Sensex Ends Flat; Mindtree Slumps Over 4%

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Indian share markets lost their growing momentum and finished marginally lower in the afternoon session. At the closing bell, the BSE Sensex stood lower by 51 points, while the NSE Nifty finished down by 26 points. The S&P BSE Mid Cap finished down by 0.5% while & S&P BSE Small Cap finished up by 0.2%. Losses were largely seen in metal stocks, software stocks and pharma stocks.

Asian stock markets finished higher today with shares in Japan leading the region. The Nikkei 225 is up 0.62% while China's Shanghai Composite is up 0.43% and Hong Kong's Hang Seng is up 0.26%. European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.59% while France's CAC 40 is up 0.49% and Germany's DAX is up 0.44%.

The rupee was trading at Rs 64.42 against the US$ in the afternoon session. Oil prices were trading at US$ 47.3 at the time of writing.

In news from banking sector, the rating agency, CRISIL in its latest report has said that Indian banks are likely to take a haircut of nearly 60%, worth Rs 2.4 trillion to resolve the top 50 Non-performing asset (NPAs) accounts with debt of Rs 4 trillion.

According to the report, these 50 companies are from the metals (30% of total debt), construction firms (25%), and power (15%) sectors, and account for half of the Rs 8 trillion bad loans in the banking system as on March 31, 2017.

The rating agency has said that it would be in the larger interest of the economy to pop the bitter pill of haircut than kick the can down the road. It has estimated that banks have provisioned for about 40% of this loan exposure and added that they used the economic value approach to assess the haircuts.

Further, the report noted that a quarter of the debt analysed needs marginal or moderate haircuts, while a third needs aggressive and nearly 40% deep haircuts. It also pointed out that the companies from the power sector would require moderate haircuts, whereas those from the metals and construction sectors would need aggressive ones.

Recently, the government has promulgated an ordinance empowering the RBI to issue directions to banks for speedy resolution of stressed assets so that they become viable.

Meanwhile, Kotak Mahindra Bank posted a 23% jump in June quarter net profit buoyed by higher interest and fee income. The bank's June quarterly results rose from a year-ago period to Rs 9.12 billion, from Rs 7.41 billion in 2016.

The bank reported that its Gross Non-Performing Assets rose to 4.1% in its June quarter while, on a year-on-year basis, it jumped 21.8%.

As a percentage of total loans, gross NPAs stood at 2.58% as compared to 2.59% in the previous quarter and 2.5% in the year-ago quarter. Net NPAs dipped to 1.25% in the June quarter from 1.26% in the previous quarter.

Kotak Mahindra Bank share price finished the trading day down by 1.4% on the BSE.

Moving on to news from oil & gas stocks. The government has approved explorer Oil and Natural Gas Corp's (ONGC) plan to buy its 51.1% stake in state-refiner Hindustan Petroleum Corp Ltd (HPCL).

As per The Economic Times, ONGC will be exempted from making an open offer to other shareholders of HPCL in the transaction, which is expected to be completed in a year. More such integration of oil companies is in the offing.

One must note that the proceeds from the deal will cover about 40% of the government's divestment target of Rs 725 billion for 2017-18.

ONGC share price finished up by 1.8% while HPCL share price plunged 4.3%.

Software stocks languished in red with Tech Mahindra share price and HCL Technologies share price leading the losses.

Tata Elxsi share price finished on an encouraging note (up 1.1%) after Bloomberg reported that Tata Group is considering a restructuring that would see several of its technology businesses moved under Tata Consultancy Services Ltd.

Meanwhile, Mindtree share price plunged over 4% On June quarter earnings disappointment. The company reported a 1.5% decline in consolidated net profit at Rs. 1.21 billion for April-June, impacted by currency volatility, visa costs and one-time impact on business of one of its subsidiaries.

The "temporary volatility" in the subsidiaries' businesses have promoted Mindtree to slash its revenue growth outlook to high single-digit from the earlier projection of double-digit rise in top line.

Sensex vs BSE IT Index Since the Start of the Year

Meanwhile, Wipro chairman Azim Premji has expressed optimism on the prospects of the Indian IT industry for the current fiscal despite global economic volatility, as the sector continues to bet on growing demand for digital technologies.

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