Benchmarks trim some losses in late afternoon session

Local equity benchmarks trimmed some of their losses in late afternoon session but continued to trade below the neutral lines. A level of pressure was seen on frontline stocks, especially HDFC and Larsen & Toubro. Sentiments remained down-beat even after government has given green signal to a pact between India and Fiji. The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the signing of a Memorandum of Understanding (MoU) between the Ministry of Agriculture of Indian government and Ministry of Agriculture of the Republic of Fiji in this regard. The MoU between India and Fiji provides for cooperation in various areas including promotion of joint ventures between private sectors of both countries. Sector wise, infrastructure sector remained in focus after ICRA has revised the outlook on the Construction Equipment (CE) sector to ‘Stable’ from ‘Negative’, following strong ramp up in volumes. Heightened focus on infrastructure spend, particularly in the road infrastructure segment has led to a sharp scale up in volumes since July 2020 (20%+ Y-o-Y growth during July-Jan’21 period).

On the global front, Asian markets were trading mostly in red, as the rollercoaster ride on global markets continued, with fears over inflation winning the tug of war with vaccine optimism today. European markets were trading lower, as the EU vowed legal response after the British government unilaterally extended a grace period for checks on food imports to Northern Ireland.

The BSE Sensex is currently trading at 51096.75, down by 347.90 points or 0.68% after trading in a range of 50539.92 and 51256.55. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.88%, while Small cap index was up by 0.95%.

The top gaining sectoral indices on the BSE were Power up by 1.21%, Utilities up by 1.20%, Consumer discretionary up by 0.67%, IT up by 0.60% and Realty was up by 0.52%, while Metal down by 1.78%, Telecom down by 1.00%, Energy down by 0.84%, Bankex down by 0.81% and Capital Goods was down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 3.21%, Dr. Reddys Lab up by 1.45%, Tech Mahindra up by 1.26%, TCS up by 0.67% and Asian Paints up by 0.52%. On the flip side, HDFC down by 2.39%, Larsen & Toubro down by 2.04%, HDFC Bank down by 1.91%, Bajaj Finserv down by 1.71% and Bharti Airtel down by 1.33% were the top losers.

Meanwhile, credit rating agency, India Ratings and Ratings (Ind-Ra) in its latest report has maintained a stable outlook on retail non-banking finance company (NBFC) and housing finance company sectors for FY22. The agency noted that the system liquidity has improved considerably, while majority of large non-banks have strengthened their capital buffers and the sector has started witnessing disbursement growth.

However, the agency continues to maintain a negative outlook on the wholesale NBFC sector for FY22, factoring in significant asset quality challenges and added regulatory restrictions on different products lines and increased competition from banks. As per the report, the wide differential among NBFCs’ funding costs is likely to push the sector to consolidate, especially in the sectors with a thin margin profile and limited product differentiation.

Ind-Ra also said that FY21 saw a strong regulatory support through the infusion of liquidity, which aided the liquidity risk converting into a solvency risk. However, NBFCs need to plan for managing liquidity as and when these measures are rolled back. Ind-Ra believes that securitisation and co-lending model would get further traction as the funding requirement of the sector overshoots the saving mobilisation rate.

The CNX Nifty is currently trading at 15157.85, down by 87.75 points or 0.58% after trading in a range of 14980.20 and 15202.35. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 3.11%, Adani Ports up by 2.99%, Grasim Industries up by 2.17%, Wipro up by 1.71% and Dr. Reddys Lab up by 1.41%. On the flip side, JSW Steel down by 3.08%, HDFC down by 2.52%, Larsen & Toubro down by 2.07%, HDFC Bank down by 1.98% and Bajaj Finserv down by 1.88% were the top losers.

Asian markets are trading mostly in red, Hang Seng decreased 643.63 points or 2.15% to 29,236.79, Nikkei 225 slipped 628.99 points or 2.13% to 28,930.11, Taiwan Weighted dropped 305.32 points or 1.88% to 15,906.41, Jakarta Composite lost 85.96 points or 1.35% to 6,290.80, Shanghai Composite declined 73.41 points or 2.05% to 3,503.49 and KOSPI was down by 39.50 points or 1.28% to 3,043.49. On the flip side, Straits Times was up by 6.83 points or 0.23% to 3,007.20.

European markets were trading lower, UK’s FTSE 100 decreased 39.39 points or 0.59% to 6,636.08, France’s CAC decreased 7.55 points or 0.13% to 5,822.51 and Germany’s DAX was down 32.42 points or 0.23% to 14,047.61.