Key gauges pare gains to turn red; Nifty tests 17K

Paring all their initial gains, Indian equity benchmarks entered into red terrain with frontline gauges testing their crucial 57,200 (Sensex) and 17,000 (Nifty) levels, as traders opted to book initial profit amid report that seven people arrived from South Africa in Maharashtra’s Thane city adjoining Mumbai since November 14 and all of them were tested in the wake of concerns over the new potentially more transmissible 'Omicron' variant of the coronavirus. Traders remained sidelines ahead of gross domestic product data that is expected to show the country's economic recovery strengthened in the second quarter. Some cautiousness also crept in as Moody’s Analytics said the Omicron variant of COVID-19 adds new uncertainties to the global economic outlook but much will depend on its speed of transmission, hospitalisation and death rates, and also the effectiveness of vaccines. Meanwhile, Asian counters also weakened sharply, giving up earlier gains as investors worried the Omicron variant will prove more resistant to vaccines and could cause more widespread global economic disruption.

The BSE Sensex is currently trading at 57201.24, down by 59.34 points or 0.10% after trading in a range of 57042.86 and 58183.77. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.45%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.90%, Industrials up by 0.51%, Realty up by 0.47%, Capital Goods up by 0.46% and IT up by 0.33%, while Metal down by 1.01%, Energy down by 0.67%, Telecom down by 0.65%, Bankex down by 0.57% and Auto down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.33%, Axis Bank up by 1.54%, Bajaj Finserv up by 1.48%, Bajaj Finance up by 1.37% and Tech Mahindra up by 0.96%. On the flip side, Kotak Mahindra Bank down by 1.83%, Tata Steel down by 1.45%, NTPC down by 1.15%, HDFC down by 1.04% and Reliance Industries down by 1.02% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that after weathering multiple challenges over the past three fiscals, asset under management (AUM) of non-banking financial companies' (NBFCs) and housing finance companies (HFCs) is set to grow 8-10 percent in the fiscal 2023, helped by improvement in economic activity and strengthened balance sheet buffers.

The agency expects AUM growth to be at 6-8 per cent in fiscal 2022. The growth in the previous fiscal was 2 per cent. It said that many NBFCs have built higher liquidity, capital and provisioning buffers in the recent past. That, combined with improving economic activity, puts them in a comfortable position to capitalise on growth opportunities. Besides, it said the gross non-performing assets (GNPAs) of non-bank lenders are expected to rise by 25-300 basis points based on asset class following recent clarification on income recognition, asset classification and provisioning (IRAC) norms.

However, the increase in GNPAs because of the revised recognition norms will be largely an accounting impact because, given the improving economy, the credit profiles of borrowers are not expected to deteriorate. Consequently, it said ultimate credit losses are not expected to change significantly. It noted that overall, fragile assets (GNPAs + slippages due to the impact of regulatory norms and from the restructured book) are seen at Rs 1.3-1.6 lakh crore, tantamount to 5-6 per cent of the industry's AUM as of March 2022. This, however, does not factor in the impact of a third wave of Covid-19, especially the just-discovered Omicron variant, which is a risk factor.

The CNX Nifty is currently trading at 17017.65, down by 36.30 points or 0.21% after trading in a range of 16987.50 and 17324.65. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 2.17%, Axis Bank up by 1.67%, SBI Life Insurance up by 1.57%, Bajaj Finserv up by 1.37% and Bajaj Finance up by 1.36%. On the flip side, Adani Ports down by 1.79%, Kotak Mahindra Bank down by 1.65%, Tata Steel down by 1.37%, Hero MotoCorp down by 1.33% and Mahindra & Mahindra down by 1.29% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 lost 462.16 points or 1.63% to 27,821.76, Straits Times declined 35.60 points or 1.14% to 3,084.98, Hang Seng slipped 532.73 points or 2.23% to 23,319.51, KOSPI plunged 76.93 points or 2.64% to 2,832.39 and Shanghai Composite was down by 3.06 points or 0.09% to 3,559.64.

On the other hand, Taiwan Weighted rose 99.67 points or 0.58% to 17,427.76 and Jakarta Composite added 27.24 points or 0.41% to 6,635.53.