Benchmarks add looses; Nifty gyrates around 6100 mark

Indian equities added losses to continue weak trade in the late afternoon session on account of selling in frontline counters while taking cues from European counterparts. The sentiments were on pessimistic mood despite encouraging October’s Export data which surprised investors positively, by jumping 13.47% at $27.27 billion and leaving country’s trade deficit in at $10.56 billion as compared to $20.21 billion a year ago. Traders were seen piling positions in Health Care, IT and TECK stocks while selling was witnessed in Capital Goods, Realty and PSU sector stocks. In scrip specific development, Apollo Tyres was trading in green after a US judge ruled that the Indian company did not breach its obligation to close its $2.5 billion buyout of Cooper Tire & Rubber Company. Ricoh India was locked at upper circuit limit on delisting plan. With an aim to attain full ownership, Japan’s Ricoh plans to acquire up to 1.04 crore shares of Ricoh India from the public, representing 26.40% stake, and delist the shares from BSE.

On the global front, most of the Asian markets were trading in green while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,150 and 20,600 levels respectively. The market breadth on BSE was negative in the ratio of 991:1224 while 126 scrips remained unchanged.

The BSE Sensex is currently trading at 20575.63, down by 90.52 points or 0.44% after trading in a range of 20,672.53 and 20,482.41. There were 10 stocks advancing against 20 declining on the index.

The broader indices were too trading in red; the BSE Mid cap was down by 0.18% while Small cap index edged lower by 0.28%.

The gaining sectoral indices on the BSE were Health Care up by 0.52%, IT up by 0.50% and TECK up by 0.44% while, Capital Goods down by 1.87%, Realty down by 1.68%, PSU down by 1.13%, Oil & Gas down by 1.02% and Power down by 0.91% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.31%, Tata Steel up by 1.90%, TCS up by 0.79%, Maruti Suzuki up by 0.72% and Cipla up by 0.67%. On the flip side, Hindalco Industries down by 2.66%, L&T down by 2.41%, ONGC down by 2.29%, Tata Motors down by 1.79% and Hero MotoCorp down by 1.74% were the top losers on the Sensex.

Meanwhile, concerned over the prevailing high interest rates scenario in the economy impacting the infrastructure development of the country, the finance ministry has written to the Reserve Bank of India (RBI) governor Reghuram Rajan seeking a change in the rules for infrastructure financing and the treatment of non-performing loans to the sector.

Mentioning infrastructure development a most critical prerequisite to revive the economic growth, finance ministry has suggested that the RBI could ease rules for infrastructure projects that are delayed and can also adopt separate implementation of corporate debt restructuring for infrastructure advances. It urged the central bank that refinancing of such projects should be allowed without treating them as restructured loans that require higher provisioning. Refinancing particularly for infrastructure projects is a globally accepted practice due to their long gestation period, however, the refinancing in the country is still on hold owing to the stringent RBI norms. At present, there are around 378 stalled projects worth around Rs 17.23 lakh crore stuck due to delays in various clearances.

The finance ministry has also pitched for a clear distinction between restructuring and rescheduling of loans. It wants that loans to projects delayed due to factors such as land acquisition or environmental clearance to be treated as rescheduling, while, restructuring should be considered for loans in case of total extended repayment programme due to circumstances that may or may not be beyond the developer's control. Moreover, banks should upgrade the risk management system to reduce the number of projects becoming non-performing assets, it recommended.

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. Further, restructuring of infrastructure loans through extension enforces a higher cost on banks as the lenders have to make provision for such assets.

The CNX Nifty is currently trading at 6,108.15, down by 32.60 points or 0.53% after trading in a range of 6,141.65 and 6,070.85. There were 11 stocks advancing against 35 declining while 1 stock remained unchanged on the index.

The top gainers of the Nifty were Cairn India up by 2.57%, Dr. Reddy’s Lab up by 2.29%, Tata Steel up by 2.07%, TCS up by 0.87% and HDFC Bank up by 0.72%. On the flip side, ACC down by 3.29%, BPCL down by 2.90%, Hindalco Industries down by 2.75%, Axis Bank down by 2.74% and IndusInd Bank down by 2.59% were the major loser on the index.

The Asian equity indices were trading mostly in green; Straits Times up by 0.36%, KLSE Composite up by 0.04%, Hang Seng up by 1.43%, Nikkei 225 up by 1.30% and Shanghai Composite up by 0.16%.

On the other hand, Jakarta Composite down by 0.65%, Taiwan Weighted down by 0.57% and Seoul Composite down by 0.38%.

The European markets were trading in red; France’s CAC 40 was down 0.08%, Germany’s DAX lost 0.09% and UK’s FTSE 100 dropped 0.03%.