Markets trade lower in early deals

Indian equity markets have made negative start and are trading in red in early deals on Tuesday amid weakness in global markets. Traders were concerned as the Reserve Bank of India (RBI) warned that the Indian banking system’s bad loans may rise to a two-decade high on the back of COVID-19 induced stress. In its latest Financial Stability Report (FSR), the RBI said Public Sector Banks (PSBs) may see gross NPAs rise from 9.7 percent in September 2020 to 16.2 percent by September 2021. Meanwhile, Investors were eyeing the Index of Industrial Production (IIP) and Consumer Price Index (CPI) data to be out later in the day. However, downside remained capped as ICRA projected that India's GDP will record a double-digit expansion of 10.1 percent in the upcoming fiscal year. It also expects the monetary policy to be changed to neutral from accommodative in the August 2021 Policy review or later. Auto stokes were in focus as automobile dealers' body FADA said passenger vehicle (PV) retail sales in December witnessed a year-on-year increase of 23.99 per cent to 2,71,249 units on the back of the pent up demand continuing from the festive season.

On the global front, Asian markets were trading mostly in red on Tuesday tracking Wall Street declines as political turmoil in Washington and rising coronavirus cases worldwide weighed on sentiment ahead of the start of the quarterly earnings season. The US markets settled lower on Monday as investors took some profits after last weeks' records while they waited for earnings season to begin and eyed events in Washington with trepidation.

Back home, the BSE Sensex is currently trading at 49161.40, down by 107.92 points or 0.22% after trading in a range of 49082.04 and 49267.06. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index up by 0.27%.

The gaining sectoral indices on the BSE were Metal up by 1.73%, Oil & Gas up by 1.69%, Energy up by 1.07%, Telecom up by 1.01% and Auto up by 0.99%, while Consumer Durables down by 1.03%, Bankex down by 0.59%, FMCG down by 0.41%, IT down by 0.39%, Healthcare down by 0.25% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.65%, ONGC up by 1.27%, Reliance Industries up by 0.95%, Larsen & Toubro up by 0.76% and HDFC Bank up by 0.73%. On the flip side, Indusind Bank down by 1.95%, Asian Paints down by 1.77%, Titan Co down by 1.58%, Kotak Mahindra Bank down by 1.55% and Hindustan Unilever down by 1.29% were the top losers.

Meanwhile, Domestic rating agency -- ICRA Ratings in its latest report has said it expects India’s real gross domestic product (GDP) to grow by 10.1 per cent in FY2022. However, it said the value of GDP in the next financial year will only mildly surpass the level that had been recorded in FY2020. It said ‘after a 7.8 per cent pandemic-driven shrinkage in the ongoing fiscal (FY2021), India's real GDP is projected to record a growth of 10.1 per cent in FY2022. The seemingly-sharp expansion will be led by the continued normalisation in economic activities as the roll-out of COVID-19 vaccines gathers traction, as well as the low base’.

The agency expects a multi-speed recovery in FY2022, with the contact-intensive sectors, discretionary consumption and investment by the private sector trailing the rest of the economy, in the arduous march back to attaining, and sustaining, pre-COVID levels. It added on a sobering note, they project the aggregate value of the Indian GDP in real terms in FY2022, to be only mildly higher than the level recorded in FY2020.

ICRA expects the headline CPI inflation to decline to 4.6 per cent in FY2022 from 6.4 per cent in FY2021, while exceeding the mid-point of the Monetary Policy Committee's (MPC's) medium target of 4 per cent, for the third consecutive year. A favourable base would moderate the retail food inflation to an average of 4.7 per cent in FY2022 from 8 per cent in FY2021, despite the pressures from edible oils, and protein items such as pulses. With the CPI inflation expected to remain above the MPC's 4 per cent target during FY2022, the agency expects an extended pause for the repo rate. The agency also expects the twin deficits to display a divergent trend in FY2022.

The CNX Nifty is currently trading at 14459.10, down by 25.65 points or 0.18% after trading in a range of 14432.85 and 14499.95. There were 22 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 6.00%, GAIL India up by 4.02%, Eicher Motors up by 3.09%, Indian Oil Corp. up by 2.76% and Tata Steel up by 2.27%. On the flip side, Asian Paints down by 2.12%, Indusind Bank down by 2.00%, Titan Co down by 1.71%, Kotak Mahindra Bank down by 1.52% and HDFC Life Insurance down by 1.49% were the top losers.

Asian markets were trading mostly in red;  Straits Times lost 8.60 points or 0.29% to 2,975.30, Taiwan Weighted fell 67.69 points or 0.44% to 15,489.61, KOSPI declined 89.72 points or 2.85% to 3,058.73 and Nikkei declined 3.20 points or 0.01% to 28,135.83. On the other hand, Shanghai Composite was up by 28.36 points or 0.80% to 3,559.86 and Hang Seng surged 129.29 points or 0.46% to 28,037.