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Sensex, Nifty Bank end at record highs as RBI cracks down on bad debt

SI Reporter/New Delhi 19 Jun 17 | 03:46 PM

The benchmark S&P BSE Sensex and Nifty Bank extended morning gains to settle at record closing high on Monday as banking stocks gained after the Reserve Bank of India (RBI) asked banks to start banktruptcy process against 12 large loan defaulters, raising hopes that reduction of bad debt will start to quicken.

The S&P BSE Sensex gained 255 points to hit its fresh high of 31,311. In intraday trade, the 30-share Sensex gained as much as 305 points to 31362.15.

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The broader Nifty50 ended at 9,657, up 69 points. The 50-share index hit its intraday high of 9,673.

The broader market underperformed with the S&P BSE Midcap and the S&P BSE Smalcap indices ending little changed. 

The market breadth, indicating the overall health of the market, turned negative from positive. On BSE, 1,469 shares fell and 1,200 shares rose. A total of 190 shares were unchanged.

"Positive cues from Europe steadied nerves at the start of the week, and with bad loan resolution efforts gaining traction, banking stocks led stocks higher. Meanwhile, potential for re-rating will vest on how swiftly concerns over GST would dissipate," said Anand James, Chief Market Strategist, Geojit Financial Services.

Bank Nifty hits 23,800 for first time ever

Bank Nifty hit its fresh lifetime high of 23,800 in intraday trade. The index settled at record closing high of 23,742, led by gains in Axis Bank, ICICI Bank, HDFC Bank and Canara Bank, which rose between 1% to 2%. 

The gains came after RBI urged lenders to initiate bankruptcy proceedings against a dozen companies, including Essar Steel, Bhushan Steel and Monnet Ispat and Energy, sources with direct knowledge of the matter said.

The RBI said it had identified the 12 defaulters last week, but did not publicise their names.

The Nifty PSU Bank Index gained as much as 0.8%, with Allahabad Bank up 1.2% and Canara Bank rising nearly 1%.

Loan defaulters fall

Loan defaulters that are facing bankruptcy proceedings, however, fell.

Lanco Infratech was down as much as 8.5% to Rs 2.15, a record low, after it said it was one of the companies that had been identified by the RBI to start bankruptcy proceedings.

Shares of Monnet Ispat and Energy fell as much as 19.9%.

The Nifty Pharma Index was down as much as 1% as ongoing quality concerns raised by the US Food and Drug Administration pressured pharma stocks.

Global markets

European stocks opened higher and headed for their biggest rise in two months as investors geared up ahead of Brexit negotiations between the UK and the European Union, and as French President Emmanuel Macron's party won a parliamentary majority at the weekend.

Euro STOXX 50 and France's CAC 40 was up 1% each, while Britain's FTSE 100 rose 0.4%. 

Earlier in the day, Asian markets also kicked off the week strongly with a two-week closing high for Japan's Nikkei and 0.3% to 0.7% gains for Australian and South Korean KOSPI.

Chinese and Hong Kong stocks jumped 1% and 1.2% ahead of a decision by index provider MSCI on Tuesday, expected to see it add mainland-listed Chinese stocks to its top share benchmarks for the first time.

(With inputs from Reuters)

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Sensex

Company Price Gain (%)
Dr Reddy's Labs1,984.852.67
Lupin944.252.32
Sun Pharma.Inds.470.852.24
O N G C159.301.11
Axis Bank499.151.01

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