Benchmarks continue lackluster trade slightly in red

Indian equity benchmarks continued their lackluster trade in afternoon session, on the back of high Wholesale Price Index (WPI) data. India's wholesale inflation rose 0.58 percent in November, as against 0.16 percent in October due to increase in prices of food articles. Sentiments also remained weak with Moody's Investors Service stating that India's weak household consumption will curb economic growth and weigh on the credit quality of Indian issuers in a range of sectors. It has lowered its GDP growth projection for India for the fiscal year ending March 2020 to 4.9 per cent from 5.8 per cent. However, losses remain capped as some support came with Chief Economic Advisor Krishnamurthy Subramanian’s statement that the government is focusing on increasing consumption to boost economic growth. On the sectoral front, majority of telecom stocks were trading in red as ICRA maintained a negative outlook for the Indian telecom industry which is grappling with adjusted gross revenue (AGR) dues, notwithstanding the green-shoots of recovery. According to ICRA, the telecom industry woes continue as the industry is required to pay a substantial amount to the Department of Telecom in the form of retrospective AGR related dues.

On the global front, Asian markets were trading mostly in red despite the U.S. and China announcing that they have reached a phase one trade deal. Investors also awaited further details of the partial trade pact and shrugged off data that showed China's industrial production as well as retail sales rose more than expected in November. Back home, the BSE Sensex is currently trading at 40963.87, down by 45.84 points or 0.11% after trading in a range of 40951.15 and 41185.03. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.30%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were IT up by 1.29%, TECK up by 1.03%, Utilities up by 0.45%, Healthcare up by 0.29% and Power was up by 0.24%, while Metal down by 0.96%, FMCG down by 0.96%, Auto down by 0.73%, Energy down by 0.66% and Basic Materials was down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.69%, TCS up by 2.16%, HCL Tech up by 1.50%, Kotak Mahindra Bank up by 0.90% and HDFC was up by 0.75%. On the flip side, Hindustan Unilever down by 1.61%, Tata Motors down by 1.47%, ITC down by 1.41%, Tata Steel down by 1.07% and Vedanta was down by 1.07% were the top losers.

Meanwhile, Moody's Investors Service in its latest report has warned that the ongoing liquidity crisis facing non-banking financial companies (NBFCs), following the bankruptcy of IL&FS in September 2018, is likely to result in rising bad loans risks for banks both from these shadow banks as well as from companies depending on such lenders for funding. It also said that the spillover of stress among NBFCs to borrowers, and ultimately to banks, will hinder improvements in banks' asset quality, profitability and capital, which is credit negative.

According to the report, tight funding for NBFCs is raising asset risks for banks in an economy that has grown increasingly dependent on non- banking lenders for the provision of credit. It also noted that owing to liquidity crisis, NBFCs are forced to reduce lending, leading to funding constraints for borrowers relying on non-bank lenders. It added that this increases the risk of loan losses for NBFCs, and as a result, they will continue to have difficulty in obtaining funding.

The report further stated that as financial health of NBFCs deteriorates due to loan losses, they will have greater difficulty obtaining funding, which will exacerbate their funding constraints and it can result in more bad loans from NBFCs for banks. Also, it warned that as NBFC customers' financials weaken, banks will reduce lending to them, which in turn will further worsen their funding stress and can lead to more bad loans from these companies for banks.

The CNX Nifty is currently trading at 12068.05, down by 18.65 points or 0.15% after trading in a range of 12061.85 and 12134.65. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.74%, TCS up by 2.11%, HCL Tech up by 1.59%, GAIL India up by 1.46% and Kotak Mahindra Bank was up by 0.93%. On the flip side, Grasim Industries down by 1.98%, Hindustan Unilever down by 1.67%, Adani Ports & SEZ down by 1.49%, JSW Steel down by 1.46% and ITC was down by 1.43% were the top losers. 

Asian markets were trading mostly in red; Hang Seng decreased 99.88 points or 0.36% to 27,587.88, Nikkei 225 slipped 70.75 points or 0.29% to 23,952.35, KOSPI fell 2.10 points or 0.1% to 2,168.15 and Straits Times trembled 0.46 points or 0.01% to 3,213.59.

On the flip side, Shanghai Composite gained 10.51 points or 0.35% to 2,978.19, Taiwan Weighted strengthened 12.04 points or 0.1% to 11,939.77 and Jakarta Composite soared 28.46 points or 0.46% to 6,225.78.