Post Session: Quick Review

Indian equity benchmarks ended the extremely volatile day of trade in red terrain as elevated crude oil prices kept investors on edge, while ease in tensions between Russia and Ukraine helped to cap losses in the end. Markets made a positive opening as traders took some support with report that India’s exports in January rose 25.28 per cent to $34.50 billion on account of healthy performance by sectors such as engineering, petroleum and gems and jewellery. Adding some optimism, an SBI research report stated that India can add $20 billion to its Gross Domestic Product (GDP) if the country can reduce by 50 per cent the dependence on imports from China by leveraging the production linked incentive schemes. However, markets entered into red terrain as traders turned cautious about the rising crude oil prices and kept booking gains at regular intervals. Some cautiousness also came in with government data showing that exports from special economic zones (SEZs) grew at a slower pace as compared to the growth of overall outbound shipments from the country during the first eight months of the current fiscal year.

Markets witnessed rally in second half of the trade after Russian defence ministry announced the end of Crimea military drills. The Russian defence ministry shared a video of Russian military equipment and forces leaving Crimea. However, profit booking at high point of the day in last leg of trade dragged markets lower for the day. On the global front, all the Asian markets ended in green and European markets were trading mostly higher as fears of a Russian invasion of the Ukraine this week dissipated after Moscow indicated it was returning some troops to base in an apparent de-escalation, delivering investors a measure of relief.

Back home, NBFCs stocks remained in focus as the Reserve Bank of India (RBI) has given finance companies extra time till September 30, 2022 to have systems ready to implement rule wherein bad loans can be upgraded as standard asset only when entire arrears of interest and principal are paid. In November 2021, RBI had given time till March 31, 2022 to implement the rule. IT stocks remained in action as the National Association of Software and Service Companies (Nasscom) has said that Indian information technology (IT) sector is set to grow at 15.5 percent - the fastest in over a decade - to $227 billion in FY22, as the pandemic pushes up demand for digitization at companies across the world.

The BSE Sensex ended at 57996.68, down by 145.37 points or 0.25% after trading in a range of 57780.28 and 58569.22. There were 6 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index slipped 0.03%, while Small cap index was up by 0.42%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.17%, Realty up by 1.05%, Consumer Durables up by 0.67%, Oil & Gas up by 0.57% and Healthcare up by 0.46%, while Metal down by 0.66%, Bankex down by 0.53%, Capital Goods down by 0.48%, Basic Materials down by 0.43% and PSU down by 0.36% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 1.13%, HDFC up by 1.05%, Dr. Reddy's Lab up by 0.94%, Kotak Mahindra Bank up by 0.93% and Mahindra & Mahindra up by 0.85%. On the flip side, Power Grid Corporation down by 3.44%, SBI down by 2.00%, ICICI Bank down by 1.69%, Tata Steel down by 1.62% and NTPC down by 1.59% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) has allowed some relaxation in the stricter prudential norms announced for all lenders, including NBFCs, on November 2021, by extending the time till September 2022 to implement the guidelines regarding upgrading an NPA account as standard but upon clearing all dues. In a circular issued on November 12, 2021, the monetary authority had given time till December 31, 2021 to implement all the stricter prudential norms.

Following representation from NBFCs, in a revised circular issued on February 15, 2022, the central bank said ‘the new circular does not, in any way, interfere with the extant guidelines on the implementation of Ind-AS by NBFCs... loan accounts classified as NPAs may be upgraded as 'standard' asset only if the entire arrears of interest and principal are paid by the borrower. (Also), NBFCs shall have time till September 30, 2022 to put in place the necessary systems to implement this provision.’

The November 12, 2021 circular was an improvement on its October 1, 2021 circular on the prudential norms on income recognition, asset classification and provisioning pertaining to advances, wherein the RBI had prevented all types of lenders from upgrading an NPA account after getting only interest dues cleared. This was issued after the central bank observed that some lenders were upgrading NPA accounts to standard on payment of only interest overdues, partial overdues, etc.

To avoid any ambiguity in this regard, the apex bank had said it is clarified that loan accounts classified as NPAs may be upgraded as a standard account only if the entire arrears of interest and principal are paid by the borrower. The revised circular also said the definition of 'out of order', as clarified in the November 2021 circular, shall be applicable to all loans offered as an overdraft facility, including those not meant for business purposes and/or which entail interest repayments as the only credits.

The CNX Nifty ended at 17322.20, down by 30.25 points or 0.17% after trading in a range of 17257.70 and 17490.60. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Divi's Lab up by 3.22%, Adani Ports up by 2.80%, ONGC up by 2.68%, Indian Oil Corporation up by 2.32% and HDFC Life Insurance up by 2.22%. On the flip side, Power Grid Corporation down by 3.51%, NTPC down by 1.59%, ICICI Bank down by 1.55%, SBI down by 1.54% and Ultratech Cement down by 1.53% were the top losers. (Provisional)

European markets were trading mostly in green, Germany’s DAX was up by 23.34 points or 0.15% to 15,436.05 and France’s CAC increased 21.01 points or 0.30% to 7,000.98, while UK’s FTSE 100 fell 13.68 points or 0.18% to 7,595.24.

Asian markets ended higher on Wednesday after Russia announced some units participating in military exercises around Ukraine were returning to their bases, which eased fears of an imminent Russian invasion of Ukraine. Meanwhile, investors are awaiting minutes of the Federal Reserve's January meeting due later in the day, with bets that the US Fed will raise interest rates by 50 basis points in March. Chinese shares gained after data showed the country's factory-gate inflation eased to its slowest pace in six months in January, which raised hopes that policymakers could ease policy further to support growth in the world's second-largest economy. Meanwhile, data from South Korea showed the country’s unemployment rate edged down in January, with the number of people employed rising at the sharpest pace in nearly 22 years.