Local equities continue to trade in negative zone

Indian equity benchmarks continued their trade in negative territory in morning session, with Sensex and Nifty falling over half a percent each, tracking similar cues from their Asian peers. Sentiments remained down-beat with Rating agency Crisil expects stressed assets of non-banking financial companies (NBFCs) to touch Rs 1.5-1.8 lakh crore or 6-7.5% of the assets under management (AUM) by the end of the current financial year.  However, reported gross non-performing assets would be limited due to the one-time Covid-19 restructuring window and the micro, small and medium enterprises (MSMEs) recast scheme offered by the Reserve Bank of India (RBI). Unlike previous crises, the pandemic has impacted almost all NBFC asset segments. Traders overlooked private survey stated that business optimism has turned positive on a year-on-year basis for the ongoing quarter after witnessing negative growth throughout 2020, amid rising consumer demand, higher businesses transactions and normalisation of supply disruptions.

On the global front, Asian markets were trading mostly in red as investors eyed the minutes from the Federal Reserve's January policy meeting. Worries about rising bond yields and its impact on riskier assets weighed on the market despite the release of upbeat Japanese economic data. The Cabinet Office said that the total value of core machine orders in Japan gained a seasonally adjusted 5.2 percent on month in December, standing at 899.6 billion yen. That beat expectations for a decline of 6.2 percent following the 1.5 percent increase in November. Back home, on the sectoral front, FMCG industry stocks were in focus with a private report that the FMCG industry in India has recorded a value growth of 7.3 percent in October-December quarter helped by consumption-led recovery during the festive period and increase in sales from traditional as well as organised trade.

The BSE Sensex is currently trading at 51797.83, down by 306.34 points or 0.59% after trading in a range of 51681.48 and 52033.96. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.32%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Power up by 1.03%, Utilities up by 0.94%, PSU up by 0.89%, Capital Goods up by 0.82% and Industrials up by 0.82%, while Realty down by 0.88%, IT down by 0.82%, TECK down by 0.61%, Metal down by 0.61% and FMCG down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.98%, Bajaj Auto up by 0.57%, NTPC up by 0.41%, Larsen & Toubro up by 0.40% and Axis Bank up by 0.33%. On the flip side, Nestle down by 3.25%, Bajaj Finserv down by 1.86%, Asian Paints down by 1.76%, Kotak Mahindra Bank down by 1.73% and Indusind Bank down by 1.51% were the top losers.

Meanwhile, rating agency Crisil has said it expects stressed assets of non-banking financial companies (NBFCs) to touch Rs 1.5-1.8 lakh crore or 6-7.5% of the assets under management (AUM) by the end of the current financial year. However, reported gross non-performing assets would be limited due to the one-time Covid-19 restructuring window and the micro, small and medium enterprises (MSMEs) recast scheme offered by the Reserve Bank of India (RBI). Unlike previous crises, the pandemic has impacted almost all NBFC asset segments.

It mentioned operations of most of these lenders were curbed the most in the April-June quarter, when disbursements and collections were severely affected by the complete standstill in economic activity.  Krishnan Sitaraman-senior director, Crisil Ratings, said this fiscal has bought unprecedented challenges to the fore for NBFCs. Collection efficiencies, after deteriorating sharply, have now improved, but are still not at pre-pandemic levels. He added there is a marked increase in overdue amounts across certain segments and players.  Nevertheless, gold loans and home loans have been resilient, with the least impact among segments.

The big challenge this year will be the unsecured personal loans segment, where underlying stress has increased significantly with early-bucket delinquencies more than doubling for many NBFCs. For vehicle finance, however, Crisil expects the impact to be transitory, and collection efficiencies to continue improving over the next few quarters as economic activity improves. Unlike previous crises, the current challenges on account of Covid-19 impacted almost all NBFC asset segments. However, it said the restructuring schemes offered by the RBI will limit the reported gross non-performing assets (GNPAs).

The CNX Nifty is currently trading at 15225.05, down by 88.40 points or 0.58% after trading in a range of 15201.25 and 15289.90. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Adani Ports &Special up by 2.98%, Hero MotoCorp up by 2.29%, HDFC Life Insurance up by 2.10%, SBI up by 2.03% and GAIL India up by 1.28%. On the flip side, BPCL down by 2.93%, Nestle down by 2.80%, Asian Paints down by 1.97%, Bajaj Finserv down by 1.88% and Divis Lab down by 1.62% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite lost 68.38 points or 1.09% to 6,224.02, KOSPI fell 38.57 points or 1.22% to 3,124.68, Straits Times trembled 13.59 points or 0.46% to 2,921.75 and Nikkei 225 slipped 156.92 points or 0.52% to 30,310.83.

On the flip side, Hang Seng increased 199.44 points or 0.65% to 30,946.10 and Taiwan Weighted strengthened 542.08 points or 3.43% to 16,344.48.