Sensex, Nifty continue to trade in positive terrain

Indian stock markets continued to trade in positive terrain in the early noon session amid improved investors’ sentiment by tracking gains in global markets on efforts to contain the deadly corona virus. Buying in frontline stocks such as Larsen & Toubro, HCL Tech and Mahindra & Mahindra were aiding sentiment, while selling in Hero MotoCorp, Maruti Suzuki and Infosys kept the gains in the markets in check. Sentiments remained upbeat as India and the US are set to seal a trade deal during President Donald Trump's planned visit to India in the last week of this month. Investors also remained optimistic with Moody's Investors Service’s statement that economic growth projections made by Finance Minister Nirmala Sitharaman in her Budget for 2020-21 appear ambitious given the structural and cyclical challenges facing the Indian economy. Meanwhile, market participants were focusing on upcoming RBI policy after a lackluster Union Budget. The RBI is scheduled to announce the outcome of its sixth bi-monthly monetary policy statement for 2019-20 on February 6, 2020.

On the global front, all the Asian markets were trading in green, with persisting risk appetite in the markets after China government injected liquidity to its economy to mitigate the impact of spreading coronavirus. Back on street, in scrip specific development, shares of Zee Entertainment Enterprises tumbled with private report that the corporate affairs ministry has ordered an inspection of the financials of the company. The stock of the company has fallen 11 per cent in the past two trading days.

The BSE Sensex is currently trading at 40955.18, up by 165.80 points or 0.41% after trading in a range of 40703.32 and 41023.64. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.47%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Realty up by 2.70%, Capital Goods up by 1.98%, Industrials up by 1.73%, PSU up by 1.05% and Metal was up by 0.96%, while TECK down by 0.10%, IT was down by 0.09% were few the losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.26%, HCL Tech up by 1.70%, Mahindra & Mahindra up by 1.53%, Tata Steel up by 1.49% and HDFC was up by 1.02%. On the flip side, Hero MotoCorp down by 2.59%, Maruti Suzuki down by 1.47%, Infosys down by 1.45%, Nestle down by 0.74% and Asian Paints was down by 0.49% were the top losers.

Meanwhile, domestic ratings agency Crisil in its latest report has warned of potentially high stress in non-banking financial companies’ (NBFCs) wholesale book well above the reported bad loan numbers by March, indicating rising risks to their retail books. It noted that almost all the NBFCs have been under severe liquidity stress since the collapse of one of the biggest, IL&FS in September 2018. It pointed out that the crisis has been so bad that the third largest home finance player DHFL has been sent to bankruptcy courts, also because of the large fraud alleged to have committed by its management.

According to the report, the spike in bad loans is being driven by the realty books, which has almost trebled as of the September 2019 quarter to 10 percent. But it is not the traditional segments-retail books -- where the material concerns lie. It is the wholesale loan book where more significant slippages are expected to manifest as portfolios come out of moratorium. The crisis in the wholesale books will be led more by real estate and structured credit, which comprise only 16 percent of the total assets of NBFCs at Rs 3.8 lakh crore as of March 2019.

The report further said that these segments are experiencing heightened headwinds as financial flexibility of many underlying operating companies in this space and realtors have been impacted due to the overall slowdown. Moreover, it said a major chunk of the loan book is under moratorium and that means NPAs could jump when loans come out of it. It stated that the reported NPAs in the realty segment is estimated to have increased to 3.3 percent as of September 2019, from 1.8 percent as of March 2019. About 40 percent of the book, including lease rental discounting, was still under moratorium as of September 2019.

The CNX Nifty is currently trading at 12034.05, up by 54.40 points or 0.45% after trading in a range of 11953.35 and 12049.60. There were 35 stocks advancing against 14 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Yes Bank up by 10.59%, Tata Motors up by 6.40%, BPCL up by 2.57%, Larsen & Toubro up by 2.55% and UPL was up by 2.29%. On the flip side, Zee Entertainment down by 6.26%, Hero MotoCorp down by 2.51%, Dr. Reddys Lab down by 1.76%, Maruti Suzuki down by 1.53% and Adani Ports &Special was down by 1.50% were the top losers.

All Asian markets were trading higher, KOSPI rose 0.13 points or 0.01% to 2,158.03, Shanghai Composite gained 23.06 points or 0.83% to 2,806.35, Jakarta Composite soared 25.82 points or 0.44% to 5,948.16, Straits Times advanced 28.91 points or 0.92% to 3,185.48, Nikkei 225 surged 262.37 points or 1.14% to 23,346.96, Taiwan Weighted strengthened 17.70 points or 0.15% to 11,573.62 and Hang Seng was up by 11.74 points or 0.04% to 26,687.72.