Key indices remain in negative territory in morning deals

Indian equity benchmarks continued to trade in the negative territory in morning deals, weighed by weakness in index heavyweights ITC, ICICI Bank and Tata Steel amid weak cues from global markets. Market participants overlooked a private report stated that amidst the continuing market rally, the value of the foreign portfolio investors' holdings in the domestic equities jumped by $112 billion to $667 billion between April 1 and September 30, 2021, even though they have been getting increasingly jittery about the highly stretched valuations. Traders also paid no heed towards RBI report showing that the country's foreign exchange reserves surged by $58.38 billion in April-September 2021 to $635.36 billion. The forex reserves were at $576.98 billion at end-March 2021. Sectorally, energy stocks’ remained in watch as Icra in its report stated that solar energy tariff is likely to go up by 20-25 paise per unit in upcoming bids for projects as compared with rates seen over the past six months. On the global front, Asian markets were trading mostly in red amid concerns that the recovery from the pandemic will slow as elevated inflation forces tighter monetary policy.

The BSE Sensex is currently trading at 60762.18, down by 381.15 points or 0.62% after trading in a range of 60679.66 and 61081.00. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.42%, while Small cap index was down by 0.74%.

The few gaining sectoral indices on the BSE were Capital Goods up by 1.07% and Auto up by 0.31%, while Metal down by 2.20%, Realty down by 2.05%, PSU down by 1.38%, Oil & Gas down by 1.15% and Basic Materials down by 1.11% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 5.79%, Larsen & Toubro up by 2.89%, Maruti Suzuki up by 2.12%, Ultratech Cement up by 1.41% and Bajaj Auto up by 1.08%. On the flip side, ITC down by 3.15%, ICICI Bank down by 2.09%, Tata Steel down by 2.01%, Titan Company down by 1.98% and SBI down by 1.83% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has said that while the central bank will foster growth in the microfinance (MFI) sector, the lenders in the space should not throw caution to the wind to chase higher asset growth and returns. He said MFIs should not try to mimic the strategies of mainstream finance, as those serving the microfinance borrowers have a greater need to balance the social objectives with their lending operations.

The Deputy Governor said any slip-up through adverse action of MFIs may undo the tremendous progress achieved over the decades and the sector can ill-afford to do that. He stated that the roots and origins of microfinance should not be forgotten and sacrificed at the altar of bottom-line growth. He added that there is no denying the fact that self-sufficiency and financial sustainability are the objectives that the lenders need to pursue. However, he said prioritization of profitability at the expense of social and welfare goals of micro finance may not be an optimal outcome.

Rao further said lenders need to remain cognizant of the fact that the balance sheet growth should not be built by compromising on prudent conduct. From the regulatory side, RBI would ‘look to foster growth of the sector, guided by the ultimate objective of financial inclusion and customer protection, while providing a level playing field’. He emphasized that MFIs should focus on understanding the needs of customers first and offer them an adequate level of support through appropriate financial products.

The CNX Nifty is currently trading at 18084.55, down by 126.40 points or 0.69% after trading in a range of 18053.85 and 18190.70. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 5.17%, Larsen & Toubro up by 2.73%, Maruti Suzuki up by 2.07%, Ultratech Cement up by 1.48% and Bajaj Auto up by 1.12%. On the flip side, Adani Ports &SEZ down by 6.74%, ONGC down by 3.55%, ITC down by 3.17%, Coal India down by 2.88% and Hindalco down by 2.82% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 227.83 points or 0.78% to 28,870.41, Jakarta Composite lost 67.13 points or 1.02% to 6,535.08, Taiwan Weighted dropped 46.44 points or 0.27% to 17,028.11, Shanghai Composite declined 33.31 points or 0.94% to 3,529.00, Hang Seng decreased 23.93 points or 0.09% to 25,604.81 and Straits Times trembled 12.60 points or 0.39% to 3,205.57.

On the flip side, KOSPI rose 6.77 points or 0.22% to 3,032.26.