Benchmarks trade with decent gains; metal shares tumble

The equity benchmarks traded with decent gains in mid-afternoon trade. At 14:28 IST, the barometer index, the S&P BSE Sensex, was up 151.60 points or 0.39% at 38,568.83. The Nifty 50 index added 38.05 points or 0.34% at 11,393.10.

Positive Asian cues boosted investors sentiment, but rising COVID-19 cases and India-China tensions capped gains.

The broader market traded mixed. The S&P BSE Mid-Cap index shed 0.53% while the S&P BSE Small-Cap index gained 0.03%.

The market breadth was almost even. On the BSE, 1138 shares rose and 1449 shares fell. A total of 181 shares were unchanged.

Foreign portfolio investors (FPIs) sold shares worth Rs 6.93 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 815.82 crore in the Indian equity market on 7 September, provisional data showed.

Buzzing Index:

The Nifty Metal index shed 0.90% to 2,428.05, declining for fourth day in a row. The index has lost 4.45% in four sessions.

Welspun Corp (down 3.62%), NMDC (down 2.99%), National Aluminum Company (down 2.62%), Jindal Steel & Power (down 1.96%), Ratnamani Metals Tubes (down 1.96%), SAIL (down 1.86%), Hindustan Zinc (down 1.54%), Tata Steel (down 1.43%), Coal India (down 0.61%), Mishra Dhatu Nigam (down 0.63%), Hindalco Industries (down 0.43%) and Hindustan Copper (down 0.14%) declined.

Meanwhile, APL Apollo Tubes (up 0.90%), MOIL (up 0.37%) and JSW Steel (up 0.24%) advanced.

Numbers to Track:

In the foreign exchange market, the partially convertible rupee edged higher to 73.35 compared with its previous closing 73.14.

The yield on 10-year benchmark federal paper rose to 6.050% compared with previous closing of 5.993% in the previous trading session.

MCX Gold futures for 5 October 2020 settlement shed 0.20% to Rs 50,965.

In the commodities market, Brent crude for November 2020 settlement fell $1.31 cents to $41.35 a barrel.

Oil prices dropped to five-week lows after Saudi Arabia made its deepest monthly price cuts to supply for Asia in five months and as uncertainty over Chinese demand clouds the market's recovery.

India-China Standoff:

India today denied firing of shots at the Line of Actual Control where the Indian and Chinese troops have been engaged in stand-off for over three months, the Defence Ministry said in a statement, hours after the People's Liberation Army accused the Indian troops of illegally crossing the border at the shore of the God Pao Mountain area and firing warning shots. In the statement, India accused China of trying to close in on Indian positions and firing in the air.

Economy:

A foreign brokerage firm has reportedly estimated that India's GDP will contract by 14.8% in FY21 and by 11.1% in CY20. It forecasted a GDP contraction of 13.7% in Q2 FY21 and 9.8% in Q3 FY21.

Meanwhile, the Reserve Bank of India (RBI) constituted KV Kamath committee has selected 26 sectors which will require restructuring based on its analyses of financial parameters hit due to the economic crash caused by the coronavirus pandemic.

In its report the five member committee reportedly said power, construction, iron and steel, roads, real estate, wholesale trading, textiles, consumer durables, aviation, logistics, hotels, restaurants and tourism, mining are among the sectors that will need restructuring.

The committee selected five financial parameters related to leverage, liquidity & debt serviceability viz. total outside liability to adjusted tangible net worth, debt to EBIDTA, current ratio, debt service coverage ratio (DSCR) and average debt service coverage ratio (ADSCR).

"Time is of essence at the present juncture. Considering the large volume and the fact that only standard assets are eligible under the proposed scheme, a segmented approach of bucketing these accounts under mild, moderate and severe stress, may ensure quick turnaround. To complete this task simplified restructuring for mild and moderate stress may be prescribed. Severe stress cases would require comprehensive restructuring," the committee reportedly added.

The RBI had formed a five member committee under the chairmanship of former ICICI Bank CEO KV Kamath to make recommendations on the financial parameters to be considered in the restructuring of loans impacted by the COVID-19 pandemic.

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