Key gauges end at fresh record closing highs

Indian equity benchmarks scaled to new record closing highs on Monday amid foreign fund inflows, a decline in crude oil prices and buying in index major Reliance Industries. Weakness in the global markets triggered a weak start however key gauges recovered quickly and inched gradually higher as the session progressed. Traders found solace as the RBI said in the second consecutive week of an increase in the kitty, India’s forex reserves have grown by $2.537 billion to $547.252 billion for the week ended November 18. Some support also came with Agriculture Minister Narendra Singh Tomar’s statement that the government expects good production of agriculture crops in the ongoing rabi (winter-sown) season on the back of higher sowing area and favourable soil moisture condition. Additional support came as the Centre released Rs 17,000 crore to the States and Union Territories as the balance compensation for the goods and services tax (GST) for the period, April-June 2022.

Markets extended gains in afternoon deals, taking support from Credit rating agency, S&P Global Ratings’ latest report stating that the global slowdown will have less impact on domestic demand-led economies such as India, Indonesia and the Philippines. It further said that in some countries the domestic demand recovery from COVID has further to go. This should support growth next year in India, Indonesia, Malaysia, the Philippines, and Thailand. Some optimism also came as Fitch Ratings said India's bank credit will see strong growth in current financial year despite effects of higher interest rates. It said the strong loan growth should benefit net revenue, particularly as it will be coupled with wider net interest margins. But, key indices trimmed some of the gains towards the end, as some concern came after Sanjiv Sanyal, member of the Economic Advisory Council to the Prime Minister said India is capable of generating a 9 per cent growth rate but in view of the geopolitical situation, we should be satisfied with a 6.5-7 per cent economic expansion.

On the global front, European markets were trading lower tracking losses in Asian peers. Asian markets settled lower on Monday, as traders reacted the growing unrest in China amid the zero-COVID policy with record-high domestic daily Covid-19 cases and the unprecedented COVID restrictions in several cities in China. Back home, pharma stocks were in limelight as Udaya Bhaskar, Director General of Pharmaceuticals Export Promotion Council of India (Pharmexcil) said pharmaceutical exports from India registered a growth of 4.22 per cent to reach $14.57 billion during the April-October period despite a negative trend last month. Road transport and highways sector stocks were in focus as a government report showed that the road transport and highways sector has the maximum number of delayed projects at 243 out of 826 projects. There were some reaction in gold industry stocks as data of the commerce ministry showed that gold imports, which have a bearing on the current account deficit, declined 17.38 per cent to about USD 24 billion during April-October due to fall in demand.

Finally, the BSE Sensex rose 211.16 points or 0.34% to 62,504.80 and the CNX Nifty was up by 50.00 points or 0.27% to 18,562.75.

The BSE Sensex touched high and low of 62,701.40 and 61,959.74, respectively. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.72%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.49%, Energy up by 1.44%, Auto up by 0.64%, Consumer Discretionary up by 0.59% and Industrials up by 0.46%, while Metal down by 1.45%, Consumer Durables down by 0.29%, Power down by 0.21%, TECK down by 0.20% and Telecom down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 3.48%, Nestle up by 1.41%, Asian Paints up by 1.38%, Bajaj Finserv up by 1.22% and Wipro up by 0.76%. On the flip side, Tata Steel down by 1.22%, Bharti Airtel down by 1.10%, HDFC Bank down by 1.08%, HDFC down by 0.85% and Mahindra & Mahindra down by 0.79% were the top losers.

Meanwhile, Care Ratings in its latest report has said that the cumulative recovery rate under the insolvency resolution processes of debt-ridden companies declined to 30.18 per cent at the end of the September quarter (Q2FY23), indicating that lenders took more haircut on their exposure. The recovery rate has fallen steeply from a peak of 43 per cent in Q1 FY20.

As per an analysis of Insolvency and Bankruptcy Board of India (IBBI) data done by Care Ratings, of the Rs 7,90,626.2 crore claims from the financial creditors admitted by various benches of the National Company Law Tribunal (NCLT), only Rs 2,43,452.5 crore or 30.18 per cent have been recovered till the end of Q2 FY23. The overall recovery rate implies a haircut of around 70 per cent for the lenders. It stated that the cumulative recovery rate has been on a downtrend, falling from 43 per cent in Q1 FY20 and 32.9 per cent in Q4 FY22 as larger resolutions have already been executed and a significant number of liquidated cases were either Board for Industrial and Financial Reconstruction (BIFR) cases and/or defunct with high resolution time. There has also been a fall in the number of cases going to/admitted by the NCLT since H2 FY21.

The report further said since the implementation of the IBC in 2016, close to 5,893 companies have been admitted by various NCLT benches. Out of those cases, operational creditors filed 3,008 cases, a little over 50 per cent, and financial creditors filed 2,531 cases or around 45 per cent. The share of corporate debtors has continued to remain the lowest at around 3 per cent as of September 2022. The share of the various sectors has largely remained constant compared with the previous period, with the manufacturing sector accounting for the highest at 39 per cent of the overall cases, followed by real estate (21 per cent), construction (11 per cent) and trading (10 per cent).

The CNX Nifty traded in a range of 18,614.25 and 18,365.60. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were BPCL up by 5.04%, Reliance Industries up by 3.38%, Hero MotoCorp up by 2.40%, Tata Consumer Products up by 1.88% and SBI Life Insurance up by 1.84%. On the flip side, Hindalco down by 2.14%, Apollo Hospital down by 1.45%, JSW Steel down by 1.39%, Tata Steel down by 1.22% and HDFC Bank down by 1.06% were the top losers.

European markets were trading lower, UK’s FTSE 100 decreased 30.57 points or 0.41% to 7,456.10, France’s CAC decreased 50.67 points or 0.75% to 6,661.81 and Germany’s DAX was down by 113.48 points or 0.78% to 14,427.90. 

Asian markets settled lower on Monday, with decline in Chinese shares on concerns over protests in China against Covid-19 curbs and its impact on the world's second-largest economy. Japanese shares dropped by tracking mixed cues from Wall Street last Friday in a subdued holiday-curtailed session. Taiwan shares fell after Taiwan President Tsai Ing-wen resigned as the head of the ruling party after it suffered losses in a local election last week. Kospi shares weighed down, even as South Korea’s central bank and government rolled out additional support measures for the local credit market, including $1.86 billion repo operation by the Bank of Korea to be carried out in December.