Key gauges trim some losses in morning deals

Indian equity benchmarks trimmed some losses but continued to trade in red terrain in morning deals, on the back of negative global cues. Sentiments remained downbeat as Care Ratings said that the credit growth for current financial year (FY22) is likely to remain in low double-digit on the back of muted economic activity. The slowdown in economy can further delay anticipated pick-up in credit growth apart from the likely impact on asset quality. However, losses remain capped as some support came with a UN report stated that India received $64 billion in Foreign Direct Investment in 2020, the fifth largest recipient of inflows in the world, It also said that the COVID-19 second wave in the country weighs heavily on the country's overall economic activities but its strong fundamentals provide optimism for the medium term. Meanwhile, the Finance Industry Development Council (FIDC) has urged the Ministry of Micro, Small & Medium Enterprises (MSME) to address issues faced by MSME borrowers and the NBFCs catering to these enterprises.

On the global front, Asian markets were trading in red as investors mulled the implications of a surprise hawkish shift last week by the U.S. Federal Reserve, while the Treasury yield curve flattened further with 30-year yields dropping below 2 per cent. Back home, on the sectoral front, leather industry’s stocks remained in watch as the Council for Leather Exports (CLE) said the country's export of leather, its products and footwear has jumped to $641.72 million in April-May 2021 from $146.79 million in the corresponding period last year.

The BSE Sensex is currently trading at 52159.93, down by 184.52 points or 0.35% after trading in a range of 51740.19 and 52176.06. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.39%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Realty up by 0.59% and FMCG up by 0.42%, while Capital Goods down by 1.00%, Power down by 0.82%, Auto down by 0.75%, TECK down by 0.68% and IT down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.69%, Hindustan Unilever up by 1.40%, Asian Paints up by 0.80%, Bajaj Finance up by 0.54% and Sun Pharma up by 0.37%. On the flip side, Larsen & Toubro down by 1.28%, Mahindra & Mahindra down by 1.20%, SBI down by 1.14%, Tech Mahindra down by 0.99% and ICICI Bank down by 0.99% were the top losers.

Meanwhile, asserting that the second wave of COVID-19 has posed some challenges, RBI Deputy Governor M K Jain has said that both the central bank and the government have taken steps to mitigate its impact. He also said that the domestic banking system is strong, as per the preliminary data for the quarter ended March 2021. The data suggest that in terms of CRAR that has been improved upon, the profitability has been improved upon, provision coverage ratio that has also been improved over the previous year, and the gross NPA as well as net NPA has come down.

Observing that the COVID-19 second wave has some challenging aspects, Jain said both the RBI and the government are dealing with this and taking steps to smoothen the impact on the financial system. The central bank has announced a slew of measures in the last two months to help flow of credit to the desired sectors and maintain adequate level of liquidity in the system. He said the RBI strives to ensure financial resilience of banks and NBFCs by prescribing a set of micro prudential norms like minimum capital requirements.

To maintain resilience, he said, the RBI has asked financial entities to undertake stress tests at regular intervals and accordingly take risk mitigation measures. He further said the financial system, both in India and overseas, is witnessing rapid shifts in the operating environment due to changing competitive landscape, automation and increasing regulatory supervisory expectations. He also expressed hopes that banks and other financial institutions in India will rise to the challenge, continue to demonstrate the resilience and be able to contribute to a $5 trillion economy and beyond.

The CNX Nifty is currently trading at 15618.10, down by 65.25 points or 0.42% after trading in a range of 15505.65 and 15626.30. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.64%, Adani Ports &SEZ up by 2.20%, Hindustan Unilever up by 1.23%, HDFC Life Insurance up by 0.90% and Asian Paints up by 0.88%. On the flip side, UPL down by 3.58%, Tata Motors down by 2.22%, Wipro down by 2.09%, Hindalco down by 1.47% and Mahindra & Mahindra down by 1.39% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 387.85 points or 1.35% to 28,413.42, Taiwan Weighted dropped 264.05 points or 1.52% to 17,054.49, KOSPI fell 31.19 points or 0.95% to 3,236.74, Straits Times trembled 36.22 points or 1.15% to 3,107.94, Shanghai Composite declined 7.93 points or 0.22% to 3,517.17, Jakarta Composite lost 43.32 points or 0.72% to 5,963.80 and Nikkei 225 slipped 1029.57 points or 3.55% to 27,934.51.