Benchmarks continue dull trade

Indian bourses continue to trade lower with cut of over half a percent each in afternoon session as selling appeared in capital goods, healthcare and power stocks. Besides, broader indices were also trading in red, dragging their larger peers lower during the trade. Sentiments were impacted as senior finance ministry official said that India's score on protection of minority investors compiled by the World Bank as part of the Ease of Doing Business rankings has slipped recently and there is a need for stakeholders to improve on this aspect. Traders shrugged off report in which Nilesh Shah, a part-time member of the economic advisory council to the Prime Minister, said the GDP contraction will improve to higher single digits in the September quarter, and the economy will be back to positive growth by the March quarter. On the global front, Asian markets were trading mixed amid the profit booking after the rally on optimistic coronavirus vaccine news and US President-elect Joe Biden's transition to the White House, weighed on certain markets. Back home, the BSE Sensex is currently trading at 44270.55, down by 252.47 points or 0.57% after trading in a range of 44191.04 and 44825.37. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.98%, while Small cap index was down by 0.75%.

The top gaining sectoral indices on the BSE were PSU up by 0.72%, Oil & Gas up by 0.53%, Energy up by 0.49%, Metal up by 0.21% and Utilities was up by 0.19%, while Capital Goods down by 1.30%, Healthcare down by 1.23%, Power down by 1.07%, Industrials down by 0.99%, Consumer Durables was down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 4.80%, Power Grid up by 0.98%, ICICI Bank up by 0.71%, Bajaj Finserv up by 0.47% and Bajaj Auto was up by 0.45%. On the flip side, Kotak Mahindra Bank down by 2.26%, Asian Paints down by 1.97%, Bajaj Finance down by 1.66%, Larsen & Toubro down by 1.65% and HCL Tech was down by 1.56% were the top losers.

Meanwhile, S&P Global Ratings in its latest report has said that non-performing loans (NPLs) in the Indian banking sector are likely to shoot up to 10-11 percent of gross loans in the next 12-18 months, from 8 percent on June 30, 2020. It said forbearance is masking problem assets for Indian banks arising from COVID-19 and the financial institutions will likely have trouble maintaining momentum after the proportion of NPL to total loans declined consistently so far this year.

According to the report, the banking system's credit costs will remain elevated at 2.2-2.9 percent this year and next. It also said resumption of economic activity, government credit guarantees for small to mid-size enterprises, and buoyant liquidity is helping to limit stress. S&P’s NPL estimates are lower than previous but it is still of the view that the sector's financial strength will not materially recover until fiscal 2023 (ended March 31, 2023).

For NBFCs S&P rate, performance has been improving. Like with banks, collections have surged for NBFCs. It said top-tier NBFCs are benefiting from surplus system liquidity, as indicated by a sharp reduction in risk premiums. However, it noted that weaker finance companies have faced higher risk premiums. It expects such polarization to persist in 2021. 

The CNX Nifty is currently trading at 12981.00, down by 74.15 points or 0.57% after trading in a range of 12962.10 and 13145.85. There were 18 stocks advancing against 31 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were ONGC up by 4.80%, GAIL India up by 2.64%, HDFC Life Insurance up by 2.06%, Coal India up by 1.54% and SBI Life Insurance was up by 1.51%. On the flip side, Kotak Mahindra Bank down by 2.39%, Eicher Motors down by 2.28%, Asian Paints down by 2.07%, Larsen & Toubro down by 1.66% and Bajaj Finance was down by 1.65% were the top losers.

Asian markets were trading mixed; Straits Times trembled 22.79 points or 0.79% to 2,868.84, KOSPI fell 16.21 points or 0.62% to 2,601.55, Shanghai Composite declined 27.47 points or 0.81% to 3,375.35 and Taiwan Weighted was down by 68.30 points or 0.49% to 13,738.83.

On the other hand, Hang Seng increased 65.82 points or 0.25% to 26,654.02, Nikkei 225 surged 131.27 points or 0.5% to 26,296.86 and Jakarta Composite was up by 8.47 points or 0.15% to 5,709.50.