Equity markets maintain upward momentum in late afternoon session

Indian equity markets maintained their upward momentum in the late afternoon session, following gains in Bankex, Consumer Durables and Energy stocks. Sentiments remained upbeat, as business activity has climbed back to the pre-second wave levels with the seventh consecutive week of surge in levels as new coronavirus infection cases decrease. Traders took note of report that rating agency  -- Crisil has said non-banking finance companies (NBFCs) are better placed currently on the liquidity front than they were a year ago, enabling them to service their near debt without much difficulty, despite a fall in collections because of the second wave of Covid-19. On the sectoral front, mining sector remained in focus, as mining sector output rose 23.3 per cent in May while power generation increased 7.5 per cent during the same month.

On the global front, Asian markets were trading mostly in green as optimism about the upcoming earnings season outweighs worries over the fast-spreading Delta virus variant that is forcing leaders to reimpose containment measures. European markets were trading mostly in red ahead of a key U.S. inflation reading, but British banks kept UK’s FTSE 100 afloat after a central bank move to scrap curbs on dividends.

The BSE Sensex is currently trading at 52,746.83, up by 374.14 points or 0.71% after trading in a range of 52545.68 and 52806.86. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.01%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Bankex up by 1.50%, Consumer Durables up by 0.70%, Energy up by 0.59%, PSU up by 0.58% and Metal was up by 0.53%, while IT down by 0.35%, TECK down by 0.30% and FMCG was down by 0.19% were the few losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.84%, ICICI Bank up by 2.69%, Sun Pharma up by 2.37%, NTPC up by 2.33% and Axis Bank up by 2.16%. On the flip side, HCL Tech down by 1.22%, Dr. Reddy's Lab down by 0.85%, Tech Mahindra down by 0.67%, Maruti Suzuki down by 0.64% and Hindustan Unilever down by 0.50% were the top losers.

Meanwhile, ratings agency ICRA in its latest report has said that restructured assets of non-bank finance companies (NBFCs) are expected to be 4.1-4.3 percent as of March 2022 as against 2.2 percent in March 2021, while the same are expected to be 2.0-2.2 percent for housing finance companies (HFCs) as against 1.0 per cent in March 2021 largely because of the impact of the second wave of the pandemic.

According to the report, the same ratio had stood at 1.6 percent as of March 2021, after the first wave of the pandemic. It said the pandemic had led the Reserve Bank of India (RBI) to make an exception by launching a loan recast facility for borrowers impacted by COVID-19. It also stated that the second wave of coronavirus infections has impacted the budding recovery in non-bank collections witnessed in Q3 FY2021 and Q4 FY2021, impacting the cash flow of the underlying borrowers and thereby further prolonging the recovery process. It added that the nature of the underlying security governed the higher incidence of recasts for NBFCs, as against the housing finance companies (HFCs) which have home mortgages.

The report further said the target borrower segment also plays a key role as a high share of restructuring was observed in smaller entities (assets under management of less than Rs 5,000 crore). Borrowers catered by these entities would have a relatively higher risk profile, also characterised by higher yields, which exposes them to increased vulnerabilities in a downcycle or a stressed scenario.

The CNX Nifty is currently trading at 15,799.80, up by 107.20 points or 0.68% after trading in a range of 15744.60 and 15815.60. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were HDFC up by 2.95%, ICICI Bank up by 2.71%, Sun Pharma up by 2.45%, NTPC up by 2.25% and Axis Bank up by 2.16%. On the flip side, Adani Ports down by 1.80%, HCL Tech down by 1.31%, Dr. Reddy's Lab down by 0.90%, Tech Mahindra down by 0.71% and Tata Consumer down by 0.68% were the top losers.

Asian markets were trading mostly in green, Hang Seng increased 448.17 points or 1.63% to 27,963.41, Nikkei 225 surged 149.22 points or 0.52% to 28,718.24, Taiwan Weighted strengthened 33.19 points or 0.19% to 17,847.52, Straits Times advanced 24.92 points or 0.79% to 3,172.06, KOSPI rose 24.91 points or 0.77% to 3,271.38 and Shanghai Composite was up by 18.68 points or 0.53% to 3,566.52. On the flip side, Jakarta Composite was down by 66.54 points or 1.09% to 6,012.03.

European markets were trading mostly in red, France’s CAC decreased 9.04 points or 0.14% to 6,550.21and Germany’s DAX was down by 2.56 points or 0.02% to 15,787.95. On the flip side, UK’s FTSE 100 was up by 20.17 points or 0.28% to 7,145.59.