Benchmarks continue lackluster trade slightly in red

Indian equity benchmarks continued their lackluster trade slightly in red in morning session, despite mostly positive trend in Asian markets. Sentiments remained down-beat with the Reserve Bank of India (RBI) in its Report stated that the profitability of non-banking finance companies (NBFCs) may be ‘dampened’ going ahead due to the loan impairment and lower credit demand. But, it said many NBFCs have made additional provisioning as per expected credit loss (ECL) norm; and bolstered their capital position by ploughing back dividends. However, losses remain capped as some support came with Former RBI Governor Duvvuri Subbarao Rao’s statement that though Covid -19 and the subsequent lockdown left a trail of economic devastation on most countries, India can potentially build upon three positive aspects- push in the rural economy, stronger federalism and a huge consumption base.

On the global front, Asian markets were trading mostly in green, as the start of COVID-19 vaccination drives in several countries and the passage of U.S. fiscal stimulus raised hopes for a global economic recovery next year. Back home, on the sectoral front, auto component industry stocks remained in focus as ratings agency ICRA said it has revised its outlook on the auto component industry from negative to stable, on the back of demand revival across original equipment manufacturers (OEMs), replacements and exports.

The BSE Sensex is currently trading at 47536.70, down by 76.38 points or 0.16% after trading in a range of 47462.03 and 47807.85. There were 19 stocks advancing against 11 stocks declining on the index.

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

The top gaining sectoral indices on the BSE were Auto up by 0.43%, Consumer Disc up by 0.26%, IT up by 0.18%, TECK up by 0.11% and Power up by 0.04%, while Telecom down by 0.45%, Capital Goods down by 0.36%, Energy down by 0.34%, Bankex down by 0.32% and Healthcare down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 1.18%, Bajaj Finance up by 1.05%, Ultratech Cement up by 0.90%, ONGC up by 0.75% and HCL Technologies up by 0.74%. On the flip side, Indusind Bank down by 1.05%, SBI down by 1.01%, Larsen & Toubro down by 0.79%, Bharti Airtel down by 0.68% and Axis Bank down by 0.68% were the top losers.

Meanwhile, Ratings agency ICRA has said it has revised its outlook on the auto component industry from negative to stable, on the back of demand revival across original equipment manufacturers (OEMs), replacements and exports. ICRA expects the domestic auto component industry's revenue to grow 16-18 per cent in the financial year starting April 2021, supported by factors such as increasing content per vehicle, low base effect, and higher realisations.

It said that long-term demand drivers include increased focus on localised supply chains by Indian OEMs. Diversification of supply chain risk by global OEMs is also expected to lead to increased sourcing from India in the coming years.

It added OEMs, which account for over 56 per cent of the auto component demand, have recorded a sharp increase in demand since September across all segments, barring the medium and heavy commercial vehicle (M&HCV) industry. Volumes of the automotive industry will take 2-3 years to revert to the pre-COVID-19 highs. Schemes such as production-linked incentives could encourage OEMs and large auto component vendors to advance their investment plans, targeted at exports.

The CNX Nifty is currently trading at 13905.55, down by 27.05 points or 0.19% after trading in a range of 13886.75 and 13982.90. There were 23 stocks advancing against 26 stocks declining, while  1 stock remain  unchanged on the index.

The top gainers on Nifty were UPL up by 3.25%, Eicher Motors up by 2.17%, Tech Mahindra up by 1.10%, Bajaj Finance up by 0.72% and Ultratech Cement up by 0.67%. On the flip side, Indusind Bank down by 1.15%, SBI down by 1.13%, Cipla down by 0.94%, Bharti Airtel down by 0.94% and Larsen & Toubro down by 0.88% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 348.83 points or 1.31% to 26,917.32, Taiwan Weighted strengthened 117.68 points or 0.81% to 14,589.73, KOSPI rose 44.02 points or 1.56% to 2,864.53, Shanghai Composite gained 30.44 points or 0.9% to 3,409.48 and Straits Times advanced 15.37 points or 0.54% to 2,863.51.

On the flip side, Jakarta Composite lost 46.61 points or 0.77% to 5,989.56 and Nikkei 225 slipped 96.59 points or 0.35% to 27,471.56.