Indian bourses continue to trade under pressure

Indian bourses remained under heavy selling pressure in afternoon session on account of negative global cues on growing fears about economic recession in the US. Investors ignored the Employees' Provident Fund Organisation (EPFO) data showing that net employment generation in the formal sector touched a 17-month high of 8.96 lakh in January. The addition in January was 131% higher as compared with 3.87 lakh EPFO subscribers added in the year-ago month. The market participants didn’t took any solace with Finance Minister Arun Jaitley’s statement that the government has exceeded its disinvestment target for the current fiscal by Rs 5,000 crore, taking the total proceeds to Rs 85,000 crore. Meanwhile, India has climbed two spots to rank at 76 out of 115 economies in the World Economic Forum’s (WEF) global energy transition index. The index benchmarks 115 countries on the current level of their energy system performance, and the readiness of their macro environment for transition to a secure, sustainable, affordable and inclusive future energy system.

The BSE Sensex is currently trading at 37754.93, down by 409.68 points or 1.07% after trading in a range of 37739.16 and 38016.76. There were 4 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.97%, while Small cap index was down by 1.12%.

The few gaining sectoral indices on the BSE were Power up by 0.86%, Utilities up by 0.63%, PSU up by 0.44% and Oil & Gas up by 0.30%, while Realty down by 2.26%, Metal down by 1.64%, Basic Materials down by 1.49%, Telecom down by 1.45% and Bankex down by 1.30% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.90%, Power Grid up by 1.74%, ONGC up by 0.66% and Coal India up by 0.37%. On the flip side, Vedanta down by 2.93%, Yes Bank down by 2.10%, ICICI Bank down by 2.04%, HDFC down by 1.88% and Kotak Mahindra Bank down by 1.74% were the top losers.

Meanwhile, the rating agency ICRA in its latest report warned that the tight liquidity has crimped credit growth for housing finance companies (HFCs) and is unlikely to improve much in FY20, even as the weak external environment will put a pressure on asset quality. It noted that HFCs are likely to register a 13-15% credit growth in FY19, which will inch up to 14-16% in FY20.

According to the report, aggravating the difficulties will be a likely pressure on the asset quality front due to the weak operating environment. It said that discussions with some HFCs reveal that their stock of repossessed assets has also increased, due to the lower saleability of those assets leading to an elongated recovery time. Besides, it stated that gross non-performing assets (NPAs) of home loan segment will increase to up to 1.3% in the medium term from the present 1% levels. It said “if we include project loans, their overall NPAs will shoot up to 1.8% in the medium term from the present 1.4%.” 

ICRA further said that the ongoing troubles will result in a narrowing of margins and, accordingly, a moderation of profit levels to 14% levels in FY19 from 18% in the year-ago period. It also expects bottom-line to be at the same levels in FY20 as well. It noted that the housing finance sector has been considered as one of the safest bets for financiers in the last few years, as the segment has been largely resilient.

The CNX Nifty is currently trading at 11337.10, down by 119.80 points or 1.05% after trading in a range of 11331.15 and 11395.65. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corp. up by 2.01%, HPCL up by 1.84%, Power Grid up by 1.66%, NTPC up by 1.41% and Dr. Reddys Lab up by 1.26%. On the flip side, Vedanta down by 2.88%, Zee Entertainment down by 2.78%, Bharti Infratel down by 2.36%, Hindalco down by 2.25% and JSW Steel down by 2.22% were the top losers.

All the Asian market were trading in red; Shanghai Composite declined 54.43 points or 1.75% to 3,049.72, Hang Seng decreased 627.40 points or 2.16% to 28,485.96, KOSPI fell 42.09 points or 1.92% to 2,144.86, Jakarta Composite dropped 107.51 points or 1.65% to 6,417.76, Taiwan Weighted dropped 159.59 points or 1.5% to 10,479.48, Nikkei 225 slipped 650.23 points or 3.01% to 20,977.11 and Straits Times was down by 42.57 points or 1.33% to 3,169.53.