Sensex Surges 250 Points; IT, Pharma Stocks Gain Most

After opening the day in red, share markets in India are trading on a volatile note and are presently trading above the dotted line. Sectoral indices are trading on a mixed note, with stocks in the IT sector and stocks in the pharma sector witnessing maximum buying interest.

The BSE Sensex is trading up by 240 points (up 0.7%) and the NSE Nifty is trading up by 65 points (up 0.7%). Meanwhile, the BSE Mid Cap index is trading up by 0.1%, while the BSE Small Cap index is trading down by 0.5%. The rupee is trading at 72.80 to the US$.

In news from stocks in the financial services sector. In what could be a further deepening of the ongoing debt crisis in Infrastructure Leasing & Financial Services (IL&FS) Group it was reported that a group firm could not service commercial papers.

A Group firm, IL&FS Financial Services (IFIN), said it could not service commercial papers (CPs) that fell due on Monday. IFIN has been having trouble servicing CPs over the past 10 days or so.

It could not service CPs that fell due on September 14; they were settled the next day. Again, on September 18, the company could not service CPs due that day.

CPs, which are issued in the form of a promissory note, are unsecured money market instruments – a low-cost alternative to bank loans.

Earlier this month, it came to light that IL&FS group defaulted on a short-term loan of Rs 10 billion from SIDBI, while a subsidiary has also defaulted Rs 5 billion dues to the development finance institution.

While IL&FS has nearly Rs 350 billion consolidated debt, IL&FS Financial Services has Rs 170 billion of debt, which sits as standard asset for most of the lenders, the reports noted.

The group has seen its various long-term and short-term borrowing programmes downgraded to ‘default’ or ‘junk’ grades by credit rating agencies, even as the regulators are also probing alleged delay in disclosure about certain loan defaults.