Nifty, Sensex may be under pressure – Tuesday closing report

If Nifty closes below 8,250, we may see some more weakness


We had mentioned in Monday’s closing report that the S&P CNX Nifty may continue to rise higher if it manages stay above 8,227. Today the benchmark opened flat and after a minor setback at the beginning, it moved higher to hit the day’s high. The index then started moving in a range up to 11.25 am. However, after this a gradual decline followed for the remaining session and the index closed in the negative after three consecutive days of gains.
Sensex opened at 27,733 while Nifty opened at 8,325. Sensex moved lower to the level of 27,475 after hitting a high of 27,851 while Nifty hit a high 8,365 before reaching the low of 8,253. Sensex closed at 27,506 (down 195 points or 0.71%), while Nifty closed at 8,267 (down 57 points or 0.68%). NSE recorded a volume of 69.17 crore shares. India VIX rose 7.65% to 15.2975.
The futures & options segment contracts for December 2014 expire tomorrow as the stock market remains closed on Thursday on account of Christmas.
The market was awaiting the outcome of the assembly elections results held at Jharkhand and Jammu & Kashmir. The latest trends showed that the BJP was leading in the Jharkhand assembly while People's Democratic Party was leading in Jammu & Kashmir.
Gujarat Gas (18.24%) and DCB Bank (6.08%) were among the top two gainers in ‘A’ group on the BSE. Both of them hit their 52-week high today. It has been reported that mobile payments solutions provider iKaaz has tied up with DCB Bank to offer tap and pay mobile payment which will allow consumers to perform cashless transactions across various retailers in India.
Rasoya Proteins (4.65%) was the top loser in ‘A’ group on the BSE. It went on to hit a new 52-week low today.
NTPC (2.88%) was the top gainer in the Sensex 30 pack. NTPC has signed of a term loan facility of Rs 2,000 crore with Bank of Baroda. The loan has a door-to-door tenure of 15 years and will be utilised to part finance the capital expenditure. 
Tata Power (3.09%) was among the top two losers among the Sensex 30 stocks. Tata Power informed the BSE that a technical snag developed in Unit No.7 at Trombay Thermal Power Generating Station. The gas turbine generator rotor of the combined cycle gas based unit developed an inter-turn short and ground. However, there is no associated damage to any other equipment. The exact extent of the fault / repair and schedule required would be known once the rotor end rings are dismantled and fault / damage is closely examined.
On Monday, US indices closed in the green. Asian indices showed mixed performance. Among those indices trading today, KLSE Composite (0.29%) was the top gainer while Shanghai Composite (3.03%) was the top loser.
China recorded a deficit of $20.8 billion in its services trade with the rest of the world in November, official data showed on Tuesday. That was wider than a $17.2 billion deficit in the services trade for October. China previously reported a record $54.47 billion surplus on its merchandise trade in November. In November, the tourism sector recorded a deficit of $7.5 billion, while "other business services" had a deficit of $9.5 billion, the State Administration of Foreign Exchange said in a statement on its website Tuesday. Over the first 11 months of the year, the country's services trade posted a deficit of $154.9 billion, the regulator said. The nation had a surplus of $332.5 billion in its merchandise trade over the same 11-month period.
European indices were trading in the green. US Futures too were trading marginally higher.


RBI adds non-cooperative borrower tag to deal with NPAs

A non-cooperative borrower is one who does not engage constructively with his lender by defaulting in timely repayment of dues while having the ability to pay


The Reserve Bank of India (RBI) today came out with guidelines to define what it terms a 'non-cooperative borrower'. While the wilful defaulter category is well known, RBI has now gone on to identify this new category of borrowers. In its circular to all banks, RBI gives the definition of a Non-Cooperative Borrower to read as under:
The RBI had first spoken of such borrowers in its ‘Framework for Revitalising Distressed Assets in the Economy - Guidelines on Joint Lenders' Forum (JLF) and Corrective Action Plan (CAP)’. The latest circular said that, “A non-cooperative borrower is one who does not engage constructively with his lender by defaulting in timely repayment of dues while having ability to pay, thwarting lenders’ efforts for recovery of their dues by not providing necessary information sought, denying access to assets financed / collateral securities, obstructing sale of securities, etc. In effect, a non-cooperative borrower is a defaulter who deliberately stone walls legitimate efforts of the lenders to recover their dues.”
In this connection, RBI advises that banks/FIs should take the following measures in classifying/ declassifying a borrower as non-cooperative borrower and reporting information on such borrowers to Central Repository of Information on Large Credits (CRILC):
The cut off limit for classifying borrowers as non-cooperative would be those borrowers having aggregate fund-based and non-fund based facilities of Rs.50 million from the concerned bank/FI. A non-cooperative borrower in case of a company will include, besides the company, its promoters and directors (excluding independent directors and directors nominated by the Government and the lending institutions). In case of business enterprises (other than companies), non-cooperative borrowers would include persons who are in-charge and responsible for the management of the affairs of the business enterprise.
It would be imperative on the part of the banks / FIs to put in place a transparent mechanism for classifying borrowers as non-cooperative. A solitary or isolated instance should not be the basis for such classification. The decision to classify the borrower as non-cooperative borrower should be entrusted to a Committee of higher functionaries headed by an Executive Director and consisting of two other senior officers of the rank of general managers/ deputy general managers as decided by the Board of the concerned bank/FI.
If the Committee concludes that the borrower is non-cooperative, it shall issue a Show
Cause Notice to the concerned borrower (and the promoter/whole-time directors in case of companies) and call for his submission and after considering his submission issue an order recording the borrower to be non-cooperative and the reasons for the same. An opportunity should be given to the borrower for a personal hearing if the Committee feels such an opportunity is necessary.
The order of the Committee should be reviewed by another Committee headed by the chairman / CEO and MD and consisting, in addition, of two independent directors of the Bank/FI and the order shall become final only after it is confirmed by the said Review Committee.
Banks/FIs will be required to report information on their non-cooperative borrowers to CRILC under CRILC-Main (Quarterly Submission) return. The return will be under the heading, ‘Reporting to Central Repository of Information on Large Credits (CRILC)’. The quarterly CRILC Main report is required to be submitted within 21 days from the close of the relevant quarter.
Boards of banks/FIs should review on a half-yearly basis the status of non-cooperative borrowers for deciding whether their names can be declassified as evidenced by their return to credit discipline and cooperative dealings. Removal of names from the list of non-cooperative borrowers should be separately reported under CRILC with adequate reasoning/rationale for such removal.
If any particular entity as mentioned above is reported as non-cooperative, any fresh exposure to such a borrower will by implication entail greater risk necessitating higher provisioning. Banks/FIs will therefore be required to make higher provisioning as applicable to substandard assets in respect of new loans sanctioned to such borrowers as also new loans sanctioned to any other company that has on its board of directors any of the whole time directors/promoters of a non-cooperative borrowing company or any firm in which such a non-cooperative borrower is in charge of management of the affairs. However, for the purpose of asset classification and income recognition, the new loans would be treated as standard assets.
It is reiterated that as the CRILC data is collected under the provisions of the RBI Act, non-adherence to reporting instructions attracts penal provisions under the Act.



B. Yerram Raju

2 years ago

It is not pragmatic to distinguish borrowers on the basis of cooperation. Either the borrower conforms to the terms and conditions of sanction and behaves well or does not. A borrower who defaults on the terms and conditions is a bad borrower and has to be classified as such. There is absolutely no need to soft peddle the borrowers who willfully prefers to distance from the financial discipline.

Assembly Election Results: BJP leads in Jharkhand as J&K stares at hung house

BJP emerged as the single largest party in terms of vote share in J&K and was hovering close to a majority in the Jharkhand assembly, decimating the Congress again and damaging regional contenders


With wins in 35 seats and leads in 8 seats, out of the 81 in Jharkhand, Bharatiya Janata Party and its ally All Jharkhand Students Union were to form a majority in Jharkhand. In Jammu & Kashmir, BJP's mission 44 seemed to have been a pipe-dream, but with 25 seats it made significant gains in terms of seats and a major achievement in terms of gaining the highest vote share in the state. People's Democratic Party was leading as the single largest party in J&K with 28 seats.
"I extend my wishes to the BJP workers in both states as it wouldn't have been possible without their efforts," BJP President Amit Shah said.
In Jharkhand, the BJP and its ally AJSU, was leading with 43 seats (including both wins and leads). Jharkhand Mukti Morcha (JMM) was at second place with 18 seats, followed by Congress and Jharkhand Vikas Morcha at 7 seats each. A grand alliance of the Janata group failed to dent the BJP or garner significant number of seats. 
There were major upsets all over, with 3 ex-CMs losing at least one of their seats they were contesting. Madhu Koda lost from Majhgaon, Arjun Munda lost from Kharsawan, and Babulal Marandi lost from the Giridh seat, but his second seat is still awaiting result. 
The biggest shock might be the loss of outgoing CM Hemant Soren's loss from Dumka, while he managed a win from Barhait.
In Jammu and Kashmir, the PDP was leading with 28 seats, followed closely by the BJP with a strong 25 seats. The outgoing ruling party, the National Conference was at 15 seats with the Congress holding onto 12 seats. 
Omar Abdullah, the outgoing Chief Minister, lost on one of the two seats he was contesting, he won from the Beerwah constituency.
With the split between parties coming nowhere close to a majority, it is likely that there will be a coalition government in J&K. Mehbooba Mufti of the PDP suggested that the PDP was more likely to form a coalition with the Congress but both, the PDP and the BJP said 'all options were open'.


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