Sensex, Nifty again near neutral lines in late morning deals

Indian equity benchmarks cut most of their gains in late morning deals to trade near their neutral lines, with both the Sensex and the Nifty trading marginally higher. Positive cues from other Asian markets helped key indices to trade in green terrain. However, gains got trimmed, as investment through participatory notes (P-notes) in the Indian capital market dipped marginally to Rs 84,976 crore as on January 31 after hitting 31-month high value at the end of the preceding month. At December-end, the investment through such instruments had risen to a 31-month high of Rs 87,132 crore, reflecting the bullish stance of FPIs.

On the global front, Asian markets were trading in green, after consumer confidence in South Korea improved in January, the latest survey from the Bank of Korea showed on Tuesday with a sentiment index score of 97.4 - up from 95.4 in December. Consumer sentiment regarding current living standards was one point higher than in January at 87, and that concerning the future outlook for living standards was also one point higher than in the previous month at 94. Consumer sentiment related to future household income was unchanged at 96, and that concerning future household spending was two points higher at 104.

The BSE Sensex is currently trading at 49812.75, up by 68.43 points or 0.14% after trading in a range of 49659.85 and 50327.31. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.62%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Realty up by 2.87%, Oil & Gas up by 2.26%, Metal up by 1.97%, Capital Goods up by 1.76% and Energy up by 1.64%, while Bankex down by 0.83% and Consumer discretionary down by 0.13% were the only losing indices on BSE.

The top gainers on the Sensex were ONGC up by 5.93%, Larsen & Toubro up by 2.70%, Sun Pharma up by 1.75%, NTPC up by 1.62% and Reliance Industries up by 1.47%. On the flip side, Kotak Mahindra Bank down by 3.56%, Asian Paints down by 2.27%, Maruti Suzuki down by 1.60%, Bajaj Auto down by 1.37% and HDFC Bank down by 1.13% were the top losers.

Meanwhile, India Ratings and Research has revised its outlook on the overall banking sector to stable for the fiscal 2021-2022 (FY22) from negative even as it sees higher stress emerging in the retail loan segment going ahead. For public sector banks (PSBs), the outlook has been revised to stable from negative and for private banks, the agency continues to have stable outlook. It estimates that overall stressed assets (gross non-performing assets (GNPA) + restructured) could increase 30 per cent for the banking system, the increase is almost 1.7 times in the retail segment in the second half of the fiscal 2020-21.

According to the agency's Director (financial institutions) Jindal Haria ‘The last nine months have provided banks the opportunity to beef up their provisions even more for legacy stressed assets, which were existing before the pandemic. It expects that by the end of FY21, the provisions will go up to almost 75-80 per cent on those NPAs. This will give banks space to absorb COVID stress. With the last year’s change in accounting norms, which allows public sector banks (PSBs) to offset their profit and loss balance sheets with share premium account, large banks would be able to manage to raise additional tier 1 capital on their own.

The agency also revised its credit growth estimates to 6.9 per cent in FY21 from earlier 1.8 per cent, and 8.9 per cent in FY22. It said that about 1.24 per cent of the total bank book is under incremental proforma NPA and about 1.75 per cent of the total book could be restructured by end-FY21. This is the incremental stress purely on account of the COVID-19 pandemic and does not include the slippages that banks would witness in the normal course of business. The agency expects the deposit rates to rise as credit growth revives as well as capital market flows are enhanced. It said ‘large banks will be able to attract better rated customers by taking advantage of their lower cost of deposits’ and  added that it will be challenging for mid or small-sized banks to have an asset profile similar to a large bank.

The CNX Nifty is currently trading at 14719.40, up by 43.70 points or 0.30% after trading in a range of 14651.85 and 14854.50. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were ONGC up by 6.02%, Tata Motors up by 4.02%, Hindalco up by 3.46%, GAIL India up by 3.43% and BPCL up by 3.15%. On the flip side, Kotak Mahindra Bank down by 3.57%, Asian Paints down by 2.05%, Maruti Suzuki down by 1.60%, Adani Ports & SEZ down by 1.25% and HDFC Bank down by 1.22% were the top losers.

Asian markets were trading in green; Taiwan Weighted strengthened 1.63 points or 0.01% to 16,411.79, Jakarta Composite soared 4.67 points or 0.07% to 6,259.98, Straits Times advanced 21.12 points or 0.73% to 2,902.33, KOSPI rose 8.30 points or 0.27% to 3,088.05, Shanghai Composite gained 12.33 points or 0.34% to 3,654.77 and Hang Seng increased 449.37 points or 1.48% to 30,769.20.