Markets remain under pressure on weak global cues

Indian equity benchmarks remained under pressure in morning session, on the back of sustained selling by investors amid weak global cues. Investors remained cautious with the International Monetary Fund (IMF), in its latest 'World Economic Outlook' report, stated that India’s Gross domestic product (GDP), severely hit by the coronavirus pandemic, is projected to contract by a massive 10.3 percent in 2020. However, it said the country is likely to bounce back with an impressive 8.8 percent growth rate in 2021, thus regaining the position of the fastest growing emerging economy, surpassing China's projected growth rate of 8.2 percent. Some concern also came as domestic rating agency Crisil said securitisation transactions dived 80 per cent in April-September period of the ongoing fiscal year to just over Rs 20,000 crore largely because of the pandemic and the loan moratoriums. Traders overlooked Niti Aayog CEO Amitabh Kant’s statement that the government has been working on multiple fronts to position India as a truly global manufacturing hub with a strong focus on exports. He also said the government is finalising its plans to expand its production-linked incentive (PLI) scheme to more sectors for boosting domestic manufacturing.

On the global front, Asian markets were trading mostly in red as halted COVID-19 vaccine trials and an impasse in U.S. fiscal aid package talks soured risk appetite. Johnson & Johnson on Tuesday said it was pausing a COVID-19 vaccine trial due to a study participant's unexplained illness. Eli Lilly and Co later said it too had paused the clinical trial of its COVID-19 antibody treatment due to a safety concern, leading the U.S. equity market to deepen losses. Back home, on the sectoral front, PSU stocks remained in focus with Finance Ministry’s statement that the Union Cabinet will soon consider new public sector enterprises policy that will define strategic sectors, which will not have more than four PSUs. There will be some important result announcements to keep the markets in action.

The BSE Sensex is currently trading at 40376.39, down by 249.12 points or 0.61% after trading in a range of 40299.05 and 40623.19. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.10%, while Small cap index was down by 0.38%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.67%, Telecom up by 0.07% and Consumer Discretionary up by 0.01%, while Utilities down by 1.66%, Power down by 1.45%, Oil & Gas down by 1.35%, PSU down by 1.33% and IT down by 1.17% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 1.25%, Tata Steel up by 1.20%, Bajaj Finance up by 0.70%, Titan Company up by 0.48% and Bajaj Auto up by 0.44%. On the flip side, NTPC down by 3.39%, ONGC down by 2.75%, Power Grid down by 2.08%, ITC down by 1.44% and HDFC Bank down by 1.44% were the top losers.

Meanwhile, CARE Rating has said Indian banks may restructure around 4-5 percent of the overall bank credit outstanding while the Gross NPA (non-performing assets) ratio is likely to be 11-11.5 percent by end of current financial year (FY21). Restructuring refers to relaxing the repayment terms of borrowers. This is done either by cutting interest rates, providing a loan moratorium or extending the repayment period. Banks need to set aside a higher amount as provisions for restructured loans. This will impact their profitability.

Further, it said the asset quality data post the Covid-19 lockdown is uncertain due to a developing regulatory scenario; multiple stakeholder objectives and moratorium computation with various firms have varying ways of computing moratorium. The GNPA ratio of SCBs stood at 8.2 percent in Q1FY21 against 9.5 percent in Q1FY20. Scheduled Commercial Banks’ asset quality has seen some improvement (GNPA reduction) due to recoveries and higher write-offs.

It said the end of FY21 GNPA numbers would move significantly ahead from the 8.5 per cent level witnessed at the end of FY20, but would be moderated by the one-time restructuring scheme and ongoing write-offs. The additions to the GNPAs would primarily from loans under SMA-1 (special mention category) and SMA-2 categories which were under moratorium and not eligible for restructuring.

The CNX Nifty is currently trading at 11847.55, down by 86.95 points or 0.73% after trading in a range of 11827.00 and 11919.80. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 1.69%, Tata Steel up by 0.79%, Bajaj Auto up by 0.60%, Titan Company up by 0.47% and Bajaj Finance up by 0.44%. On the flip side, Wipro down by 5.92%, NTPC down by 3.45%, Coal India down by 3.25%, ONGC down by 2.60% and Power Grid down by 2.06% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 66.28 points or 0.27% to 24,583.40, Taiwan Weighted dropped 28.55 points or 0.22% to 12,918.58, KOSPI fell 18.19 points or 0.76% to 2,384.96, Shanghai Composite declined 18.02 points or 0.54% to 3,341.73 and Straits Times trembled 14.17 points or 0.55% to 2,553.48.

On the flip side, Nikkei 225 surged 10.07 points or 0.04% to 23,611.85 and Jakarta Composite soared 15.51 points or 0.3% to 5,148.08.