Sensex, Nifty remain in red during late morning session

Bears were holding their grip over the Dalal Street in late morning session, with both Sensex and Nifty trading in red terrain. Negative cues from other Asian markets impacted domestic sentiments. Traders were worried, as Fitch Ratings said that there are growing indications that India's latest wave of Covid-19 infections will add to risks among financial institutions (FIs) by sapping near-term momentum from the economic recovery. Measures announced by the Reserve Bank of India (RBI) on May 5 will provide some relief to FIs in the next 12 to 24 months, but largely at the expense of postponing the recognition and resolution of underlying asset-quality problems. Besides, Regulator Sebi came out with disclosure requirements under business responsibility and sustainability reporting, covering environmental, social and governance perspectives, which will be applicable on the top 1,000 listed entities by market capitalisation.

On the global front, Asian markets were trading in red, after China's consumer price inflation rose moderately at a slower-than-expected pace in April, while producer prices grew at the fastest pace in more than three years driven by higher commodity prices. Consumer price inflation rose to 0.9 percent in April from 0.4 percent in March, the National Bureau of Statistics reported. On a monthly basis, consumer prices dropped 0.3 percent versus an expected fall of 0.2 percent.

The BSE Sensex is currently trading at 49254.31, down by 248.10 points or 0.50% after trading in a range of 48988.18 and 49290.78. There were 8 stocks advancing against 21 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index was up by 1.00%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.83%, Utilities up by 1.61%, PSU up by 1.43%, Energy up by 0.97% and Power up by 0.75%, while Metal down by 1.11%, IT down by 0.79%, TECK down by 0.69%, Bankex down by 0.47% and FMCG down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.79%, Sun Pharma up by 2.00%, NTPC up by 1.39%, Indusind Bank up by 0.93% and SBI up by 0.76%. On the flip side, HDFC down by 2.38%, Kotak Mahindra Bank down by 1.85%, Tech Mahindra down by 1.42%, Mahindra & Mahindra down by 1.10% and Hindustan Unilever down by 1.07% were the top losers.

Meanwhile, the Reserve Bank of India  (RBI) has come out with modified guidelines that allow sound private sector banks to undertake government business, whether at the Centre or in states. According to the modified norms, scheduled private sector banks, which are not under the Prompt Corrective Action (PCA) framework of the RBI, can undertake government business after executing an agreement with the central bank. Scheduled private sector banks, not having agency banking agreement with RBI, but intend to handle government agency business, may be appointed as agents of RBI upon execution of an agreement with RBI.

The central bank said this will be subject to the condition that the concerned bank is not under PCA framework or moratorium at the time of making the application or signing of the agreement with RBI. It may be mentioned that the Finance Ministry in February 2021 had lifted the embargo imposed in September 2012 on further allocation of government business to private sector banks. In view of the lifting of the embargo, the RBI has decided to revise the framework for authorising Scheduled Private Sector Banks as agency banks of RBI for conduct of government business.

It further said existing private Sector agency bank with whom RBI already has agency banking agreement and who are authorised to do government agency business may continue to do these government agency businesses for Central and/or State Governments without taking any fresh approval from the central bank. It also said once RBI authorises a bank for any government business, separate approval from RBI with regard to mode (physical or e-mode) and area of operations is not required and the same will be decided by the CGA (for Central Government) or the Finance Department of the State Government, keeping the RBI informed in the matter.

The CNX Nifty is currently trading at 14882.10, down by 60.25 points or 0.40% after trading in a range of 14771.40 and 14885.75. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Coal India up by 4.69%, Indian Oil Corp up by 4.64%, Ultratech Cement up by 2.74%, Tata Consumer Products up by 2.41% and Sun Pharma up by 1.81%. On the flip side, Hindalco down by 3.02%, HDFC down by 2.36%, JSW Steel down by 2.15%, Kotak Mahindra Bank down by 1.93% and Wipro down by 1.69% were the top losers.

Asian markets were trading in red; Nikkei 225 plunged 926.46 points or 3.14% to 28,591.88, Straits Times fell 22.69 points or 0.71% to 3,159.72, Hang Seng declined 613.45 points or 2.15% to 27,982.21, Taiwan Weighted slipped 501.53 points or 2.91% to 16,734.08, KOSPI dropped 45.87 points or 1.41% to 3,203.43, Jakarta Composite skid 58.01 points or 0.97% to 5,917.78 and Shanghai Composite was down by 9.10 points or 0.27% to 3,418.89.