Bourses continue to trade slightly in red

Key Indian benchmarks continues their trade slightly in red in afternoon session, as market participants were seen squaring off positions ahead of December series F&O expiry due on Thursday. Traders were seen in selling position for realty, telecom and banking stocks, while buying was witnessed in auto, basic materials and consumer discretionary stocks. Market participants remained on sideline despite 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 higher amid hopes of a strong economic recovery next year and little sign of policymakers winding back massive stimulus efforts fuelled global risk appetite. Back home, the BSE Sensex is currently trading at 47583.38, down by 29.70 points or 0.06% after trading in a range of 47462.03 and 47807.85. There were 15 stocks advancing against 14 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.03%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Auto up by 0.72%, Basic Materials up by 0.53%, Consumer Discretionary up by 0.48%, Metal up by 0.39% and Energy was up by 0.37%, while Realty down by 0.60%, Telecom down by 0.59%, Bankex down by 0.45%, Healthcare down by 0.35%, PSU was down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 1.67%, Maruti Suzuki up by 1.49%, Tech Mahindra up by 1.29%, Ultratech Cement up by 1.26% and Asian Paints was up by 0.89%. On the flip side, Indusind Bank down by 1.19%, Axis Bank down by 1.19%, HDFC down by 1.19%, Sun Pharma down by 1.17% and SBI was down by 0.92% were the top losers.

Meanwhile, Reserve Bank of India (RBI), in its report on 'Trend and Progress of Banking in India 2019-20' has cautioned about the imminent stress in the banking sector after unwinding of the measures taken to combat the impact of COVID-19, and it said banks will need to adapt and adjust themselves to meet the upcoming challenges. The report said that the central bank initiated timely measures to relieve stress on bank balance sheets, corporates and households following the outbreak of the coronavirus pandemic.

Observing that banking soundness indicators are obscured under the asset quality standstill, it said banks are raising capital in preparation of the imminent stress. The report noted with the moratorium coming to an end, the deadline for restructuring proposals is fast approaching and with the possible lifting of the asset quality standstill, banks' financials are likely to be impacted in terms of asset quality and future income. Going forward, banks will have to adapt and adjust to the rapidly evolving economic landscape due to these challenges and also the entry of niche players and emerging financial technologies.

The RBI report said improvement in the health of the banking sector henceforth hinges around the pace and shape of economic recovery, and added that the challenge is to rewind various relaxations in a timely manner, reining in loan impairment and adequate capital infusion for a healthy banking sector. The report further said that in the wake of a severe and unprecedented macroeconomic shock caused by the COVID-19 pandemic, the RBI's actions veered towards providing a stimulus to the economy while ensuring financial stability.

The report noted that the moderation in gross non-performing assets (GNPA) ratio, which started after the peak in March 2018, continued through 2019-20 and 2020-21 so far to reach 7.5 per cent by end-September 2020. The improvement was driven by lower slippages which declined to 0.74 per cent in September 2020 and resolution of a few large accounts through the Insolvency and Bankruptcy Code (IBC). Fresh slippages remained highest among the state-owned banks. GNPA ratio of banks declined from 9.1 per cent at end-March 2019 to 8.2 per cent at end-March 2020 and further to 7.5 per cent at end-September 2020. The modest GNPA ratio of 7.5 per cent at end-September 2020 veils the strong undercurrent of slippage.

The CNX Nifty is currently trading at 13921.30, down by 11.30 points or 0.08% after trading in a range of 13886.75 and 13982.90. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were UPL up by 3.22%, Eicher Motors up by 2.30%, Maruti Suzuki up by 1.50%, Bajaj Finance up by 1.49% and Tech Mahindra was up by 1.25%. On the flip side, Axis Bank down by 1.36%, Indusind Bank down by 1.32%, Sun Pharma down by 1.18%, HDFC down by 1.14% and SBI was down by 0.97% were the top losers.

Asian markets were trading mostly higher; KOSPI rose 52.96 points or 1.88% to 2,873.47, Straits Times advanced 19.50 points or 0.68% to 2,867.64, Hang Seng increased 409.46 points or 1.54% to 26,977.95, Taiwan Weighted strengthened 215.65 points or 1.49% to 14,687.70 and Shanghai Composite was up by 28.14 points or 0.83% to 3,407.18

On the flip side, Nikkei 225 slipped 123.98 points or 0.45% to 27,444.17 and Jakarta Composite was down by 36.44 points or 0.6% to 5,999.73.