Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in morning session, with losses of around half a percent, on heavy selling in Oil & Gas, IT and Energy stocks amid weak global cues. Selling in frontline blue chip stocks such Asian Paints, Wipro, ONGC, TCS and Infosys too weighed down sentiment, while buying in Indusind Bank, Tata Motors and Yes Bank minimizing losses up to certain level. Sentiments remained weak on macro concerns such as prevailing liquidity crunch in the market despite the Reserve Bank of India’s (RBI's) measures to improve the situation in the market and rising crude prices.

Sentiments remained under pressure with a private report stating that the government doesn’t have centralised information as yet on prosecutions launched against persons identified for suspicious cash deposits. Responding to an RTI filing by FE, the I-T department, however, said 11.8 lakh of the 23.5 lakh persons identified for suspicious post-demonetisation deposits and sent notices to by it on the e-filing portal replied to the queries raised. Traders overlooked a report that the Union government may take up the issue of relaxing minimum capital requirement norms for lenders in a bid to free up additional money and provide liquidity to the banking system in the board meeting of the RBI.

On the global front, Asian markets were trading in red as geo-political concerns spooked investors risk appetite. Back home, in scrip specific development, PNB Housing Finance jumped on raising Rs 1,775 crore via CP. Besides, White Organic Agro soared on initiating cultivation of cluster beans.

The BSE Sensex is currently trading at 33997.29, down by 137.09 points or 0.40% after trading in a range of 33852.70 and 34062.62. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.37%, while Small cap index was down by 0.33%.

The few gaining sectoral indices on the BSE were Realty up by 0.92%, Consumer Durables up by 0.36%, Power up by 0.16% and Bankex was up by 0.03%, while Oil & Gas down by 1.58%, IT down by 1.56%, TECK down by 1.36%, Energy down by 1.03% and Consumer discretionary was down by 0.67% were top the losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.91%, Tata Motors up by 2.23%, Tata Motors - DVR up by 1.72%, Yes Bank up by 1.71% and HDFC was up by 1.70%. On the flip side, Asian Paints down by 4.09%, Wipro down by 2.86%, ONGC down by 1.89%, TCS down by 1.87% and Infosys was down by 1.76% were the top losers.

Meanwhile, expressing cautiousness over Indian banks’ profitability, global rating agency Moody’s Investors Service in its latest report has stated that the profitability of Indian banks is ‘distinctively weak’ compared to those in BRICS nations. Though, it also said that the profitability will improve from next fiscal as asset quality stabilises. On capitalisation, Moody's said it is the ‘weakest’ for Indian banks with a tangible common equity ratio of 8.7% at the end of 2017.

The report explained that system wide asset quality in India is weak due to stressed public sector banks, which dominate the sector. Government capital infusions will boost weak public sector banks' capital ratios. It added that the system as a whole is unprofitable due to high credit costs at dominant state-owned Indian banks and the profitability is distinctively weak for Indian banks than others in the five-nation BRICS bloc. By contrast, Brazilian and South African banks have the highest return on assets (ROA).

Moody's said Indian banks have a negative ROA because of high credit costs at public sector banks, which dominate the system, despite having a similar level of pre-provisioning profitability to Chinese banks. Their profitability will remain under pressure for the rest of the current fiscal year, which ends in March 2019, as provisions for credit losses will remain large. It also said Indian bank's profitability will improve from the next fiscal year as asset quality stabilizes.

The CNX Nifty is currently trading at 10198.60, down by 46.65 points or 0.46% after trading in a range of 10152.25 and 10222.10. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 5.53%, Indusind Bank up by 2.31%, Tata Motors up by 2.11%, HDFC up by 1.94% and Yes Bank was up by 1.47%. On the flip side, Asian Paints down by 4.09%, Wipro down by 3.01%, BPCL down by 2.75%, HPCL down by 2.47% and Indian Oil was down by 2.24% were the top losers.

Asian markets were trading in red, Hang Seng declined 570.01 points or 2.23% to 25,583.14, Nikkei 225 dropped 570.08 points or 2.59% to 22,044.74, Taiwan Weighted fell 182.90 points or 1.87% to 9,791.38, Jakarta Composite slipped 24.26 points or 0.42% to 5,816.18, KOSPI shed 54.32 points or 2.58% to 2,107.39, Straits Times decreased 30.99 points or 1.02% to 3,047.07 and Shanghai Composite was down by 36.46 points or 1.39% to 2,618.42.