Buoyed by firm global cues, Indian equity benchmarks have extended their previous session’s northward journey and frontline gauges are inching towards their crucial 21,000 (Sensex) and 6250 (Nifty) levels in morning deals on Wednesday. Supportive cues from US markets provided the much needed support to local markets and sentiments remained up-beat on optimism that the Federal Reserve after its two-day policy meeting will maintain its asset purchase program. Rally in Asian markets too boosted the traders’ moral with Japanese Nikkei surging about a percentage point after industrial production in Japan climbed a seasonally adjusted 1.5 percent in September compared to the previous month, reversing the previous month’s contraction.
Back home, sentiments also remained up-beat after the stock exchanges, in consultation with market watchdog Securities and Exchange Board of India (SEBI), have decided to ease the norms to retain up to Rs 10,000 in trading accounts of active customers based on representations received from investors and members. However, gains on the up-side remained capped after the rupee depreciated against the US dollar in early trades and was trading at Rs 61.49 compared to its previous close of Rs 61.32. Some cautiousness also crept in after India Inc raised apprehension saying that hike in key interest rate by the Reserve Bank of India will hit the already weak investment momentum and impact India’s economic growth.
Also, there will be some concern in coal and mining stocks as it has been reported that the auction of coal blocks to private firms may get further delayed to March next year as the Coal Ministry has sought from consultancy firm CMPDIL a report on reserves of four more mines. On the sectoral front, realty witnessed the maximum gain in trade followed by healthcare and technology, while auto, metal and oil and gas remained the top losers on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 706 shares on the gaining side against 472 shares on the losing side while 50 shares remain unchanged.
The BSE Sensex opened at 20944.14; about 15 points higher compared to its previous closing of 20929.01, and has touched a high and a low of 21037.59 and 20937.12 respectively. The index is currently trading at 20979.03, up by 50.02 points or 0.24%. There were 17 stocks advancing against 13 declines on the index.
The overall market breadth has made a strong start with 57.49% stocks advancing against 38.46% declines. The broader indices were trading in green; the BSE Mid cap up by 0.32% and Small cap indices up by 0.54%.
The top gaining sectoral indices on the BSE were, Realty up by 1.04%, Health Care up by 0.69%, Teck up by 0.56%, Bankex up by 0.39% and FMCG up by 0.38%, while Auto down by 0.44%, Metal down by 0.36%, Oil & Gas down by 0.31%, PSU down by 0.13% and Capital Goods down by 0.10% were the top losers on the sectoral index.
The top gainers on the Sensex were Bharti Airtel up by 3.60%, BHEL up by 2.35%, Dr Reddys Lab up by 1.90%, ICICI Bank up by 1.53% and Bajaj Auto up by 0.89%. On the flip side, SSLT was down by 1.10%, ONGC was down by 1.05%, Tata Motors was down by 1.01%, Wipro was down by 0.95% and Mahindra & Mahindra was down by 0.88% were the top losers 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 opened at 6,230.80; about 10 points higher as compared to its previous closing of 6,220.90, and has touched a high and a low of 6,253.65 and 6,222.60 respectively. The index is currently trading at 6,236.00, up by 15.10 points or 0.24%. There were 27 stocks advancing against 23 declines on the index.
The top gainers of the Nifty were Bharti Airtel up by 3.80%, BHEL up by 2.42%, Dr. Reddy's Laboratories up by 1.90%, ICICI Bank up by 1.72% and Lupin up by 1.54%. On the flip side, Ranbaxy down by 2.87%, JP Associate down by 1.19%, ONGC down by 1.05%, M&M down by 1.04% and SSLT down by 1.02% were the major losers on the index.
Most of the Asian equity indices were trading in green; Shanghai Composite surged 16.21 points or 0.76% to 2,145.07, Hang Seng strengthened 196.85 points or 0.86% to 23,043.39, Nikkei 225 soared 136.04 points or 0.95% to 14,462.02, Straits Times increased 7.80 points or 0.24% to 3,216.62, Seoul Composite gained 1.49 points or 0.07% to 2,053.25 and Taiwan Weighted was up by 12.54 points or 0.15% to 8,433.52.
On the flip side, Jakarta Composite declined 11.28 points or 0.25% to 4,551.49 and KLSE Composite was down by 1.90 points or 0.10% to 1,813.75.
