Benchmark indices continue lackluster trade

Indian bourses continued lackluster trade and were trading with cut of over quarter a percent each in afternoon session as selling appeared in Metal, Bankex and Auto stocks with Sensex and Nifty tumbling by 173 and 59 points respectively. Sentiments were fragile as S&P Global cut its growth forecasts for some of Asia's top economies including India, the Philippines and Malaysia, offsetting upgrades to China and South Africa and much of Latin America. The estimates, which feed into S&P's closely-followed sovereign ratings, saw India's growth projection chopped to 9.5% from 11% due to its COVID-19 outbreak. On the global front, Asian markets were trading mostly lower weighed down by the concerns over spiking covid-19 cases despite of faster vaccine rollout. Back home, in scrip specific development, Bajaj Healthcare jumped as company seeks compulsory licence for Baricitinib, while Indian Bank slipped on listing of fresh shares issued to QIBs.

The BSE Sensex is currently trading at 52562.36, down by 173.23 points or 0.33% after trading in a range of 52516.56 and 52816.42. There were 12 stocks advancing against 17 stocks declining, while 1 stock remains unchanged on the index.

The broader indices were trading mixed; the BSE Mid cap index lost 0.05%, while Small cap index was up by 0.24%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.75%, FMCG up by 0.29%, Utilities up by 0.08%, Industrials up by 0.04% and Consumer Durables was up by 0.03%, while Metal down by 1.02%, Bankex down by 0.82%, Auto down by 0.77%, Oil & Gas down by 0.70% and Basic Materials was down by 0.55% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 1.17%, Nestle up by 0.77%, Power Grid up by 0.75%, Titan Company up by 0.69% and Reliance Industries was up by 0.38%. On the flip side, Maruti Suzuki down by 1.79%, Bajaj Auto down by 1.40%, ICICI Bank down by 1.38%, Kotak Mahindra Bank down by 1.32% and Mahindra & Mahindra was down by 1.29% were the top losers.

Meanwhile, domestic rating agency ICRA in its latest report has said that nearly a third of loans by Non-Banking Financial Companies (NBFCs) are in risky segments, and the already elevated non-performing assets (NPA) ratio for such lenders are expected to rise by up to 1 percent in FY22 due to the impact of the second COVID-19 wave. Estimate on the overall assets under management (AUM) growth for non-bank lenders has been revised down to 7-9 percent as against 8-10 percent earlier by ICRA because of the setback in disbursements in the first quarter of the fiscal, impacted by the second wave.

According to the report, entities would also be faced with increased asset quality pressures as prolonged stress in the operating environment would push the gross stage3/NPAs by about 0.50-1 percent in the current fiscal; it increased by about 0.40-50 percent during the last fiscal. About 30 percent of the non-bank exposure is deemed to be in the risky segments like real estate, personal credit, microfinance, unsecured SME, and segments of commercial vehicle and passenger vehicle financing, which were more severely affected by the pandemic. It noted that geographically, large states like Maharashtra, Karnataka, and Tamil Nadu, which accounted for around 40 percent of the sectoral credit, were among the severely affected states by the second wave and witnessed tighter restrictions.

The agency further said demand for restructuring would go up in the current fiscal because of the prolonged stress in the operating environment and the non-availability of any blanket forbearance like loan moratorium. It pointed out that restructuring in the last fiscal was about 1.5 percent of the sectoral AUM. The NBFCs sector will require about Rs 2 lakh crore of additional funding if it was to meet the envisaged growth. It underlined that capitalization and liquidity profile remains a silver lining for the sector. Earnings are expected to remain under pressure in FY22 and similar to FY21 levels, as credit cost is expected to remain high and similar to the last fiscal, in the base case scenario.

The CNX Nifty is currently trading at 15755.55, down by 59.15 points or 0.37% after trading in a range of 15742.55 and 15835.90. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 1.11%, Power Grid up by 0.78%, Nestle up by 0.76%, Divi's Lab up by 0.70% and Titan Company was up by 0.66%. On the flip side, Hindalco down by 1.95%, ONGC down by 1.84%, Maruti Suzuki down by 1.82%, Bajaj Auto down by 1.44% and Kotak Mahindra Bank was down by 1.42% were the top losers.

Asian markets were mostly lower, Nikkei 225 slipped 235.41 points or 0.81% to 28,812.61, KOSPI fell 15.21 points or 0.46% to 3,286.68, Hang Seng decreased 257.98 points or 0.88% to 29,010.32, Jakarta Composite lost 22.59 points or 0.38% to 5,916.88, Shanghai Composite declined 31.07 points or 0.86% to 3,575.30 and Straits Times was down by 31.99 points or 1.02% to 3,094.89.

On the flip side, Taiwan Weighted was up by 7.22 points or 0.04% to 17,598.19.