Firm trade continues on Dalal Street

Key barometer gauges continued their firm trade in afternoon session on Wednesday. Gains in Metal, Realty, Auto stocks supported the markets, however Telecom, IT stocks remained on the selling side. Energy stocks maintained their gains with the report that Union petroleum and natural gas minister Dharmendra Pradhan has said energy demand in India is likely to grow by 4.2 percent per annum by 2035. He noted that this makes the country’s energy demand growing faster than that of all major economies in the world. He also said the share of world's third-largest energy consumer in total global primary energy demand is set to double to 11 percent by 2040. Traders paid no heed towards rating agency has cut its FY20 growth forecast for NBFCs to 10-12 percent from the earlier estimate of 15 percent, citing reasons like funding challenges and slowdown in economic activity. Meanwhile, Finance Minister Nirmala Sitharaman has said that the up and down in Gross Domestic Product (GDP) are part of the growth process and the government is responding to the current economic challenges to revive demand and consumption in the country.

Asian markets were trading mostly in green, as US-China tensions ebbed and investors awaited key central bank policy announcements, including the European Central Bank on Thursday and the US Federal Reserve next week. Traders are also awaiting the latest developments in trade talks between China and the US ahead of next month’s planned top-level meeting, with both sides sounding less terse in recent statements, which has lifted hopes.

The BSE Sensex is currently trading at 37339.81, up by 194.36 points or 0.52% after trading in a range of 37193.57 and 37343.46. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.68%, while Small cap index was up by 1.25%.

The  top gaining sectoral indices on the BSE were Realty up by 3.40%, Auto up by 2.39%, Metal up by 2.01%, Basic Materials up by 1.41% and consumer discretionary was up by 1.29%, while IT down by 1.11%, TECK down by 0.93% and FMCG was down by 0.10% were the few losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 14.18%, Tata Motors up by 6.93%, Tata Motors - DVR up by 6.73%, Indusind Bank up by 2.85% and Vedanta up by 2.69%. On the flip side, HCL Tech down by 2.09%, Tech Mahindra down by 1.28%, Infosys down by 1.21%, TCS down by 0.80% and Sun Pharma down by 0.49% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has revised its FY20 outlook on non-banking finance companies (NBFCs) to negative from stable and also maintained its negative outlook on large ticket housing finance companies (HFCs). It expects structured finance (SF) rated transactions to remain stable in the second half of FY20, on the back of cherry-picked loans, significant amortisation, minimum utilisation of credit enhancement and the consistently robust performance of underlying retail and commercial loan assets when compared to overall industry trends.

Besides, rating agency has cut its FY20 growth forecast for NBFCs to 10-12 percent from the earlier estimate of 15 percent, citing reasons like funding challenges and slowdown in economic activity, which is evident from the fall in vehicle sales, slowdown in rural infra activity, and challenges to small and medium enterprises (SME). It expects the overall profitability to moderate across the industry, as the rise in funding cost and falling lending opportunities would lead to increased margin pressure. It added that the ability to partially pass on the increase in funding cost to retail borrowers also remains constrained due to subdued demand.

Ind-Ra further said that most NBFCs have been facing funding challenges post the credit crisis in September 2018, and though the funding costs have softened, they remain higher than the costs prevailing a year ago. It noted that NBFCs have been grappling with a double whammy, with the funding tightness being accompanied by possible asset-side headwinds in light of slowing demand. According to India Ratings, during this period, NBFCs also had to increasingly rely on alternate measures to generate liquidity, including asset sales and securitization and direct assignments of loans. It added that NBFCs with strong credit profiles have been better equipped to tackle challenges facing the sector, enabling them to gain market share.

The CNX Nifty is currently trading at 11031.40, up by 28.35 points or 0.26% after trading in a range of 11011.65 and 11054.80. There were 31 stocks advancing against 18 stocks declining on the index, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Yes Bank up by 13.55%, Tata Motors up by 7.51%, JSW Steel up by 3.49%, Indusind Bank up by 2.76% and Maruti Suzuki up by 2.68%. On the flip side, Wipro down by 2.31%, Zee Entertainment down by 2.23%, HCL Tech down by 2.16%, GAIL India down by 1.59% and Tech Mahindra down by 1.27% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 393.74 points or 1.48% to 27,077.42, Nikkei 225 surged 205.66 points or 0.96% to 21,597.76, Taiwan Weighted strengthened 36.77 points or 0.34% to 10,790.35, Straits Times advanced 33.45 points or 1.06% to 3,189.16, KOSPI rose 17.12 points or 0.84% to 2,049.20, Jakarta Composite soared 4.93 points or 0.08% to 6,341.60. On the flip side, Shanghai Composite was down by 0.10 points to 3,021.10.