Volatility struck bourses in early trade as the key benchmark indices cut initial losses triggered by weak Asian stocks. The barometer index, the S&P BSE Sensex was currently down 35.60 points or 0.13% at 26,487.49. The market breadth indicating the overall health of the market was negative.
Bank stocks edged higher after the Reserve Bank of India (RBI) after trading hours yesterday, 8 June 2015, announced that banks can undertake a Strategic Debt Restructuring (SDR) of a stressed assets by converting loan dues into equity shares.
In overseas markets, Asian stocks edged lower today, 9 June 2015 amid worries about Greece and the prospect of the US Federal Reserve soon raising interest rates. US stocks declined yesterday, 8 June 2015, with the tech stocks leading the market lower.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 749.12 crore yesterday, 8 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 529.82 crore yesterday, 8 June 2015, as per provisional data.
At 9:31 IST, the S&P BSE Sensex was down 35.60 points or 0.13% at 26,487.49. The index lost 76.59 points at the day's low of 26446.50 at onset of the day's trading session. The index fell 10.73 points at the day's high of 26,512.36 in early trade.
The CNX Nifty was down 14.80 points or 0.18% at 8,029.35. The index hit a high of 8,036.20 in intraday trade. The index hit a low of 8,013.40 in intraday trade.
The market breadth indicating the overall health of the market was negative. On BSE, 685 shares declined and 642 shares rose. A total of 70 shares were unchanged.
The BSE Mid-Cap index was off 10.17 points or 0.1% at 10,183.83. The fall in the index was lower than Sensex's decline in percentage terms. The BSE Small-Cap index was off 26.31 points or 0.25% at 10,671.25. The fall in the index was higher than Sensex's decline in percentage terms.
The total turnover on BSE amounted to Rs 136 crore by 09:30 IST.
Bank stocks edged higher after the Reserve Bank of India (RBI) after trading hours yesterday, 8 June 2015, announced that banks can undertake a Strategic Debt Restructuring (SDR) of a stressed assets by converting loan dues into equity shares.
Among private bank stocks, HDFC Bank (up 0.06%), IndusInd Bank (up 0.06%), Kotak Mahindra Bank (up 0.06%), Axis Bank (up 0.24%), Yes Bank (up 0.96%), and ICICI Bank (up 0.51%) rose.
Among PSU bank stocks, State Bank of India (SBI) (up 0.53%), Punjab National Bank (up 0.06%), Bank of Baroda (up 0.16%), Canara Bank (up 0.64%), Bank of India (up 1.01%) and Union Bank of India (up 0.81%) rose.
SDR will provide banks with enhanced capabilities to initiate change of ownership in cases of restructuring of accounts where borrower companies are not able to come out of stress due to operational/managerial inefficiencies despite substantial sacrifices made by the lending banks, the RBI said. At the time of initial restructuring, the Joint Lenders' Forum (JLF) must incorporate, in the terms and conditions attached to the restructured loan/s agreed with the borrower, an option to convert the entire loan (including unpaid interest), or part thereof, into shares in the company in the event the borrower is not able to achieve the viability milestones and/or adhere to 'critical conditions' as stipulated in the restructuring package. This should be supported by necessary approvals/authorisations (including special resolution by the shareholders) from the borrower company, as required under extant laws/regulations, to enable the lenders to exercise the option effectively. Restructuring of loans without the required approvals/authorisations for SDR is not permitted. If the borrower is not able to achieve the viability milestones and/or adhere to the 'critical conditions' as stipulated in the restructuring package, the JLF must immediately review the account and examine whether the account will be viable by effecting a change in ownership. If found viable under such examination, the JLF may decide on whether to invoke the SDR, i.e. convert the whole or part of the loan and interest outstanding into equity shares in the borrower company, so as to acquire majority shareholding in the company.
In order to achieve the change in ownership, the lenders under the JLF should collectively become the majority shareholder by conversion of their dues from the borrower into equity, according to the RBI notification. However, the conversion by JLF lenders of their outstanding debt (principal as well as unpaid interest) into equity instruments shall be subject to the member banks' respective total holdings in shares of the company conforming to the statutory limit in terms of Section 19(2) of Banking Regulation Act, 1949. Post the conversion, all lenders under the JLF must collectively hold 51% or more of the equity shares issued by the company. The share price for such conversion of debt into equity will be determined as per a formula prescribed by the RBI.
Provisions of the SDR would also be applicable to the accounts which have been restructured before the date of this circular provided that the necessary enabling clauses are included in the agreement between the banks and borrower, the RBI said.
According to the RBI notification, JLF and lenders should divest their holdings in the equity of the company as soon as possible. On divestment of banks' holding in favour of a new promoter, the asset classification of the account may be upgraded to 'Standard'. However, the quantum of provision held by the bank against the said account as on the date of divestment, which shall not be less than what was held as at the 'reference date', shall not be reversed. At the time of divestment of their holdings to a 'new promoter', banks may refinance the existing debt of the company considering the changed risk profile of the company without treating the exercise as 'restructuring' subject to banks making provision for any diminution in fair value of the existing debt on account of the refinance. Banks may reverse the provision held against the said account only when all the outstanding loan/facilities in the account perform satisfactorily during the 'specified, i.e. principal and interest on all facilities in the account are serviced as per terms of payment during that period. In case, however, satisfactory performance during the specified period is not evidenced, the asset classification of the restructured account would be governed by the extant IRAC norms as per the repayment schedule that existed as on the reference date, assuming that 'stand-still'/above upgrade in asset classification had not been given. However, in cases where the bank exits the account completely, i.e. no longer has any exposure to the borrower, the provision may be reversed/absorbed as on the date of exit.
Tata Steel lost 2.05%. With respect to media report titled Tata Steel, Swansea varsity tie up, Tata Steel after market hours yesterday, 8 June 2015 clarified that the media report is based on a release issued by the company's subsidiary in Europe. It is research related project and has no impact and is not material to the company's operations, Tata Steel said.
Asian stocks edged lower today, 9 June 2015 amid worries about Greece and the prospect of the US Federal Reserve soon raising interest rates. Key benchmark indices in China, Singapore, South Korea, Taiwan, Hong Kong, Japan and Indonesia fell by 0.01% to 2.47%.
China's consumer inflation in May was at its weakest level in four months, official data showed today, 9 June 2015. China's consumer price index rose 1.2% in May from a year earlier, slower than a 1.5% year-over-year rise in April, data from the National Bureau of Statistics showed.
US stocks declined yesterday, 8 June 2015, with the tech stocks leading the market lower.
Meanwhile, the Group of Seven leaders (G-7) called for action on Greece as talks between the nation and its creditors continued yesterday, 8 June 2015. Greece deferred a payment to the IMF last week and needs to crack a deal or get another extension before its euro-area bailout package expires on 30 June 2015.
Powered by Capital Market - Live News
