of Labour and Employment announced additional benefits for workers through social securities schemes run by the EPFO and the ESIC amid the COVID-19 pandemic.

On the global front, Asian markets were trading mostly in red, after the manufacturing sector in China continued to expand in May, albeit at a slower pace, the latest survey from the National Bureau of Statistics showed on Monday with a manufacturing PMI score of 51.0. That was shy of expectations for 51.1, which would have been unchanged from the April reading. It does, however, remain well above the boom-or-bust line of 50 that separates expansion from contraction.

The BSE Sensex is currently trading at 51801.39, up by 378.51 points or 0.74% after trading in a range of 51179.94 and 51803.23. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.51%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were Energy up by 2.91%, Realty up by 1.68%, Telecom up by 1.40%, Oil & Gas up by 1.32% and Metal up by 1.13%, while Auto down by 0.52% and IT down by 0.04% were the only losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.09%, Reliance Industries up by 1.63%, ICICI Bank up by 1.62%, Bharti Airtel up by 1.40% and Asian Paints up by 1.37%. On the flip side, Mahindra & Mahindra down by 5.68%, Sun Pharma down by 0.71%, Infosys down by 0.70%, Tech Mahindra down by 0.56% and HCL Tech. down by 0.49% were the top losers.

Meanwhile, in a major move, the finance ministry has expanded the scope of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which will now offer concessional loans to hospitals for setting up on-site oxygen generation plants. Besides, the validity of the scheme has been extended by three months to September 30 and or till guarantees for an amount of Rs 3 lakh crore are issued. The last date of disbursement under the scheme has been extended to December 31. On account of the disruptions caused by the second wave of COVID-19 pandemic to businesses across various sectors of the economy, the government has further enlarged the scope of Emergency Credit Line Guarantee Scheme. Under the ECLGS 4.0, it said, 100 per cent guarantee cover will be given to loans up to Rs 2 crore to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants. The interest rate on these loans has been capped at 7.5 per cent, which means the banks can offer loans less than this ceiling.

The ministry said ‘Borrowers who are eligible for restructuring as per the RBI guidelines of May 5, 2021, and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter’.Al so, the new scheme has made a provision of additional ECLGS assistance of up to 10 per cent of the outstanding as of February 29, 2020, to borrowers covered under ECLGS 1.0, in tandem with restructuring as per the RBI guidelines of May 5, 2021. The government has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.

Loans to the civil aviation sector made eligible under ECLGS 3.0. The ECLGS 3.0 covered business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors, which had as of February 29, 2020, total credit outstanding not exceeding Rs 500 crore and overdue, if any, was for 60 days or less, on that date. The tenor of loans granted under ECLGS 3.0 would be 6 years, including a moratorium period of 2 years. The revised operational guidelines are being issued by National Credit Guarantee Trustee Company (NCGTC). The scheme was valid till October 2020 and later extended to November-end. The scheme was again extended in November as part of the Atmanirbhar Bharat 3.0 package till March 31, 2021, by including the 26 stressed sectors identified by the RBI-constituted K V Kamath committee. The scheme was further extended for three months on April 1 and subsequently widened.

The CNX Nifty is currently trading at 15529.25, up by 93.60 points or 0.61% after trading in a range of 15374.00 and 15535.85. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 3.82%, ICICI Bank up by 2.14%, JSW Steel up by 1.98%, ITC up by 1.88% and Bharti Airtel up by 1.68%. On the flip side, Mahindra & Mahindra down by 4.73%, Adani Ports & SEZ down by 1.33%, Infosys down by 0.81%, Tata Motors down by 0.80% and Larsen & Toubro down by 0.65% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 331.43 points or 1.14% to 28,817.98, Hang Seng decreased 145.56 points or 0.5% to 28,978.85, Straits Times trembled 16.83 points or 0.53% to 3,161.67 and Shanghai Composite declined 7.17 points or 0.2% to 3,593.61. On the flip side, KOSPI rose 6.23 points or 0.2% to 3,194.96, Jakarta Composite soared 47.17 points or 0.81% to 5,895.79 and Taiwan Weighted strengthened 91.55 points or 0.54% to 16,962.41.