Benchmarks trim losses; trade continues in red

Indian equity benchmarks trimmed losses but continued their weak trade in the late afternoon session on account of selling in frontline blue chip counters. Asian shares however rose to eight-month highs on track for solid weekly gains, as record highs on Wall Street offset the impact on sentiment of an attack in France. Traders were seen piling position in Auto, Metal and Bankex stocks while selling was witnessed in IT, TECK and Power sector stocks. In scrip specific development, Infosys was trading in red on revising downward its revenue guidance for FY17. The company expects FY17 revenue to grow at a slower pace between 10.5 percent and 12 percent in constant currency versus its previous estimate of 11.5-13.5 percent. DCB Bank was trading in red after the private lender reported a marginal rise of 0.34 percent in net profit for the quarter ended June 30, 2016. On the other hand, NBCC was trading in green after it announced that it will implement re-development of three housing colonies located at Sarojini Nagar, Nauroji Nagar and Netaji Nagar in the national capital.

On the global front, Asian markets were trading in green while the European markets were trading mostly on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,600 and 27,900 levels respectively. The market breadth on BSE was negative in the ratio of 1024:1489 while 165 scrips remained unchanged.

The BSE Sensex is currently trading at 27880.10, down by 62.01 points or 0.22% after trading in a range of 27735.87 and 28048.70. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.45%, while Small cap index down by 0.30%.

The gaining sectoral indices on the BSE were Auto up by 1.32%, Metal up by 0.89%, Bankex up by 0.59%, Consumer Durables up by 0.48% and Capital Goods up by 0.46% while, IT down by 5.07%, TECK down by 3.81%, Power down by 0.35%, PSU down by 0.13% and Realty down by 0.06% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.01%, Bharti Airtel up by 2.88%, Tata Motors up by 2.25%, Adani Ports & Special Economic zone up by 2.17% and Mahindra & Mahindra up by 1.87%.

On the flip side, Infosys down by 8.36%, TCS down by 3.03%, Wipro down by 2.65%, NTPC down by 1.48% and ICICI Bank down by 0.99% were the top losers.

Meanwhile, domestic rating agency ICRA has said that banks gross Non-performing Assets (NPAs) could be nearing peak levels in the range of 8-8.5% by March 2017, as compared to 7.7% as on March 2016. It also added that, asset quality is not expected to improve substantially in near term.

In its latest report the agency stated that, credit growth is likely to be in the range of 11-12% in 2016-17, primarily driven by retail and other smaller ticket loans. Deposit growth will be in the range of 10-11% in the current fiscal.  Besides, it also said that public sector banks' (PSBs) profitability is not expected to improve significantly in 2016-17, return on equity (RoE) will remain in single digits.

The report further said that, relaxations in Basel III norms in March 2016 improved state PSBs tier-1 capital by 30-100 basis points, despite relaxations, infusion of Rs 25,000 crore by the government and low credit growth, state-run banks' capitalisation remained low with aggregated tier 1 at around 9.1% as on March 2016. Also, PSBs will need Rs 40,000-50,000 crore tier 1 capital raising in this fiscal as against government capital infusion plan of Rs 25,000 crore.

ICRA also said that significant improvement in asset quality will hinge upon economic recovery in credit intensive sectors, as well as successful execution of deleveraging efforts by some stressed corporate groups. Further, sluggishness in deposit growth could be on account of psychological impact on depositors following a decline in nominal interest rates on deposits, significant raising of tax-free bonds over the last few years providing alternative safe savings avenue, increase in limit for remittances and banks reducing dependence on large ticket deposits on the back of muted credit growth.

The CNX Nifty is currently trading at 8555.00, down by 10.00 points or 0.12% after trading in a range of 8510.05 and 8594.80. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 4.01%, Bharti Airtel up by 2.73%, Idea Cellular up by 2.46%, Tata Motors up by 2.24% and Bosch up by 2.14%.

On the flip side, Infosys down by 8.40%, TCS down by 3.17%, Tech Mahindra down by 2.88%, Wipro down by 2.62% and NTPC down by 1.64% were the top losers.

The Asian markets were trading in green; Shanghai Composite increased 0.28 points or 0.01% to 3,054.30, KOSPI Index increased 8.49 points or 0.42% to 2,017.26, FTSE Bursa Malaysia KLCI increased 9.88 points or 0.6% to 1,664.66, Jakarta Composite increased 12.45 points or 0.24% to 5,095.99, Taiwan Weighted increased 83.49 points or 0.94% to 8,949.85, Hang Seng increased 98.19 points or 0.46% to 21,659.25 and Nikkei 225 increased 111.96 points or 0.68% to 16,497.85.

The European markets were trading mostly in red; UK’s FTSE 100 decreased 10.59 points or 0.16% to 6,643.88, France’s CAC decreased 14.13 points or 0.32% to 4,371.39, while Germany’s DAX increased 5.84 points or 0.06% to 10,074.14.