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Benchmarks extend losses in early noon session
Aug-20-2019

Indian bourses extended their losses in early noon session with Sensex and Nifty trading down by 117 and 51 points respectively. Weak broader indices along with sell off at Metal, Basic Materials and PSU counters dragged the markets lower. Traders were concerned on report that former Reserve Bank of India (RBI) Governor Raghuram Rajan called slowdown in the economy very worrisome and said the government needs to fix the immediate problems in power and non-bank financial sectors and come out with a new set of reforms to energise private sector to invest. Selling also crept in with Care Ratings’ report that India's jobs scene -- with unemployment at a 45-year high -- is looking gloomy with hiring activity slowing across most sectors. Meanwhile, the Reserve Bank of India will sell five government securities worth Rs 17,000 crore on August 23, 2019, the move will suck out liquidity from the financial system.

On the global front, Asian markets were trading mostly in green owing to increased risk appetite among the market players after the concerns over the trade dispute between United States and China eased following reports that the US allowed its companies to continue doing business with Chinese telecommunications giant Huawei for an additional 90 days. Back on street, in scrip specific developments, shares of CG Power and Industrial Solutions touched lower circuit after the company recognized unauthorized transactions. Besides, Goldiam International shined on bagging orders worth Rs 100 crore. 

The BSE Sensex is currently trading at 37285.00, down by 117.49 points or 0.31% after trading in a range of 37241.83 and 37511.55. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.75%, while Small cap index was down by 0.57%.

The few gaining sectoral indices on the BSE were IT up by 1.39%, TECK up by 1.19% and Auto was up by 0.33%, while Metal down by 1.32%, Basic Materials down by 1.23%, PSU down by 1.16%, Bankex down by 1.15% and Energy was down by 1.12% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.07%, TCS up by 1.36%, Maruti Suzuki up by 1.29%, Bajaj Auto up by 1.12% and Hindustan Unilever was up by 0.79%. On the flip side, Yes Bank down by 6.19%, Indusind Bank down by 3.19%, ICICI Bank down by 2.24%, Bajaj Finance down by 1.97% and ITC was down by 1.93% were the top losers.

Meanwhile, with an aim to reduce cost of raising capital, the government has removed the redemption reserve requirement for issuance of debentures by Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs) and listed firms. Under the companies law, these entities raising money had to create Debenture Redemption Reserve (DRR) of 25% of the value of outstanding debentures and that requirement has now been done away with.

The changes would be applicable for public issue as well as private placements. On the other hand, in the case of unlisted companies, the DRR requirement has been reduced to 10% from 25% of the outstanding debentures. The measure has been taken by the government with a view to reducing the cost of the capital raised by companies through issue of debentures and is expected to significantly deepen the bond market.

The corporate affairs ministry has amended the Companies (Share Capital & Debentures) Rules to effect the changes. Till now, listed companies had to create a DRR for both public issue as well as private placement of debentures. In the case of NBFCs and HFCs, they had to have DRR when they opted for public issue of debentures. The amendments are aimed at creating a level-playing field between NBFCs, HFCs and listed companies on the one hand and also between them and banking companies and all India financial institutions on the other, which are already exempted from DRR.

The CNX Nifty is currently trading at 11002.45, down by 51.45 points or 0.47% after trading in a range of 10994.40 and 11076.30. There were 17 stocks advancing against 32 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Infosys up by 2.04%, Wipro up by 1.45%, TCS up by 1.41%, Bajaj Auto up by 1.27% and Maruti Suzuki was up by 1.13%. On the flip side, Yes Bank down by 6.26%, Indiabulls Housing down by 4.90%, Indusind Bank down by 3.36%, Ultratech Cement down by 2.47% and Britannia Industries was down by 2.23% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 112.99 points or 0.55% to 20,676.15, KOSPI rose 22.59 points or 1.16% to 1,962.49, Taiwan Weighted strengthened 34.94 points or 0.33% to 10,523.69, Hang Seng increased 23.61 points or 0.09% to 26,315.45, Shanghai Composite gained 3.34 points or 0.12% to 2,886.44 and Straits Times was up by 9.68 points or 0.31% to 3,138.13. On the other hand, Jakarta Composite was down by 3.73 points or 0.06% to 6,292.99.
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