Shares off the day's high; auto share advance

Key equity indices came off the day's high in mid-morning trade as profit taking emerged at higher levels. At 11:26 IST, the barometer index, the S&P BSE Sensex, was up 181.33 points or 0.47% at 38,598.56. The Nifty 50 index added 51.60 points or 0.45% at 11,406.65.

In the broader market, the S&P BSE Mid-Cap index shed 0.13% while the S&P BSE Small-Cap index gained 0.33%.

The market breadth was positive. On the BSE, 1242 shares rose and 1071 shares fell. A total of 158 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.

Economy:

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.

Buzzing Index:

The Nifty Auto index gained 0.16% to 7,970.80. The index shed 1.14% in the past two sessions.

Mahindra & Mahindra (up 1.05%), Maruti Suzuki (up 0.61%) and Hero MotoCorp (up 0.28%) were the top index gainers while Tata Motors (down 1.17%), Ashok Leyland (down 1.01%) and TVS Motor Company (down 0.89%) were the top index losers.

Stocks in Spotlight:

Dr. Reddy's Laboratories was up 0.11% to Rs 4427.20. The drug maker on Monday announced the launch of Fulvestrant Injection, 250 mg/5 mL (50 mg/mL) per single-dose syringe in the U.S. market, a therapeutic equivalent generic version of Faslodex (fulvestrant) Injection, 250 mg/5 mL (50 mg/mL), approved by the U.S. Food and Drug Administration (USFDA). The Faslodex brand and generic market had U.S. sales of approximately $407 million MAT for the most recent twelve months ending in June 2020 according to IQVIA Health (as per IQVIA Retail and Non-Retail MAT June 2020).

Ashoka Buildcon jumped 6.23% to Rs 72.45 after the company emerged as the lowest bidder (L-1) for two road construction projects from NHAI. Both projects come under Bharatmala Pariyojana Phase-1.

EIH rose 0.95% to Rs 85.30 after the hospitality major said its board approved raising upto Rs 350 crore through rights issue of equity shares. The promoters of the company have informed the board that they collectively intend to fully subscribe to their rights entitlement and have reserved their right to subscribe to any additional equity shares, among themselves, in the event of under-subscription of the said issue.

Global Markets:

The US Dow index futures were up 320 points, indicating a strong opening in the US stocks today. Asia shares rose across the board on Tuesday.

Japan's Nikkei 225 index rose 0.81%. The island nation revised GDP figures for the April-June quarter showed the country's economy shrinking an annualized 28.1%, according to second preliminary estimates released by the Cabinet Office. It was worse than preliminary estimates released in mid-August, which had shown the country's economy shrinking 27.8% on an annualized basis in April-June.

Elsewhere, the pound extended its drop to the longest since June as the prospects of a trade accord with the European Union looked increasingly remote. U.K. Prime Minister Boris Johnson said Monday he's willing to walk away from talks rather than compromise on what he sees as the core principles of Brexit, and set an Oct. 15 deadline to reach an agreement.

In US, financial markets were shut on Monday for the U.S. Labor Day holiday.

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