Local bourses trim losses in early noon session

Local equities trimmed their losses in early noon session but still trade in negative zone as traders were concerned with the finance ministry data showing that Goods and services tax (GST) collection fell to a 19-month low of Rs 91,916 crore in September, pointing to a deepening economic slowdown. It is the second straight month when the collection has fallen below the Rs 1-trillion mark. There were some cautiousness in the markets on report that the Finance Ministry made it clear that companies opting for a lower tax of 22% will not be eligible for accumulated additional depreciation and Minimum Alternative Tax (MAT) credit. Meanwhile, India Inc’s debt servicing woes, which seemed to be getting better from FY15 to FY19, now seem to be taking a distinct turn for the worse. However, traders got some support with India Ratings and Research’s statement that the corporate tax cut will help India Inc save up to Rs 65,000 crore of outgo in FY20.

On the global front, Asian market were trading in red, after the US opened a new trade war front by saying it will impose tariffs on $7.5 billion of goods from the European Union. Back home, auto stocks remained in focus with the report that low consumer sentiment continued to subdue sales performance of the Indian automobile sector in September, as major industry players reported a significant decline in their respective sales figures.

The BSE Sensex is currently trading at 38176.16, down by 129.25 points or 0.34% after trading in a range of 37957.56 and 38284.00. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.18%, while Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were Realty up by 2.51%, Oil & Gas up by 1.40%, Energy up by 0.82%, TECK up by 0.45% and IT up by 0.40%, while Metal down by 1.91%, Basic Materials down by 0.77%, Capital Goods down by 0.74%, Bankex down by 0.54% and Healthcare was down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 23.44%, Tata Motors up by 5.07%, Tata Motors - DVR up by 3.59%, ICICI Bank up by 1.78% and ITC up by 1.45%. On the flip side, Indusind Bank down by 4.23%, Vedanta down by 2.25%, HDFC down by 1.96%, Axis Bank down by 1.71% and HDFC Bank down by 1.55% were the top losers.

Meanwhile, credit ratings agency Crisil, in its latest report has said that gross non-performing assets (NPAs) within the Indian banking system may further reduce to 8-8.5 percent by March 2020 from the peak of 11.5 percent in March 2018 as fresh accretion through slippages get slower and also with big ticket resolutions. However, it said that the Non-Banking Financial Companies (NBFCs) may continue to face challenges. It added banking system has been afflicted by the scourge of high NPAs for nearly five years now, which has led to net worth erosion and also led to discovery of scams in the sector.

According to the report, the banking system's credit growth will be stable at over 12 percent, on government's recapitalization efforts for the state-run lenders and also the aggressive play by private sector ones, who will grow faster than the system. It pointed out that the level of NPAs in the banking system has at the end of the year will be a final credit growth number they notch up because of the denominator effect. On the NPAs front, it said the fresh slippages are expected to come down to 3-3.5 percent for FY20, as compared to 3.8 percent in the year-ago period and a peak of 7.4 percent in end FY18.

Ratings agency has termed the situation in the crisis-hit NBFC sector as ‘evolving’ and said that the assets under management growth will slow down to 12 percent for the sector, as against 15 percent in the year-ago period and over 18 percent per annum in four years prior to that. It noted that wholesale lending focused entities without a strong parentage will find it difficult and typically such NBFCs also have issues around asset liability mismatches. It stated that there is a possibility of shrinkage in the wholesale pools. However, it said the retail-focused NBFCs and also those with strong parentage will not witness much of difficulties.

The CNX Nifty is currently trading at 11327.90, down by 32.00 points or 0.28% after trading in a range of 11257.35 and 11353.40. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 21.09%, Zee Entertainment up by 6.15%, Tata Motors up by 4.94%, BPCL up by 3.95% and Wipro up by 2.27%. On the flip side, Indusind Bank down by 4.89%, Coal India down by 3.63%, Hindalco down by 2.58%, Vedanta down by 2.25% and Axis Bank down by 1.83% were the top losers.

All Asian market were trading in red; Nikkei 225 slipped  450.92 points or  2.07% to 21,327.69 ,Hang Seng decreased  136.91 points or  0.53% to 25,905.78 ,Taiwan Weighted dropped  68.24 points or  0.62% to 10,879.64, Jakarta Composite lost  42.43 points or  0.7% to 6,013.00 and Straits Times was down by 29.48 points or  0.95% to 3,073.97.