Local equities continue lackluster trade

Local equity benchmarks continued their lackluster trade in morning session, with losses of around quarter a percent. Market participants remained concerned with a report that the commerce ministry’s data showing that eight core industries grew at its slowest pace in 16 months at 3.5% in November due to fall in output of crude oil and fertilizers. Core sector growth was 6.9 percent in November 2017.  Traders took note of a report that the country's external debt fell by $19.3 billion, or 3.6 per cent, to $510.4 billion during the six-month period ended September, due to a decrease in commercial borrowings, non-resident Indian (NRI) deposits and valuation effect. However, losses remained capped as traders were getting some support with Finance Minister Arun Jaitley’s statement that the Government does not need RBI surplus to finance its fiscal deficit target, while stressing that the Modi led NDA dispensation has the best track record of managing the deficit than any other previous regime. Beside, Finance Minister also stated that the government is closely monitoring the macroeconomic conditions to ensure that the fiscal deficit remains within the target of 3.3 per cent of the GDP for 2018-19.

On the global front, Asian markets were closed on account of the New Year holiday. Back home, a report also state that restrictions imposed on banks under RBI’s Prompt Corrective Action framework has helped bring down the extent of contagion losses likely to be incurred by the banking system in case these banks were to fail.

The BSE Sensex is currently trading at 35977.20, down by 91.13 points or 0.25% after trading in a range of 35912.59 and 36224.00. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.06%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were Realty up by 1.78%, Telecom up by 0.47%, Healthcare up by 0.40%, Consumer Durables up by 0.23% and Industrials was up by 0.02%, while Metal down by 0.59%, Auto down by 0.36%, FMCG down by 0.34%, Consumer Disc down by 0.25 and Basic Materials was down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.63%, Yes Bank up by 1.40%, Axis Bank up by 1.10%, Bharti Airtel up by 0.97% and Bajaj Auto was up by 0.42%. On the flip side, IndusInd Bank down by 1.18%, Power Grid down by 0.98%, Asian Paints down by 0.75%, Mahindra & Mahindra down by 0.71% and Maruti Suzuki was down by 0.63% were the top losers.

Meanwhile, indicating that the banking sector is on course to a recovery, Reserve Bank of India (RBI) governor Shaktikanta Das has said the period till September 2018 had seen a decline in gross non-performing asset (NPA) ratios - a first such dip in three years. Governor underlined that after a prolonged period of stress, the banking sector appears to be on course to recovery as the load of impaired assets recedes, adding that state-run lenders, which account for a bulk of the dud assets, need operational improvements.

According to RBI’s half-yearly financial stability report (FSR), the asset quality of banks showed an improvement, with Gross NPAs ratio declining to 10.8% in September 2018 from 11.5% in March 2018, while for the state-run lenders, the same improved to 14.8% in September 2018 from close to 15.2% in March 2018. The RBI Governor expressed hope that the GNPA ratio of all banks would come down to 10.3% by March 2019 from 10.8% in September 2018. In the last financial year (FY18), gross NPAs of the banking system shot up to Rs 10,39,700 crore, or 11.2% of total advances as against Rs 791,800 crore or 9.3% of advances in the same period of previous year(FY17).

Besides, he said even though the current NPA levels were high, stress tests done by the RBI had pointed to an improvement in the ratio in future. The immense effort put in by the stakeholders so far is required to be buttressed with substantive reforms in governance and oversight regime, supported by recapitalisation of weak PSBs.

The CNX Nifty is currently trading at 10830.15, down by 32.40 points or 0.30% after trading in a range of 10813.65 and 10885.30. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 1.64%, Yes Bank up by 1.40%, Axis Bank up by 1.19%, Bharti Airtel up by 1.04% and Bajaj Auto was up by 0.34%. On the flip side, IndusInd Bank down by 1.41%, Hindalco down by 1.39%, Indiabulls Housing down by 1.07%, Mahindra & Mahindra down by 0.86% and Zee Entertainment was down by 0.85% were the top losers.