Benchmarks continue lackluster trade slightly in green

Indian equity benchmarks continued their lackluster trade slightly in green in morning session, on buying in select blue-chip stocks despite weak global cues. Investors got some support with a Ficci-Dhruva Advisors industry survey report stated that the opening up of India's economy post lockdown and implementation of the economic package unveiled by the government have started showing results on the ground with initial signs of improvement in the performance of businesses now visible. Market participants also took a note of private survey stating that a significant number of Indian professionals are focusing on sharpening their soft skills like communication and virtual presentation to adapt themselves to the changing talent landscape in a post-COVID-19 world. However, gains remain capped with India Ratings and Research’s report that the impact of Covid-19 and the associated policy response may result in an additional Rs 1.67 lakh crore of debt from the top 500 debt-heavy private sector borrowers turning delinquent between FY21 and FY22. On the sectoral front, sugar stocks were in focus with the All India Sugar Trade Association’s statement that Indian mills have contracted to export 5.2 million tonnes of sugar since the current season began on October 1. 

On the global front, Asian markets were trading mostly in red, as worries over a spike in coronavirus cases in some US states and other parts of the world weighed on investors sentiment. Back home, the BSE Sensex is currently trading at 36555.52, up by 68.24 points or 0.19% after trading in a range of 36483.08 and 36660.35. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.36%, while Small cap index was up by 0.75%.

The top gaining sectoral indices on the BSE were IT up by 1.69%, TECK up by 1.37%, Healthcare up by 0.80%, Capital Goods up by 0.67% and Industrials up by 0.50%, while Utilities down by 1.84%, Oil & Gas down by 1.36%, PSU down by 1.15%, Power down by 0.87% and Metal down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.70%, Bajaj Finance up by 2.44%, HCL Technologies up by 1.87%, Asian Paints up by 1.85% and Bajaj Finserv up by 1.41%. On the flip side, Power Grid down by 2.78%, Mahindra & Mahindra down by 2.24%, ITC down by 1.88%, ONGC down by 1.79% and Ultratech Cement down by 1.53% were the top losers.

Meanwhile, India Ratings and Research in its latest report has said that the impact of Covid-19 and the associated policy response may result in an additional Rs 1.67 lakh crore of debt from the top 500 debt-heavy private sector borrowers turning delinquent between FY21 and FY22. It added that this could take the proportion of stressed debt to 18.21% of the outstanding quantum from 11.57% at present. This estimated stress will be over and above the Rs 2.54 lakh crore anticipated prior to the onset of the pandemic, taking the cumulative quantum to Rs 4.21 lakh crore. This constitutes 6.63% of the total debt, and it expects the corresponding credit cost to be 3.57% of the total debt.

Ind-Ra has analysed in detail the degree of vulnerability of the top 500 debt-heavy private sector issuers, after assessing the mix between productive and non-productive assets (i.e. asset quality) held by each issuer along with their refinancing risks. The report buckets issuers in five categories of vulnerability - low, moderate, high, extreme and stressed. Based on these buckets, the agency has arrived at the estimates of debt at risk and expected credit costs. The agency believes that in a scenario wherein funding markets continue to exhibit heightened risk aversion, corporate stress could increase further by Rs 1.68 lakh crore, resulting in Rs 5.89 lakh crore of the corporate debt, or 9.27% of the total debt, becoming stressed in FY21-FY22. The resultant credit cost could be higher at 4.82% of the outstanding book.

Consequently, 20.84% of the outstanding debt could be under stress in the agency’s stress case scenario. The report said although further revisions in the FY21 GDP growth expectations by itself may not lead to a change in Ind-Ra’s stress estimates, the risk of a significantly prolonged recovery in the economic activity through FY22 and a larger-than-anticipated dent on demand could even result in stresses surpassing the agency’s stress-case estimates. The agency expects the credit growth to fall 15% in FY21 as a result of tepid corporate capex, coupled with muted revenue. However, refinancing pressures will persist and securing timely funding could continue to prove challenging.

The CNX Nifty is currently trading at 10775.00, up by 11.35 points or 0.11% after trading in a range of 10752.75 and 10803.60. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 2.69%, Infosys up by 2.68%, HCL Technologies up by 2.00%, Wipro up by 1.82% and Asian Paints up by 1.70%. On the flip side, Power Grid down by 2.84%, Mahindra & Mahindra down by 2.20%, BPCL down by 2.10%, ITC down by 1.95% and Adani Ports &SEZ down by 1.92% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 137.29 points or 0.6% to 22,577.15, Taiwan Weighted dropped 28.36 points or 0.23% to 12,088.34, KOSPI fell 15.10 points or 0.69% to 2,172.83 and Straits Times trembled 2.72 points or 0.1% to 2,686.89. On the flip side, Jakarta Composite soared 2.89 points or 0.06% to 4,991.76, Hang Seng increased 32.39 points or 0.12% to 26,371.55 and Shanghai Composite gained 43.91 points or 1.32% to 3,376.79.