Benchmarks trade lower ahead of inflation data

Benchmarks have extended losses in the late morning deals as selling was witnessed in index heavyweights. Sentiments remained dampened as the rupee was trading lower at 61.65. Meanwhile, investors also remained concerned with Standard & Poor’s (S&P) statement that India’s sovereign rating could come under threat if the general election due next year threw up a hung Parliament or the government was unable to push through reforms. Also, India’s export growth slipped to a five-month low of 5.86 percent in November as shipments of petro-goods, pharma, automobile and gems and jewellery fell. On the global front, all the Asian equity markets were trading in the red at this point of time amid expectations the Federal Reserve may act sooner than later to unwind its stimulus after a provisional budget deal in Washington eased some of the fiscal drag on the US economy.

Back home, traders were buying, Power and Realty while selling was seen in Auto, Metal and Bankex on the BSE. The market breadth on BSE remains negative with advances to declines in the ratio of 761:852. BSE Sensex and NSE Nifty were comfortably trading near their psychological 21,000 and 6,250 levels respectively. The BSE Sensex is currently trading at 21028.23 down by 143.18 points or 0.68% after trading in a range of 21103.80 and 21004.89. There were 6 stocks advancing against 24 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 4.98% and Small cap index gained 7.24%.

The top gaining sectoral indices on the BSE were, Power up by 7.14% and Realty up by 0.04%, while Auto down by 1.08%, Metal down by 0.94%, Bankex down by 0.86%, Oil & Gas down by 0.59% and Capital Goods down by 0.55% were the top losers on the sectoral index. 

The top gainers on the Sensex were Tata Power up by 2.79%, Gail India up by 0.49%, BHEL up by 0.46%, HDFC up by 0.37% and ONGC up by 0.24%. On the flip side, Tata Motors was down by 2.45%, Bharti Airtel was down by 1.46%, Tata Steel was down by 1.31%, Wipro was down by 1.21%, ICICI Bank was down by 1.07%  were the top losers on the Sensex.

Meanwhile, In order to bring more transparency in restructuring and to ensure viability and fairness of Indian companies, Reserve Bank of India (RBI) plans to mandate independent valuations for large restructuring proposals. The RBI Governor highlighted that central bank is planning a new entity to restructure and buy distressed assets and is working on to develop systems for early detection of financial distress. Meanwhile, the RBI will issue discussion paper on recognising financial distress by next week.

Underscoring the need for effective judiciary and bankruptcy systems to deal with the NPA menace, the Governor has asserted that banks will choke up with bad loans if system for early detection of financial distress cannot be developed. Therefore, for cleaning up the system, there is a need to recognise the problem early, resolve it early and recover the money. Presently, banks are struggling with the rising bad loans and weak financial distress system has led to large number of proposals for debt restructuring further adding to the stress on banks’ debt portfolio.

Furthermore, the RBI governor iterated that loan defaults have become a problem and the central bank will take a move soon in order to make borrowing costlier, especially for uncooperative and willful defaulters. 

The CNX Nifty is currently trading at 6,266.45 down by 41.45 points or 0.66% after trading in a range of 6,286.85 and 6,254.50. There were 10 stocks advancing against 40 stock declines on the index.

The top gainers of the Nifty were Tata Power up by 2.79%, Ranbaxy up by 1.53%, BHEL up by 0.46%, Gail up by 0.39% and HDFC up by 0.31%. On the flip side, Tata Motors down by 2.59%, Ambuja Cements down by 2.58%, ACC down by 1.98%, JP Associaties down by 1.49%,and  Wipro down by 1.32% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite dipped 2.33 points or 0.11% to 2,201.84, Hang Seng dropped  68.97 points or 0.30% to 23,269.27, Jakarta Composite shed 43.47 points or 1.02% to 4,228.27, KLSE Composite contracted 5.60 points or 0.30% to 1,837.22, Nikkei 225 tumbled 257.84 points or 1.66% to 15,257.22, Straits Times decreased 7.04 points or 0.23% to 3,053.70, Seoul Composite contracted 12.88 points or 0.65% to 1,965.09 and Taiwan Weighted was down by 62.85 points or 0.75% to 8,370.92.