Key gauges continue lacklustre trade in morning deals

Indian equity benchmarks continued their lacklustre trade slightly in red in morning deals dragged mainly by losses in Power, Utilities, Metal and IT stocks. Sentiments remained downbeat as the Financial Stability Report (FSR) released by the Reserve Bank of India (RBI) said that the gross non-performing assets (GNPAs) ratio of banks may increase to 9.8 percent by March 2022 from 7.48 percent in March 2021 under a baseline scenario. However, losses remain capped as traders found some support with the Union Finance Minister Nirmala Sitharaman’s statement that a special session of the GST Council will be held soon to discuss all compensation-related issues. She also said that the flow of COVID-19 vaccination across the country will be well managed and all states will be taken care of. Traders also took a note of Reserve Bank Governor Shaktikanta Das’ statement that the second wave of the pandemic took a ‘grievous toll’ on India, but the dented economic activity has started recovering from late-May. In a first, Das flagged the rising data breaches and cyber attacks as a risk facing the economy, along with others like firming global commodity prices.

On the global front, Asian markets were trading mostly in red, following the broadly positive cues from Wall Street. Traders are upbeat following the prospects of a strong global economic recovery after data showed improvement in manufacturing and jobless claims in the US. Back home, on the sectoral front, there was some reaction in power sector stocks with power ministry data showing that power consumption in the country grew by nearly 10 per cent in June to 115.39 billion units (BU) compared to a year ago, but is still lower than the pre-COVID level.

The BSE Sensex is currently trading at 52275.76, down by 42.84 points or 0.08% after trading in a range of 52200.47 and 52436.83. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.05%, while Small cap index was up by 0.80%.

The top gaining sectoral indices on the BSE were Realty up by 1.02%, Healthcare up by 0.75%, Energy up by 0.54%, Consumer Durables up by 0.52% and Telecom up by 0.45%, while Power down by 0.99%, Utilities down by 0.60%, Metal down by 0.53%, IT down by 0.52% and TECK down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 1.17%, Bajaj Finance up by 0.80%, Reliance Industries up by 0.77%, Indusind Bank up by 0.43% and NTPC up by 0.43%. On the flip side, TCS down by 0.99%, Tata Steel down by 0.98%, Infosys down by 0.69%, HCL Technologies down by 0.67% and Tech Mahindra down by 0.61% were the top losers.

Meanwhile, the Financial Stability Report (FSR) released by the Reserve Bank of India (RBI) has said that the gross non-performing assets (GNPAs) ratio of banks may increase to 9.8 percent by March 2022 from 7.48 percent in March 2021 under a baseline scenario. Under a severe stress scenario, GNPA of banks may increase to 11.22 percent. It, however, said that banks have sufficient capital, both at the aggregate and individual level, even under stress.

The latest report said within the bank groups, public sector banks' (PSBs') GNPA ratio of 9.54 percent in March 2021 edging up to 12.52 percent by March 2022 under the baseline scenario is an improvement over earlier expectations and indicative of pandemic proofing by regulatory support. For private sector banks (PVBs) and foreign banks (FBs), the transition of the GNPA ratio from baseline to medium to severe stress is from 5.82 percent to 6.04 percent to 6.46 percent, and from 4.90 percent to 5.35 percent to 5.97 percent, respectively. Under the baseline and the two stress scenarios, the system level CRAR (capital to risk assets ratio) holds up well, moderating by 30 basis points (bps) between March 2021 and March 2022 under the baseline scenario and by 130 bps and 256 bps, respectively, under the two stress scenarios. All 46 banks would be able to maintain CRAR well above the regulatory minimum of 9 percent as of March 2022 even in the worst-case scenario.

The report further said the common equity Tier I (CET-1) capital ratio of banks may decline from 12.78 percent in March 2021 to 12.58 percent in March 2022, under the baseline scenario. It would further fall to 11.76 percent and 10.73 percent, respectively, under the medium and severe stress scenarios by March 2022. The report said COVID-19 has increased the risks to financial stability, especially when the unprecedented measures taken to mitigate the pandemic's destruction are normalised and rolled back.

The CNX Nifty is currently trading at 15668.35, down by 11.65 points or 0.07% after trading in a range of 15649.60 and 15711.20. There were 22 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Adani Ports &SEZ up by 1.83%, Divi's Lab up by 1.68%, ICICI Bank up by 1.10%, Coal India up by 1.00% and Indian Oil Corporation up by 0.79%. On the flip side, TCS down by 1.07%, Tata Steel down by 0.95%, Britannia Industries down by 0.86%, Eicher Motors down by 0.79% and HCL Technologies down by 0.77% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 462.59 points or 1.6% to 28,365.36, Shanghai Composite declined 56.55 points or 1.58% to 3,532.23, Taiwan Weighted dropped 10.01 points or 0.06% to 17,703.93 and KOSPI fell 1.46 points or 0.04% to 3,280.60.

On the flip side, Straits Times advanced 1.16 points or 0.04% to 3,125.35, Jakarta Composite soared 26.70 points or 0.44% to 6,032.66 and Nikkei 225 surged 62.01 points or 0.22% to 28,769.05.