Domestic bourses maintain momentum

Domestic bourses continued to trade in fine contour on continued buying by funds and retail investors as RBI Governor Shaktikanta Das unveiled liquidity support measures amid rising Covid-19 cases in India. RBI announced a slew of measures including loan restructuring for individual and small businesses hit hard by fresh COVID-19 wave. To augment supply of goods for COVID care, the central bank opened Rs 50,000 crore on-tap window to ease access to emergency health services to boost provision of immediate liquidity for ramping up COVID-19 related healthcare infrastructure and services in the country. Traders seem to have overlooked report that India's services sector activities eased to a three-month low in April, as the rise in business activity was constrained by the pandemic and sentiment towards growth prospects faded. The seasonally adjusted India Services Business Activity Index fell to 54 in April from 54.6 in March, the slowest increase in output in three months.

On the global front, Asian markets were trading mostly lower as US stock futures steadied in the wake of a pullback in large-cap tech darlings. Back home, the market breadth remained optimistic, as there were 1644 shares on the gaining side against 1112 shares on the losing side, while 172 shares remained unchanged.

The BSE Sensex is currently trading at 48536.12, up by 282.61 points or 0.59% after trading in a range of 48254.32 and 48620.51. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.49%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.83%, Telecom up by 1.37%, TECK up by 1.07%, Bankex up by 1.06% and IT was up by 1.03%, while Capital Goods down by 0.28%, Industrials down by 0.08%, FMCG down by 0.07% and Realty was down by 0.07% were the few losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.75%, Bharti Airtel up by 2.01%, Indusind Bank up by 1.87%, ONGC up by 1.64% and Kotak Mahindra Bank was up by 1.49%. On the flip side, Bajaj Finance down by 2.45%, Hindustan Unilever down by 1.04%, Larsen & Toubro down by 0.92%, Asian Paints down by 0.48% and Bajaj Finserv was down by 0.42% were the top losers.

Meanwhile, Icra Ratings in its latest report has said that the Microfinance Institutions (MFIs) are likely to see an impact on their collections and may continue to witness asset quality pressures in the near term, with increasing COVID-19 cases and the resultant restrictions in movements imposed by many states. However, good on-balance sheet liquidity and sizeable provisions created by most of the MFIs in FY2021 will provide a cushion to them for absorbing further shocks.

The agency's vice president and sector head (financial sector ratings) Sachin Sachdeva said ‘Asset quality pressures for the microfinance industry to continue in the near term amid the rising COVID-19 infections and localised restrictions/ lockdowns’. He said the restrictions in movement imposed by several states are creating disruptions in the economic activities and impacting the field operations of MFIs. Though some states have classified the microfinance industry under essential activity, the cash flows of borrowers may be affected due to the restrictions/ lockdowns, thereby affecting their repayment ability. According to Sachdeva, the sector is witnessing a reduction in collections and the recovery seen in Q4 FY2021 is being challenged again. He noted ‘We estimate a sequential drop of 8-10 per cent in collections in April 2021 and the same may dip further if the infections continue rising and more restrictions are imposed across locations’.

The report said improvement in collection efficiency and pick-up in growth in assets under management in H2 FY2021 helped the industry witness a marginal improvement in the overdue portfolio (0+ days past due (dpd)) to 16.7 per cent as on December 31, 2020 compared to 18.1 per cent as on September 30, 2020. The collections continued to improve in Q4 FY2021 and most MFIs estimate a reduction of 300-400 basis points in the 0+ dpd in Q4 FY2021. However, the improvement in the 90+ dpd is expected to be marginal as it is challenging for marginal borrowers to repay multiple instalments. Among major states as per portfolio size, Assam led the chart in terms of the 90+ dpd, which stood at around 20.3 per cent as on December 31, 2020. Other major states namely Maharashtra, West Bengal, and Kerala had 90+ dpd of 7.8 per cent, 6.1 per cent and 6.1 per cent, respectively as on December 31, 2020 compared to pan India average of 4.9 per cent.

The CNX Nifty is currently trading at 14567.70, up by 71.20 points or 0.49% after trading in a range of 14506.60 and 14608.20. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were UPL up by 4.32%, Sun Pharma up by 3.94%, Bharti Airtel up by 2.21%, Wipro up by 2.15% and Indusind Bank was up by 1.90%. On the flip side, Adani Ports down by 3.19%, Bajaj Finance down by 2.58%, Hindustan Unilever down by 0.98%, Larsen & Toubro down by 0.94% and Tata Steel was down by 0.74% were the top losers.

Asian markets were trading mostly lower; Taiwan Weighted dropped 90.34 points or 0.53% to 16,843.44, Straits Times trembled 35.07 points or 1.1% to 3,144.06 and Hang Seng was down by 128.63 points or 0.45% to 28,428.51. On the flip side; Jakarta Composite was up by 16.21 points or 0.27% to 5,980.03.