India’s benchmark index for equities climbed to a record on optimism the Reserve Bank of India measures will help clean up bad loans from the banking system.
The S&P BSE Sensex rose 0.8% to 31,311.57 points in Mumbai as metal makers and banks gained. Tata Steel rose to the highest level since September 2014, with the biggest percentage boost on the gauge after it proposed selling its stake in Tata Motors. Software exporter Infosys was the worst performer, dropping to the lowest level in more than a month. Nine of the 13 sector indexes compiled by BSE advanced, with the S&P BSE Bankex rising to a record.
India’s central bank plans to use insolvency laws against more corporate defaulters to speed up resolution of the country’s bad loans that have swelled to $180bn. Last week it notified 12 large debtors, most of them steel companies, and ordered banks to use these laws to resolve Rs2tn ($31bn), or almost a fourth, of the country’s bad debt.
Federal steel secretary Aruna Sharma yesterday said that government expects 4-5% enhancement in steel demand in the current fiscal year and it was important to have fresh infusion of capital in the sector, television channel CNBC-TV18 said in a tweet, quoting her.
“The comments from steel secretary and RBI measures instil confidence that the government is focused on cleaning up,” Jitendra Panda, managing director at Peerless Securities, said by phone. “Markets are now looking forward to Prime Minister Narendra Modi’s visit to the US for some cues on the information technology and pharmaceutical sector, languishing under global headwinds.”
Meanwhile the rupee yesterday erased all the gains and closed unchanged against the US dollar from its previous close. The rupee closed at 64.43 a dollar, unchanged from its Friday’s close of 64.43. The rupee opened at 64.40 a dollar and touched a high and a low of 64.32 and 64.42 respectively.
The 10-year bond yield closed at 6.467% compared to its previous close of 6.489%. Bond yields and prices move in opposite directions.
So far this year, the rupee has gained 5.25%, while foreign investors bought $8.34bn and $13.44bn in local equity and debt markets, respectively.
Asian currencies were trading mixed as markets 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.
South Korean won was up 0.14%, Indonesian rupiah 0.13%. However, Japanese yen was down 0.19%, China Offshore 0.11%, China renminbi 0.1%. The dollar index, which measures the US currency’s strength against major currencies, was trading at 97.072, down 0.09% from its previous close of 97.164.
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