RBI loan restructuring option, hike in gold LTV sees Sensex end 362 pts up

All that happened in the markets today

The domestic stock market ended around 1 per cent higher on Thursday after the Reserve Bank of India (RBI) decided to keep the benchmark repo rate unchanged at 4 per cent, and reverse repo rate at 3.35 per cent. Further, the central bank also announced measures to support NBFCs, HFCs, corporate debt market, and announced a relaxation on the loan-to-value (LTV) ratio for gold loans. READ MORE

The S&P BSE Sensex today ended 362 points or 0.96 per cent higher at 38,025 levels while NSE's Nifty ended at 11,200, up 98.5 points or 0.89 per cent. India VIX dropped nearly 2 per cent to 23.14 levels. 

Infosys, HDFC Bank, TCS, and ICICI Bank were the major contributors to the Sensex's gains. 

In the broader market, the S&P BSE MidCap index ended 0.77 per cent higher at 14,017 while the S&P BSE SmallCap index ended 1 per cent higher at 13,562 points. 

On the sectoral front, barring Nifty PSU Bank index, all the other sectoral indices on the NSE ended in the green. The Nifty Bank gained over 0.6 per cent while Nifty Realty rallied over 1 per cent. The Nifty IT index gained 1.8 per cent to 18,189 levels. 

Global markets 

Stocks slipped on Thursday as investors waited for signs of agreement on a US stimulus package, while the US dollar slumped to a two-year low on fears that the recovery in the world’s biggest economy was lagging others.

European stocks edged down in volatile trading, with Frankfurt gaining 0.2 per cent as investors digested a fresh batch of corporate earnings reports.

In commodities, oil prices slipped just below five-month highs, with support from a weak dollar and falling US crude inventories undermined by bearish sentiment about fuel demand.

Gold prices raced towards a record high as dismal US jobs data hammered the dollar and intensified worries about a recovery in the pandemic-ravaged global economy.

(With inputs from Reuters)

3:54 PM

Market Closing Comment :: Vinod Nair, Head of Research at Geojit Financial Services

Indian benchmark indices came off highs but still closed out a volatile day with gains, following RBI commentary regarding interest rate outlook. Although expectations of a rate cut were there, RBI kept rates on hold, following a rise in inflation. However, it has indicated that monetary policy will remain accommodative until growth revives. We believe that if inflation remains under control, there will be further policy easing from the central bank. With this event out of the way, markets expected to turn focus back on earnings visibility and quality.

3:47 PM

BSE Snapshot at Close

3:44 PM

Stocks that supported Sensex's 360 pts-rally

3:43 PM

Sectoral trends on NSE at Close

3:39 PM

Sensex Heatmap at Close

3:37 PM

Closing Bell

>> Benchmark S&P BSE Sensex index settled the day at 38,025 level, rallying 362 points or 0.96 per cent. The index hit an intra-day high of 38,221.

>> The broader Nifty50, meanwhile, ended at the psychological level of 11,200, up 99 points or 0.89 per cent. The index hit an intra-day high of 11,257.

3:33 PM

COMMENT ON RBI POLICY :: Niranjan Hiranandani, President, Assocham

A Positive step by Reserve Bank of India to pay heed to India Inc’s long pending demand of Onetime restructuring of loans without classifying them as NPAs, by setting up an expert committee steered by KV Kamath. Opening up the window for restructuring of loans to companies, individuals and MSME under mandated safeguards grants breather to the liquidity strapped industry. A flexible repayment scheme under the new resolution framework shall bring in the much-needed relief to resume operations smoothly.

3:28 PM

Valuation drop, legal complications likely to hit HDIL's sale prospects

Real estate major HDIL may find good offers hard to come by, given the slump in the real estate sector, litigation woes, and arrest of its promoters. The Mumbai-based firm had earlier attracted attention from top players like Adani Properties, SunTeck Realty, and Suraksha Asset Reconstruction Company (owned by the Dilip Shanghvi family). READ MORE

3:25 PM

INDEX GAINER:: Infosys surges 3%

3:18 PM

MARKET CHECK:: BSE Healthcare index up 1%

3:09 PM

Steel Strips Wheels bags manufacturing orders worth $2,09,000 for US market

Steel Strips Wheels Ltd (SSWL) said the orders are worth $2,09,000. It said similar orders are expected in times to come from other regular customers as the market remains normalcy.

 

"This will support further ramping up of production at Chennai steel wheels plant," it added. READ MORE

2:59 PM

COMMENT ON RBI POLICY :: Dhiraj Relli, MD & CEO, HDFC Securities

The outcome of MPC of RBI’s meeting was on expected lines. Additional special liquidity facility to NHB and NABARD to help the housing sector and agriculture/rural activities is welcome. However, raising of LTV on gold loans to 90% from 75% may have some delayed impact as lenders may be wary of lending upto 90% after Gold prices have already run up too much over the past few months.

Key provision of restructuring of loans to borrowers who were not in default on March 01 through recommendation of KV Kamath committee cannot have come sooner. The committee’s recommendations will enable ensuring prudent entry norms, clearly defined boundary conditions, specific binding 10 covenants, independent validation and strict post-implementation performance monitoring. Mention of outer limit of 2 years for the resolution and raising the provision limits to 20% for lenders not signing inter-creditor agreement will help speeden the resolution process and maintain the soundness of the banking system.

Overall the outcome of MPC meet this time around is prudent, to the point and meets the current requirements of the lending community though the borrowers may want something more. What will be crucial to watch is the challenges faced by the committee in making its recommendations considering the viewpoints of the parties involved and ensuring the success of the plan.

 

 

2:52 PM

India must look beyond what rating agencies think, says Raghuram Rajan

Former Reserve Bank of India governor Raghuram Rajan said on Thursday that overly focusing on what sovereign rating agencies think can take one's eyes off what needs to be done for the economy. "It is also important to convince both domestic and international investors that after the crisis associated with the pandemic is over, we will return to fiscal responsibility over the medium term, and the government should do more to convince them of that," Rajan told the Global Markets Forum. READ MORE

2:47 PM

HDFC Bank's delayed reports to draw in Indian regulator

Indian banks seeking to assess the credit worthiness of borrowers depend on data from credit bureaus like Experian, particularly at a time when soured debt is expected to surge due to the coronavirus pandemic. Lenders are obliged by the RBI to provide information on their borrowers to Experian and three other credit bureaus on a monthly basis. HDFC Bank has in recent weeks brought its information up to date, the people said. READ MORE

2:37 PM

MARKET CHECK:: Top 5 gainers on the BSE at this hour