Barometer gauges maintain gains

Stock markets were trading in green terrain in the afternoon session due to buying in Bankex, IT and TECK sectors. Buying in frontline stocks such as Indusind Bank, Tech Mahindra and HDFC were aiding sentiment, while selling in NTPC, ONGC and Nestle kept the gains in the markets in check. Traders were getting comfort with report of UN stating that the India's economy could prove to be the ‘most resilient’ in the subregion of South and South-West Asia over the long term, the positive but lower economic growth post COVID-19 pandemic and the country's large market will continue to attract investments. The growth, however, was mainly driven by India, which accounted for 77 percent of the total inflows and received $51 billion in 2019, up 20 percent from the previous year. Adding optimism, Union minister Nitin Gadkari said that the Micro, Small and Medium Enterprises Ministry is contemplating fresh plans and laws to find a solution of the receivables issue as outstanding dues are creating working capital problem for the sector.

On the global front, Asian markets were trading mixed as hopes that a long-awaited U.S. pandemic relief package would be expanded and a Brexit trade deal supported investor risk appetites. Back on street, in scrip specific developments, Fineotex Chemical surged after Nippon India MF buys 6% stake and Ahluwalia Contracts zooms on bagging new order aggregating to Rs 309.44 crore.

The BSE Sensex is currently trading at 47474.55, up by 120.80 points or 0.26% after trading in a range of 47361.90 and 47714.55. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.05%, while Small cap index was up by 0.04%.

The top gaining sectoral indices on the BSE were Bankex up by 0.82%, IT up by 0.49%, TECK up by 0.34%, Consumer Discretionary was up by 0.11%, while Metal down by 1.24%, Power down by 0.88%, Energy down by 0.65%, Basic Materials down by 0.52% and Capital Goods was down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 3.16%, Tech Mahindra up by 1.63%, HDFC up by 1.53%, HCL Tech up by 1.29% and Axis Bank was up by 1.24%. On the flip side, NTPC down by 1.44%, ONGC down by 1.07%, Nestle down by 1.03%, Larsen & Toubro down by 0.87% and Hindustan Unilever was down by 0.86% were the top losers.

Meanwhile; rating agency ICRA in its latest report has said that banks' gross non-performing assets (NPAs) and net NPAs are expected to rise to 10.1-10.6 percent and 3.1-3.2 percent, respectively by March 2021 from 7.9 percent and 2.2 percent, respectively as of September 2020. However, it said net NPAs and credit provisions will subsequently trend lower in 2021-22 as banks have reported strong collections on their loan portfolio with most of them reporting collections of over 90 percent.

The report further said the loan restructuring requests are much lower than previously estimated, supported by sharper than expected improvement in economic activities as well liquidity support through the government's emergency credit line guarantee scheme. It has revised its loan restructuring estimate downwards to 2.5-4.5 percent of advances as against 5-8 percent estimated earlier. It said with expectations of sustained collections and lower restructuring, the asset quality is expected to improve further with net NPA declining to 2.4-2.6 per cent by March 2022. It added that this will lead to lower credit provisions and better profitability in FY22.

The agency further said the credit provisions are estimated to decline to 1.8-2.4 percent of advances during 2021-22 from an estimate of 2.2-3.1 percent in the ongoing fiscal and 3.1 percent in 2019-20, which will lead to improvement in return on equity (RoE) for banks. It pointed out that low interest rates, improved business volumes, better job prospects and income levels could also stimulate credit demand next year. It added that this coupled with better competitive positioning of banks vis-a -vis other lenders driven by steep decline in cost of deposits could improve bank credit growth to 6-7 percent in next fiscal from an estimated 3.9-5.2 percent in 2020-21 and 6.1 percent in 2019-20.

The CNX Nifty is currently trading at 13896.90, up by 23.70 points or 0.17% after trading in a range of 13859.90 and 13967.60. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.06%, Tech Mahindra up by 1.69%, Eicher Motors up by 1.58%, HDFC up by 1.38% and HCL Tech up by 1.32%. On the flip side, Hindalco down by 1.67%, NTPC down by 1.64%, Tata Motors down by 1.45%, JSW Steel down by 1.09% and Nestle was down by 1.03% were the top losers.

Asian markets were trading mixed; KOSPI rose 11.91 points or 0.42% to 2,820.51, Nikkei 225 surged 714.12 points or 2.66% to 27,568.15, Straits Times advanced 7.10 points or 0.25% to 2,847.24 and Hang Seng was up by 239.11 points or 0.91% to 26,553.74.

On the other side, Taiwan Weighted dropped 11.02 points or 0.08% to 14,472.05, Jakarta Composite lost 13.40 points or 0.22% to 6,080.15 and Shanghai Composite was down by 13.05 points or 0.38% to 3,384.24.