Benchmarks continue to trade lower

Pressurized by feeble global cues, key barometer gauges continued their range bound trade below neutral lines in morning deals, with Sensex and Nifty falling more than 250 and 70 points, respectively. After opening in red territory, markets extended their losses. Telecom, Auto, Metal and Utilities counters witnessed notable losses. Broader indices, BSE Mid cap and Small cap are also trading in red. Sentiment on the street weakened with Care Ratings report that it has projected Gross Domestic Product (GDP) growth of 4.5% for Q3-FY20, which is lower than 6.6% GDP growth recorded in the corresponding period a year ago. For the full year FY20, it has estimated GDP growth to be at 5% with a downward bias. Traders also concerned with payroll data of the Employees’ State Insurance Corporation (ESIC) showing that around 12.67 lakh jobs were created in December 2019 lower against 14.59 lakh in the previous month.

The market participants failed to take support with report that increased demand for retail loans, strong growth in lending by private banks and pick-up in economic activity are likely to improve credit growth to 8-9 per cent in the next financial year. Sector wise, sugar stocks remained in focus as industry body ISMA revised the country's sugar production upward by two per cent to 26.5 million tonnes for the ongoing 2019-20 marketing year, much lower than last year but enough to meet the local demand.

Global cues also remained lackluster with most of the Asian markets were trading lower as the global spread of the coronavirus outbreak continued to rattle traders. Back on domestic turf, India and Australia agreed to consider reviving stalled negotiations on the proposed free trade agreement (FTA).

The BSE Sensex is currently trading at 39984.09, down by 297.11 points or 0.74% after trading in a range of 39888.17 and 40194.89. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.87%, while Small cap index was down by 0.37%.

The top losing sectoral indices on the BSE were Telecom down by 1.96%, Auto down by 1.55%, Metal down by 1.45%, Utilities down by 1.32% and Realty was down by 1.31%, while there is no gainer in sectoral indices on the BSE.

The top gainers on the Sensex were Asian Paints up by 0.82%, Hindustan Unilever up by 0.72%, Ultratech Cement up by 0.68% and SBI up by 0.02%. On the flip side, Sun Pharma Industries down by 2.28%, Bharti Airtel down by 2.14%, Indusind Bank down by 1.98%, Tata Steel down by 1.60% and Maruti Suzuki down by 1.47% were the top losers.

Meanwhile, rating agency Crisil in its latest report has said increased demand for retail loans, strong growth in lending by private banks and pick-up in economic activity may improve credit growth in the next financial year (FY21). The RBI's move to exempt banks from cash reserve ratio (CRR) requirement for incremental credit to certain sectors for up to five years, will also support lending.

According to report, the prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit offtake set to rise 8-9% on-year in FY21, a good 200-300 basis points (bps) over the likely growth of around 6% this fiscal. So far this year, loan growth has slowed to around 7-7.5 per cent. During this fiscal, some growth momentum is expected in the fourth quarter, after subdued three quarters due to traditional fiscal year ending growth.

It mentioned that retail credit should continue to grow at a healthy rate of around 16 per cent, next year, supported by sustained demand for unsecured loans, muted business growth for non-banks as well as steady levels of pool purchases. Structural shifts such as favourable demographics, rising propensity to leverage for personal consumption, increase in availability of financing, and reasonable risk-adjusted returns for lenders, will continue to support retail lending.

The CNX Nifty is currently trading at 11704.10, down by 93.80 points or 0.80% after trading in a range of 11679.55 and 11743.45. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 0.71%, Hindustan Unilever up by 0.66%, Ultratech Cement up by 0.61%, Asian Paints up by 0.56% and Dr. Reddys Lab up by 0.23%. On the flip side, GAIL India down by 3.33%, Tata Motors down by 3.10%, Hindalco down by 2.84%, Sun Pharma Industries down by 2.47% and Eicher Motors down by 2.44% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 218.63 points or 0.97% to 22,386.78, Hang Seng decreased 163.18 points or 0.61% to 26,730.05, Taiwan Weighted dropped 84.06 points or 0.73% to 11,456.17, Jakarta Composite lost 62.24 points or 1.08% to 5,724.90, Straits Times trembled 29.70 points or 0.94% to 3,128.54 and KOSPI fell 25.87 points or 1.23% to 2,077.74. On the flip side, Shanghai Composite was up by 9.16 points or 0.3% to 3,022.21.