Benchmarks add gains; Nifty surpasses 6,200 mark

Indian equities added gains to continue firm trade hovering near the highest point of the day in the late afternoon session on account of buying in frontline counters. The sentiments were on upbeat mood after Reserve Bank of India, in its second quarter monetary policy review, delivered the expected, by hiking repo rates by 25 basis points and rolling back the MSF rate by the same quantum. Traders were seen piling position in Bankex, Metal and Realty stocks. In scrip specific development, Apollo Hospital Enterprises was trading in green after the healthcare major entered into a partnership with private equity fund Kohlberg Kravis Roberts (KKR) to raise Rs 550 crore to repay promoters’ debt and build more hospitals. Maruti Suzuki India was trading firm on reporting its September quarter earnings where net profit grew 6 percent q-o-q up 3 times year-on-year to Rs 670 crore due to lag impact of currency benefits.

On the global front, the Asian markets were trading on a mixed note while the European markets were trading on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,200 and 20,900 levels respectively. The market breadth on BSE was positive in the ratio of 1133:1038 while 134 scrips remained unchanged.

The BSE Sensex is currently trading at 20901.83, up by 331.55 points or 1.61% after trading in a range of 20912.11 and 20493.66. There were only 29 stocks advancing against 1 decline on the index.

The broader indices too gained some more ground; with BSE Mid Cap index up by 1.24% while Small Cap index gained 0.52%.

The gaining sectoral indices on the BSE were Bankex up by 3.79%, Metal up by 2.46%, Realty up by 2.44%, Auto up by 1.83% and Consumer Durables up by 1.73% while there were no losers on the index.

The top gainers on the Sensex were Maruti Suzuki up by 6.36%, ICICI Bank up by 5.02%, Tata Steel up by 4.15%, SSLT up by 3.17% and Hindalco Industries up by 3.13%. On the flip side, Gail India down by 0.17% was the sole loser on the Sensex.

Meanwhile, in order to boost country’s infrastructure sector, the government is formulating a plan to determine the way in which bad assets are recognized, which will give lenders more leeway to rescue projects and will give a strong push to infrastructure investment. The move is aimed to provide relief to stressed infrastructure projects as the government is of the view that infrastructure project that has full paying capacity should not be counted as a bad asset just because it has run into delays.

Over the past few years, infrastructure projects of around Rs 15 lakh crore in the country have got stuck owing to the various reasons such as lack of clearance. Infrastructure development is crucial to boost the economy’s growth and delay in the implementation of infrastructure has promoted the government to seek recourse to special measures to get them moving again. The government is likely to suggest that if a robust infrastructure project faces hurdles then there should be a provision for restructuring the loan to extend the moratorium on principal and interest payment without any cost to the borrower or the lender.

Infrastructure lending exerts a lot of pressure on the banks as large infrastructure and industrial projects usually have a moratorium period in their loans in which the borrower does not make interest or principal payment. At present, restructuring of the asset through extension enforces a higher cost on banks as the lenders have to make provision for such assets even though the asset is considered standard.

The gross NPAs with restructured advances that are considered standard have risen to Rs 136,970 crore (17.43% of the total assets) at the end of March '13 from Rs 12,190 crore (4.66% of the total) at the end of March 2009, intensifying the pressure on banks. Meanwhile, the government is expected to make liberal treatment of such loans, which will encourage banks to restructure and start projects that may have run into delays.

The CNX Nifty is currently trading at 6,213.65, up by 112.55 points or 1.84% after trading in a range of 6,216.45 and 6,079.20. There were 48 stocks advancing against 2 declines on the index.

The top gainers of the Nifty were Maruti Suzuki up by 6.42%, IndusInd Bank up by 5.35%, Axis Bank up by 5.34%, JP Associate up by 5.10% and ICICI Bank up by 4.91%. On the flip side, Gail India down by 0.30% and TCS down by 0.05% were the only losers on the index.

The Asian equity indices were trading mixed; Taiwan Weighted up by 0.16%, Seoul Composite up by 0.18%, Straits Times up by 0.13%, Hang Seng up by 0.18%. On the other hand, Jakarta Composite down by 0.85%, KLSE Composite down by 0.23%, Nikkei 225 down by 0.49% and Shanghai Composite down by 0.23%. 

The European markets were trading in green; France’s CAC 40 was up 0.51%, Germany’s DAX gained 0.14% and UK’s FTSE 100 was up 0.37%.