Sensex, Nifty remain higher

Indian equity benchmarks remained higher in late morning session, with both Sensex and Nifty trading in green terrain. Positive cues from other Asian markets helped key indices to remain higher. Traders were positive, amid reports that in a bid to ensure timely support to depositors of stressed banks, the Union Cabinet has given green signal for amendment to the DICGC Act to provide account holders access to up to Rs 5 lakh funds within 90 days of a bank coming under moratorium. Finance Minister Nirmala Sitharaman in her Budget speech had announced that changes will be made to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961. Last year, the government raised insurance cover on deposit five-fold to Rs 5 lakh to provide support to depositors of ailing lenders like Punjab and Maharashtra Co-operative (PMC) Bank.

On the global front, Asian markets were trading in green, after Malaysia's exports rose more than expected in June, data from the Department of Statistics showed on Wednesday. Exports grew 27.2 percent year-on-year to MYR 105.5 billion in June. Imports grew 32.1 percent annually to MYR 83.2 billion in June.

The BSE Sensex is currently trading at 52674.64, up by 230.93 points or 0.44% after trading in a range of 52561.39 and 52740.66. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were Metal up by 4.89%, Basic Materials up by 2.26%, Realty up by 1.38%, Energy up by 1.02% and IT up by 0.91%, while Power down by 0.48%, Healthcare down by 0.46%, FMCG down by 0.40%, Utilities down by 0.05% and Telecom down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 5.93%, Bajaj Finserv up by 2.44%, HCL Tech up by 2.24%, Reliance Industries up by 1.55% and Titan Co up by 1.30%. On the flip side, Power Grid down by 25.85%, Maruti Suzuki down by 2.09%, NTPC down by 0.99%, Kotak Mahindra Bank down by 0.88% and Bajaj Auto down by 0.84% were the top losers.

Meanwhile, in a bid to ensure timely support to depositors of stressed banks, the Union Cabinet has given green signal for amendment to the DICGC Act to provide account holders access to up to Rs 5 lakh funds within 90 days of a bank coming under moratorium. Finance Minister Nirmala Sitharaman in her Budget speech had announced that changes will be made to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961. Last year, the government raised insurance cover on deposit five-fold to Rs 5 lakh to provide support to depositors of ailing lenders like Punjab and Maharashtra Co-operative (PMC) Bank.

Following the collapse of PMC Bank, Yes Bank and Lakshmi Vilas Bank too came under stress, leading to restructuring by the RBI and government. Sitharaman said ‘The Deposit Insurance and Credit Guarantee Corporation Bill 2021 has been cleared by the Cabinet today’. The Bill is expected to be introduced in the monsoon session. Once the Bill becomes law, it will provide immediate relief to thousands of depositors, who had their money parked in stressed lenders such as PMC Bank and other small cooperative banks. As per the current provisions, the deposit insurance of up to Rs 5 lakh comes into play when the licence of a bank is cancelled and the liquidation process starts.

DICGC, a wholly-owned subsidiary of the Reserve Bank of India, provides insurance cover on bank deposits. Sitharaman said deposit Insurance Credit Guarantee Cooperation (DICGC) insures all bank deposits, such as savings of fixed or current deposits or recurring deposits, and it covers all commercial banks, including foreign bank branches in India. With the proposed amendment, she said each account holder’s deposit in banks is insured up to a maximum of Rs 5 lakh, for both principal and interest. At present, it takes 8-10 years for depositors of a stressed bank to get their insured money and other claims.

Observing that accessing depositors money has been an issue, Sitharaman said ‘now, what we’re saying is, even if there is a moratorium on a bank, which means everything is frozen and depositors are not able to take their money out of their accounts, even at that time this measure will set in’. The first 45 days will go for the bank, which has come under stress, to collect all the accounts where the claims will have to be made, and then it will be given to this insurance company, which in real-time will check it all up, and nearer the 90th day, depositors will get the money. Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit.

The CNX Nifty is currently trading at 15785.95, up by 76.55 points or 0.49% after trading in a range of 15737.80 and 15801.80. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 9.30%, Tata Steel up by 6.19%, JSW Steel up by 4.01%, Tata Motors up by 3.13% and Bajaj Finserv up by 2.42%. On the flip side, Power Grid down by 25.80%, Maruti Suzuki down by 2.29%, Cipla down by 1.80%, NTPC down by 1.03% and Dr. Reddy's Lab down by 0.87% were the top losers.

Asian markets were trading in green; Nikkei 225 surged 187.01 points or 0.68% to 27,768.67, KOSPI rose 0.55 points or 0.02% to 3,237.41, Straits Times advanced 15.55 points or 0.49% to 3,157.30, Shanghai Composite gained 34.97 points or 1.04% to 3,396.56, Jakarta Composite soared 16.13 points or 0.26% to 6,104.65, Taiwan Weighted strengthened 194.06 points or 1.13% to 17,329.28 and Hang Seng increased 698.43 points or 2.74% to 26,172.31.