Sensex, Nifty manage to keep heads above water

Indian equity benchmarks were managing to keep their heads above water in late morning deals, with both Sensex and Nifty trading marginally higher. Positive cues from other Asian markets were helping key indices to remain in green terrain. Traders got relief, amid reports that the Employees' State Insurance Corporation (ESIC) subscribers who lost their job due to the COVID-19 situation can claim unemployment relief of 50 per cent of wages under the Atal Bimit Kalyan Yojana. The ESIC has issued instructions for submission of claims by the affected workers to claim relief under recently expanded Atal Beemit Kalyan Yojana in which relief is to be paid to those members who lost their job.

On the global front, Asian markets were trading mostly in green, after overall nationwide consumer prices in Japan were up 0.2 percent on year in August, in line with expectations and slowing from 0.3 percent in July. Core CPI, which excludes volatile food costs, sank an annual 0.4 percent - again matching forecasts following the flat reading in the previous month. Individually, prices were down for fuel, education and recreation - while prices were higher for food, housing, furniture, clothing and medical care.

The BSE Sensex is currently trading at 39055.62, up by 75.77 points or 0.19% after trading in a range of 38979.08 and 39200.42. There were 19 stocks advancing against 10 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.85%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Healthcare up by 4.58%, Realty up by 2.20%, Telecom up by 1.01%, Metal up by 0.77% and TECK up by 0.72%, while FMCG down by 0.69% was the only losing index on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.06%, Tech Mahindra up by 2.05%, Mahindra & Mahindra up by 1.84%, Asian Paints up by 1.42% and HCL Tech up by 1.42%. On the flip side, Hindustan Unilever down by 1.53%, Bajaj Finserv down by 1.45%, Maruti Suzuki down by 0.95%, Nestle down by 0.74% and Kotak Mahindra Bank down by 0.72% were the top losers.

Meanwhile, expressing cautiousness, domestic ratings agency -- Icra Ratings has warned that divesting majority stake in state-run lenders by the government will be ‘credit negative’ for such public sector banks (PSBs). It highlighted that many of the entities where the government is mulling selling off majority stake as per reports have a weak credit profile, and added that a move to reduce the public ownership will be hurtful. It noted that these six lenders are primarily supported by sovereign ownership and the ensuing stable deposit base.

The agency said a stake sale can help the government meet its ambitious divestment targets and also save it from future capital infusions. The banking sector and its stability will continue to remain important to government, and the need is to identify strong candidates while identifying the new shareholders. The agency's group head for financial sector ratings Karthik Srinivasan said ‘The financial profile of these PSBs is very weak and the standalone profiles of these banks could be low within investment grades rating given their weak asset quality, profitability, capital and solvency profile’. He added that the liability profile for these banks will become a key monitorable in immediate term as the agency feels that the deposits could be ‘highly sensitive’ to the banks' ownership.

As per the agency's estimates, cumulatively these banks reported losses of Rs 1.08 lakh crore during FY 2016-2020 and the government had to infuse Rs 76,600 crore in capital during this period, and the gross non-performing assets ratio for these banks stood at a high 15.5 per cent as on March 31, 2020. The rating agency said despite the capital infusion, the capital position is weak with Tier 1 capital of 9 per cent and net NPAs being a high 67 per cent of the core capital as on March 31, 2020, translating in weak solvency profile.

The CNX Nifty is currently trading at 11562.15, up by 46.05 points or 0.40% after trading in a range of 11537.55 and 11584.10. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 8.89%, Cipla up by 7.85%, Sun Pharma up by 4.23%, Adani Ports & SEZ up by 2.64% and Hindalco up by 2.30%. On the flip side, Hindustan Unilever down by 1.55%, Bajaj Finserv down by 1.46%, Shree Cement down by 1.02%, Maruti Suzuki down by 0.93% and Nestle down by 0.75% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 75.65 points or 0.31% to 24,416.50, Nikkei 225 surged 36.21 points or 0.16% to 23,355.58, Shanghai Composite gained 18.58 points or 0.57% to 3,289.02, Jakarta Composite soared 9.40 points or 0.19% to 5,047.80, Taiwan Weighted strengthened 4.81 points or 0.04% to 12,877.55 and KOSPI rose 0.37 points or 0.02% to 2,406.54. On the flip side, Straits Times trembled 5.17 points or 0.21% to 2,495.61.