The government’s thrust on expediting the resolution of the massive bad debt issue in a time-bound manner pushed the benchmark Sensex to a record high on Monday.
Banking stocks gained further ground on expectations that bankruptcy proceedings would bring down the overall quantum of non-performing assets (NPAs).
The 30-share Sensex rose 255.17 points to close at 31,311.57.
This is a new closing high for the benchmark that touched an intra-day high of 31430.32 on June 6.
The broader Nifty closed at 9657.55, up 69.50 points. The 50-share Nifty closed at a record high of 9,675 on June 5.
Meanwhile, the gainers in the Sensex pack included Axis Bank, HDFC Bank, ICICI Bank and State Bank of India (SBI) among others. Among sectoral indices, BSE Bankex was among the top gainers rising almost 1% or 256 points. According to industry estimates, the quantum of gross NPAs in the country is pegged at ₹7 lakh crore.
The Reserve Bank of India (RBI) has directed banks to initiate bankruptcy proceedings against entities that have defaulted on loans of ₹5,000 crore and above. Expectedly, shares of companies like Bhushan Steel, Jaypee Infratech and Lanco Infratech among others lost ground. Investor sentiment also received a boost with the government announcing a relaxation in the time limit for filing GST returns.
“The market is back to the buoyed sentiment due to relaxation in return filing time line to minimise the impact of transition to GST... RBI’s insistence that the banks start the bankruptcy proceedings which will improve bank’s asset quality & strengthen the balance sheet, led the index to climb by around 1%,” said Vinod Nair, Head - Research, Geojit Financial Services. Liquidity is also acting as a catalyst at a time when sector-specific development is pushing select heavyweights to new highs. Foreign investors have been net buyers at ₹3,328 crore in the current month
