Key gauges pare gains to trade in red in early afternoon deals

Indian equity benchmarks pared all of their gains to enter into red terrain in early noon session amid India’s economy likely to expand at its weakest pace in more than five years in April-June, as consumer demand and private investment weakened at a time global trade frictions have dampened business sentiment. Traders paid no heed towards Union Finance Minister Nirmala Sitharaman statement, the Centre will announce two more big steps in the coming days to give momentum to industry. The government has decided to increase spending and has announced a slew of measures to arrest the sluggishness in the automobile market. Sentiments on the street remain dampened as Reserve Bank of India’s annual report showed that subdued global demand and some slack in government consumption expenditure led to a moderation in economic activity during 2018-19.

On the global front, Asian markets were trading in green as China struck a hopeful tone on trade with the US but continued fears about a global growth slowdown, or even a recession, capped sharp rallies. Back home, banking stocks edged lower despite the RBI’s report that early recognition and resolution of stressed assets have helped banks contain their gross non- performing loans ratio at 9.1% in FY19 down from 11.2% a year before. It said fresh slippages have also come down and as a result, the system-level provision coverage ratio has jumped to 60.9% during the period.

The BSE Sensex is currently trading at 36894.38, down by 174.55 points or 0.47% after trading in a range of 36885.00 and 37318.99. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.01%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Metal up by 0.98%, Realty up by 0.34%, Healthcare up by 0.24%, Consumer Durables up by 0.23% and Basic Materials was up by 0.10%, while Power down by 2.07%, PSU down by 1.70%, Utilities down by 1.68%, Capital Goods down by 1.50% and Telecom was down by 1.25% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 1.95%, Tata Steel up by 1.73%, Sun Pharma Industries up by 0.82%, HDFC Bank up by 0.58% and Hindustan Unilever up by 0.51%. On the flip side, NTPC down by 3.70%, Power Grid Corporation down by 2.61%, Larsen & Toubro down by 2.51%, Axis Bank down by 2.33% and HCL Tech. down by 1.90% were the top losers.

Meanwhile, Reserve Bank of India (RBI) in its annual report for 2019 has stated that steadfastly pursued recognition, repair and resolution of stressed assets resulted in the gross non-performing asset (NPA) ratio of both public and private sector banks declining to 9.1 percent in financial year 2019 (FY19) as compared to 11.2 percent in FY18.

According to the report, after the initial teething difficulties, the insolvency and bankruptcy code is proving to be a game-changer. It noted that recoveries have gradually improved and as a result, deadlock in the potential path of the investment cycle are easing. It also stated that capital buffers have been strengthened by recapitalisation to the tune of Rs 2.7 lakh crore, including the budgetary allocations for FY20 and the abatement of stress has rekindled bank credit inflows, which are getting broad- based.

The report further noted that a new framework for resolution of bad loans issed in June 2019 provide incentives for early resolution, with discretion to lenders on the processes. It said the objective is to ring-fence future build-ups of NPAs and protect the banking sector. It pointed out that the large exposure framework was revised to capture exposures and concentration risks more accurately and to align the framework with the international best practices. It added that the minimum leverage ratio has been revised for the systemically important banks and other financial entities for greater harmonisation with Basel III standards.

The CNX Nifty is currently trading at 10891.95, down by 56.35 points or 0.51% after trading in a range of 10887.70 and 11024.85. There were 15 stocks advancing against 34 stocks declining on the index, while 1 stock remains unchanged on the index on the index

The top gainers on Nifty were Hindalco up by 2.56%, Tata Steel up by 1.49%, Vedanta up by 1.40%, Wipro up by 1.00% and Britannia Industries up by 0.83%. On the flip side, NTPC down by 4.47%, Power Grid Corporation down by 3.42%, Coal India down by 2.70%, Bharti Infratel down by 2.63% and Axis Bank down by 2.30% were the top losers.

All Asian markets were trading in green; Nikkei 225 gained 254.72 points or 1.24% to 20,715.65, Straits Times strengthened 21.32 points or 0.69% to 3,103.15, Hang Seng gained 72.52 points or 0.28% to 25,776.02, Taiwan Weighted increased by 155.62 points or 1.49% to 10,618.05, Kospi advanced 36.21 points or 1.87% to 1,969.62, Jakarta Composite soared 25.54 points or 0.41% to 6,314.66 and Shanghai Composite was up by 9.18 points or 0.32% to 2,900.10.