Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could gain 10.50 points at the opening bell after indices witnessed five sessions of losses. The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month November 2016 series to December 2016 series. The near month November 2016 derivatives contracts expire on Thursday, 24 November 2016.
In overseas stock markets, Asian stocks were mixed. US stock market finished lower on Friday, 18 November 2016, but higher for the week as Wall Street heads into a holiday-shortened week when the focus will be on a slew of economic data and fresh scrutiny of a suddenly surging US dollar and rising interest rates. A recent rally sparked by bullishness about President-elect Donald Trump's potential pro-growth fiscal policies helped pushed stocks back toward record levels. Friday's trading was subdued as investors pulled back and focused on remarks on the previous day from Federal Reserve Chair Janet Yellen that pointed to a hike in interest rates next month.
Closer home, foreign portfolio investors (FPIs) sold shares worth a net Rs 926.32 crore on Friday, 18 November 2016, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1143.44 crore on Friday, 18 November 2016, as per provisional data.
Among corporate news, Housing finance major HDFC announced after market hours on Friday, 18 November 2016 that it has assigned the outstanding loans in projects of Unitech Group to JM Financial Asset Reconstruction Company (JMFARC). Detailing the rationale behind this move, HDFC stated that over the last three decades, it has funded various projects of the Unitech Group and that HDFC's current exposure to the Group involves funding of certain projects across various locations. In the recent past, the Unitech Group has faced sluggishness in the sale of apartments in its projects. This has affected the cashflows of the Group, which in turn has had an adverse impact on the progress of construction, and has resulted in irregular servicing of the loans. Under these circumstances, HDFC has assigned the outstanding loans in these projects to JMFARC. All these projects are located in prime locations, are financially viable but require additional funding. JMFARC will arrange for funds to support and kick-start these projects. The progress of the projects and the resultant cash flows will thereafter be closely monitored.
Against the total dues of Rs 869 crore in respect of these projects, JMFARC has paid HDFC Rs 155 crore upfront and has issued security receipts (SRs) to HDFC amounting to Rs 705 crore which will be redeemable over the period of construction. Though these accounts were standard assets as at 30 September 2016, and turned non-performing assets (NPA) only at the end of October 2016, in view of the irregular payment history, HDFC said, it has over the last few quarters as a matter of prudence, made provisions amounting to Rs 240 crore in respect of these accounts. No further provisioning is required as a result of the sale of the loans to JMFARC. After considering the provision of Rs 240 crore already made (34% of the SRs) the net carrying value of the SRs will be Rs 465 crore.
Vedanta announced after market hours on Friday, 18 November 2016 that its subsidiary Sesa Mining Corporation has revoked the suspension order in the Bicholim mines with immediate effect. The management took the decision after employees appealed to resume work. Sesa Mining Corporation had recently suspended the work at Bicholim mines due to union agitation/activism.
Meanwhile, metal sector stocks and index heavyweights ITC, HDFC Bank and Infosys led small losses for key benchmark indices on Friday, 18 November 2016. The Sensex lost 77.38 points or 0.3% to settle at 26,150.24, its lowest closing level since 25 May 2016.
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