Sensex, Nifty maintain gaining rally in late morning session

Indian equity benchmarks maintained gaining rally in late morning session, with both Sensex and Nifty trading near their intraday high points. Positive cues from other Asian markets helped key indices to remain higher. Traders were positive, as Prime Minister Narendra Modi said that the country's economic growth rate is over 8 per cent. Sentiments also remained optimistic, amid reports that non-banking financial companies (NBFCs) showed resilience in 2021 despite the coronavirus pandemic woes and are expected to witness continued momentum in growth this year. This year, the growth will be driven by the uptick in the economy, stronger balance sheet, higher provisions and improved capital positions of NBFCs.

On the global front, Asian markets were trading mostly in green, after the manufacturing sector in Malaysia continued to expand in December, and at a faster pace, the latest survey from Markit Economics revealed on Monday with a manufacturing PMI score of 52.8. That's up from 52.3 in November and it moved further above the boom-or-bust line of 50 that separates expansion from contraction.

The BSE Sensex is currently trading at 58858.49, up by 604.67 points or 1.04% after trading in a range of 58306.45 and 58869.20. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.83%, while Small cap index was up by 1.14%.

The top gaining sectoral indices on the BSE were Realty up by 1.64%, Bankex up by 1.26%, Auto up by 1.25%, Capital Goods up by 1.20% and IT up by 1.19%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were TCS up by 2.16%, Bajaj Finserv up by 2.02%, Axis Bank up by 1.91%, ICICI Bank up by 1.51% and HDFC Bank up by 1.42%. On the flip side, Dr. Reddy's Lab down by 0.65%, Mahindra & Mahindra down by 0.64%, Titan Co down by 0.59%, Indusind Bank down by 0.48% and Tech Mahindra down by 0.09% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that Non-banking financial companies (NBFCs) showed resilience in 2021 despite the coronavirus pandemic woes and are expected to witness continued momentum in growth in 2022. It noted that this year, the growth will be driven by the uptick in the economy, stronger balance sheet, higher provisions and improved capital positions of NBFCs.

On the other hand, the report said gross non-performing assets (NPAs) of NBFCs are likely to rise, following the Reserve Bank of India's (RBI) move to tighten the NPA norms in November 2021. The asset under management (AUM) of shadow banking players is expected to grow at 6-8 per cent in the current financial year and 8-10 per cent in the next financial year. With increased pace of vaccinations and the broadening revival of the economy, the NBFC sector is expected to remain buoyant.

It further expects reported NPAs for NBFCs to rise between 25-300 basis points, depending on which segment they are operating in. While for home loan and gold loans, NPAs will be in the lower end of the range; and for MSMEs or unsecured loan NBFCs, it will be at the higher end of the range. However, this will not impact the fundamental asset quality material because it is more of an accounting metrics. The funding condition of NBFCs is stabilising because banks are lending to them. Mutual funds, that had become very cautious to lend to NBFCS, have now also started lending. NBFCs are also diversifying their funding base by looking at retail borrowing.

The CNX Nifty is currently trading at 17519.85, up by 165.80 points or 0.96% after trading in a range of 17383.30 and 17531.70. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 4.53%, Coal India up by 4.38%, Tata Motors up by 2.78%, TCS up by 2.10% and Axis Bank up by 2.02%. On the flip side, Cipla down by 1.51%, Mahindra & Mahindra down by 0.62%, Titan Co down by 0.57%, Dr. Reddy's Lab down by 0.53% and Divi's Lab down by 0.48% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite soared 55.52 points or 0.84% to 6,637.00, Taiwan Weighted strengthened 29.17 points or 0.16% to 18,248.01, Straits Times advanced 8.52 points or 0.27% to 3,132.20 and KOSPI rose 6.58 points or 0.22% to 2,984.23. On the flip side, Hang Seng decreased 144.98 points or 0.62% to 23,252.69.