Firm trade continues over Dalal Street

Firm trade continued over the Dalal Street in late morning deals, with both the Sensex and the Nifty remaining higher with notable gains. Sentiments over the street remained positive despite negative cues from other Asian markets. Market participants were optimistic, as Finance Minister Nirmala Sitharaman reviewed the situation about outstanding payments to micro, small and medium enterprises, especially by CPSEs and central government agencies. Top officials including Secretary in the Department of Financial Services Debasish Panda, MSME Secretary A K Sharma, among others, were present in the meeting.

On the global front, Asian markets were trading mostly in red, after Malaysia's industrial production dropped in October due to the weakness in the mining sector. The data from the Department of Statistics showed that industrial production fell 0.5 percent year-on-year in October, after a 1.0 percent increase in September. The drop in production was mainly due to decline in production of mining industry. Manufacturing output rose 2.4 percent yearly in October, but slower than the 4.3 percent increase in the previous month. Among other sectors, the mining and quarrying output decreased the most by 10.6 percent, while electricity output rose 1.0 percent.

The BSE Sensex is currently trading at 46146.82, up by 186.94 points or 0.41% after trading in a range of 46024.76 and 46309.63. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.21%, while Small cap index was up by 0.68%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.52%, PSU up by 2.13%, Metal up by 1.59%, Utilities up by 1.57% and Energy up by 1.38%, while Telecom down by 0.50% was the only losing index on BSE.

The top gainers on the Sensex were ONGC up by 7.64%, NTPC up by 2.67%, Tata Steel up by 2.04%, ITC up by 1.48% and Bajaj Finance up by 1.26%. On the flip side, Asian Paints down by 0.85%, HDFC Bank down by 0.56%, Nestle down by 0.47%, Bharti Airtel down by 0.47% and Axis Bank down by 0.45% were the top losers.

Meanwhile, ratings agency ICRA has said that the Reserve Bank of India's (RBI’s) draft circular on dividend distribution by non-banking financial companies (NBFCs) is unlikely to impact most of the industry players. The RBI has proposed that NBFCs should have at least 15 per cent Capital to Risk Weighted Assets Ratio (CRAR) for the last 3 years, including the accounting year for which it proposes to declare a dividend. The RBI sought comments on the draft circular from NBFCs, industry participants and other interested parties by December 24.

According to ICRA, over the last three years, dividend pay-out ratios have been about 10-20 per cent for most entities, with few in the range of 20-30 per cent. It expects most NBFCs to comfortably meet the CAR (Capital Adequacy Ratio) criteria but a few entities having high NPAs would find it difficult to meet the net NPA filter and thus dividend payout for them could be impacted, if this circular is implemented. It noted that while HFCs (housing finance companies) have not been specifically mentioned in this draft, meeting the CAR criteria would be relatively easier given the lower risk weights on the large part of their portfolio.

Furthermore, the Net NPA criteria specified for NBFCs may not be a constraint for HFCs to pay out dividend considering the low NPAs for the segment currently. The ratings agency said ‘NBFCs complying with the minimum regulatory capital adequacy ratio or leverage ratio for the last three years and having net NPA below 6 per cent in each of the last three years can declare dividends with a pay-out ratio of up to 50 per cent or as per the matrix proposed by the RBI’.

The CNX Nifty is currently trading at 13534.35, up by 56.05 points or 0.42% after trading in a range of 13505.15 and 13579.35. There were 34 stocks advancing against 15 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were ONGC up by 7.42%, GAIL India up by 6.21%, NTPC up by 3.29%, Coal India up by 2.89% and Indian Oil Corporation up by 2.65%. On the flip side, Divis Lab down by 1.42%, Eicher Motors down by 1.12%, Asian Paints down by 0.77%, Adani Ports & SEZ down by 0.74% and Britannia down by 0.58% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 94.46 points or 0.35% to 26,661.78, Taiwan Weighted dropped 82.34 points or 0.58% to 14,167.15, Shanghai Composite declined 34.59 points or 1.03% to 3,338.69 and Jakarta Composite lost 3.14 points or 0.05% to 5,930.56. On the flip side, Straits Times advanced 11.00 points or 0.39% to 2,835.96, KOSPI rose 24.78 points or 0.9% to 2,771.24 and Hang Seng increased 74.64 points or 0.28% to 26,485.23.