Markets trade flat with negative bias in morning deals

Indian equity benchmarks trimmed some of their losses and were now trading flat with a negative bias in morning deals, amid nervousness among investors globally after concerns about the Ukraine-Russia conflict resurfaced. Traders remained cautious with Crisil Ratings’ report stated that since the introduction of new asset quality norms last November that brought in shadow banks and housing financiers on par with banks, housing finance companies' gross bad loans have gone up by 70 basis points (bps) even as their portfolio quality has improved. However, losses remain capped as some support came with Finance Minister Nirmala Sitharaman has urged multilateral financial institutions to increase funding especially to low and middle income countries to prepare them to deal with pandemic situations in the future. She said that low income and middle income countries do not have enough resources and need global support to face challenges.

On the global front, Asian markets were trading mixed as traders reacted to the geopolitical concerns focused on Russia and Ukraine, as well as sinking crude oil prices. Back home, on the sectoral front, power industry’s stocks remained in action as the Ministry of Power notified green hydrogen policy, which will help in meeting the target of production of 5 million tonnes of Green hydrogen by 2030 and the related development of renewable energy capacity.

The BSE Sensex is currently trading at 57842.57, down by 49.44 points or 0.09% after trading in a range of 57488.39 and 57939.65. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.15%, while Small cap index was down by 0.04%.

The top gaining sectoral indices on the BSE were Power up by 1.02%, Capital Goods up by 1.00%, Utilities up by 0.98%, Metal up by 0.76% and Industrials up by 0.41%, while Healthcare down by 0.62%, IT down by 0.56%, TECK down by 0.48%, Oil & Gas down by 0.26% and FMCG down by 0.25% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.49%, Tata Steel up by 1.05%, Power Grid Corporation up by 1.04%, HDFC up by 0.95% and NTPC up by 0.72%. On the flip side, Infosys down by 0.96%, Ultratech Cement down by 0.90%, Tech Mahindra down by 0.80%, Asian Paints down by 0.74% and Wipro down by 0.66% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has revised its outlook on the banking sector to ‘improving’ from ‘stable’ for next fiscal year (FY23), helped by better credit demand and strong balance sheet of lenders. For next fiscal year, the agency expects credit growth to pick up to 10 per cent and sees gross non-performing asset (GNPA) ratio at 6.1 per cent.  It mentioned ‘We have revised the outlook on the overall banking sector to improving for FY23 from stable, as the banking system’s health is at its best in decades. The improving health trend that began in FY20 is likely to continue into FY23.’

Key financial metrics are likely to continue to show improvement in FY23, backed by strengthened balance sheets and an improving credit demand outlook with an expected commencement of the corporate capex cycle. The agency’s stable outlook on public sector banks (PSBs) for FY23 reflects reasonable capital buffers, low overhang of corporate stress in terms of expected slippages and manageable impact of COVID-19.

It expects PSBs to look for growth across sectors and benefit from loan recoveries, considering their highest profitability in the past six years. The stable outlook on large private banks for FY23 indicates their continued market share gains in both assets and liabilities. Most have strengthened their capital buffers and proactively managed their portfolio.

The CNX Nifty is currently trading at 17289.70, down by 14.90 points or 0.09% after trading in a range of 17219.20 and 17321.65. There were 21 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Coal India up by 1.96%, SBI Life Insurance up by 1.39%, Larsen & Toubro up by 1.28%, Tata Steel up by 1.02% and Power Grid Corporation up by 0.99%. On the flip side, Cipla down by 2.24%, Divi's Lab down by 1.65%, Shree Cement down by 1.41%, ONGC down by 1.14% and Infosys down by 0.87% were the top losers.

Asian markets were trading mixed; Hang Seng decreased 119.31 points or 0.48% to 24,673.46, Nikkei 225 slipped 80.69 points or 0.3% to 27,152.18, Taiwan Weighted dropped 30.40 points or 0.17% to 18,238.17 and KOSPI fell 2.25 points or 0.08% to 2,741.84.

On the flip side, Shanghai Composite gained 0.74 points or 0.02% to 3,468.78, Straits Times advanced 2.33 points or 0.07% to 3,443.90 and Jakarta Composite soared 54.57 points or 0.8% to 6,889.69.