Domestic indices magnify losses in late morning deals

Domestic equity indices magnified their losses in late morning deals as market participants indulged in reducing their positions. Meanwhile, the broader markets were also facing the heat of selling; the BSE mid-cap index declined by 1.45 per cent and the small-cap index was down 1.43 per cent. Hectic selling in Zomato, Adani Ports &, SBI, Reliance Industries and ICICI Bank companies’ stocks dragged the markets lower. Traders overlooked report that Moody's Ratings has projected the Indian economy to grow by 7% in the current fiscal (FY25) and said robust economic expansion will drive growth in insurance premiums. Most of sectoral indices on the BSE were trading in red led by Consumer Durables, Realty, Consumer Disc, Telecom and Power.

On the global front, Asian markets were trading mostly in green amid caution following U.S. President Donald Trump's announcement of trade tariffs on neighboring countries shortly after taking office. Back home, in the stock specific development, Waaree Energies surged after the company has received a Letter of Award (LoA) for supply of solar modules for 180 MWp from a renowned customer engaged in the business of owning, developing and operating renewable power projects in India.

The BSE Sensex is currently trading at 76350.15, down by 723.29 points or 0.94% after trading in a range of 76224.79 and 77297.72. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.45%, while Small cap index down by 1.43%.

The only gaining sectoral index on the BSE was FMCG up by 0.06%, while Consumer Durables down by 3.28%, Realty down by 3.00%, Consumer Disc down by 2.19%, Telecom down by 1.95% and Power down by 1.63% were the top losing indices on BSE.

The few gainers on the Sensex were Ultratech Cement up by 0.94%, ITC up by 0.74% and HCL Technologies up by 0.45%. On the flip side, Zomato down by 11.23%, Adani Ports down by 2.93%, SBI down by 1.85%, Reliance Industries down by 1.58% and ICICI Bank down by 1.38% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has issued revised guidelines for the settlement of dues payable by borrowers to Asset Reconstruction Companies (ARCs) on January 20, and to take immediate effect. According to RBI, the revision, issued under Sections 9 and 12 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, is intended to improve transparency, accountability, and efficiency in settlement processes carried out by ARCs.

ARCs are now required to frame Board-approved policies governing the settlement of dues. These policies must cover crucial aspects such as the eligibility cut-off dates for one-time settlements, permissible sacrifices for various exposure categories, and methodologies to determine the realizable value of securities. By addressing these areas, the revised guidelines aim to ensure that settlements are executed with clear and transparent protocols. Settlements can only be pursued after all potential avenues for recovery have been thoroughly explored. The Net Present Value (NPV) of the settlement amount must generally be equal to or greater than the realizable value of securities. If significant differences arise between the valuation of securities at the time of acquisition and their value during settlement, the reasons must be documented.

To ensure accountability, settlements should preferably be paid in lump sums. In cases involving instalment payments, acceptable business plans and cash flow projections of the borrower must support the proposals. The guidelines classify settlement procedures based on the outstanding dues of borrowers. For accounts exceeding Rs 1 crore, proposals must first be examined by an Independent Advisory Committee (IAC) comprising professionals with expertise in finance, law, or technical fields. The IAC’s recommendations are then reviewed by the ARC’s Board, including at least two independent directors. A detailed rationale for the Board’s decisions must be recorded in the minutes of the meeting. For accounts with dues of Rs 1 crore or below, the process is streamlined but retains key oversight measures. Officials involved in acquiring financial assets are barred from participating in the settlement process for the same assets.

Additionally, quarterly reports summarizing resolution trends, fraud or wilful default classifications, and recovery timelines must be submitted to the Board. Special provisions have been introduced for settlements involving borrowers classified as frauds or wilful defaulters. ARCs may settle dues in such cases without prejudicing ongoing criminal proceedings. These settlements, regardless of the amount involved, are subject to the same rigorous criteria applicable to larger accounts. The RBI has emphasized that all compromise settlements are governed by existing legal frameworks. In cases where recovery proceedings are underway in judicial forums, settlements will require consent from the relevant judicial authority to ensure compliance with legal standards.

The CNX Nifty is currently trading at 23169.70, down by 175.05 points or 0.75% after trading in a range of 23127.70 and 23426.30. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.05%, Apollo Hospital up by 2.54%, Ultratech Cement up by 0.97%, Tata Consumer up by 0.78% and ITC up by 0.75%. On the flip side, Trent down by 4.51%, Adani Ports down by 2.90%, Adani Enterprises down by 2.02%, SBI down by 1.96% and Reliance Industries down by 1.58% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 204.26 points or 1.01% to 20,130.07, Jakarta Composite gained 31.75 points or 0.44% to 7,202.49, KOSPI increased 1.39 points or 0.06% to 2,521.44, Nikkei 225 surged 22.14 points or 0.06% to 38,924.64 and Taiwan Weighted added 53.27 points or 0.23% to 23,320.09. However, Shanghai Composite weakened 2.89 points or 0.09% to 3,241.49 and Straits Times fell 11.52 points or 0.3% to 3,796.45.