Post Session: Quick Review

Volatility continued on Dalal Street and markets ended in red for third straight session on Friday amid nervousness among investors globally after concerns about the Ukraine-Russia conflict resurfaced. Markets made a weak opening as traders remained concerned 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, markets gained traction and entered into green terrain in noon deals taking support with rating agency ICRA’s statement that the government's ambitious production-linked incentive (PLI) scheme will look to unlock manufacturing capacity as well as support in attracting about Rs 4 lakh crore of capital expenditure over the next five years. 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.

However, market participants booked all of their gains in later part of the trade as sentiments got dented after SBI's research report- Ecowrap stated that country's gross domestic product (GDP) is likely to grow at 5.8 per cent in the third quarter of fiscal 2022. It stated ‘As per SBI Nowcasting Model, the forecasted GDP growth for Q3 FY22 would be 5.8%, with a downward bias. The full year (FY22) GDP growth is now revised downwards to 8.8% from our earlier estimate of 9.3%.’

On the global front, European markets made a positive opening after UK retail sales recovered at a faster than expected pace in January. Retail sales volume grew 1.9 percent month-on-month, in contrast to the revised 4 percent decline in December. This was also faster than the expected growth of 1.0 percent. Asian markets ended mostly in red, following a steep drop on Wall Street fuelled by renewed fears that Russia will soon invade Ukraine, adding to long-running angst about the Federal Reserve’s plans to hike interest rates. Back home, telecom stocks remained in focus as Trai data showed the mobile user count in India fell by 12.8 million in December 2021 compared to the previous month, with Reliance Jio and Vodafone Idea suffering subscriber losses, even as Bharti Airtel added customers. 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 ended at 57832.97, down by 59.04 points or 0.10% after trading in a range of 57488.39 and 58175.35. There were 12 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index lost 0.80%, while Small cap index was down by 0.80%. (Provisional)

The only gaining sectoral indices on the BSE were Capital Goods up by 0.39% and Bankex up by 0.28%, while Realty down by 1.23%, Oil & Gas down by 1.14%, Basic Materials down by 0.97%, Healthcare down by 0.89% and Energy down by 0.88% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were HDFC up by 0.96%, Larsen & Toubro up by 0.66%, Axis Bank up by 0.64%, SBI up by 0.49% and Kotak Mahindra Bank up by 0.45%. On the flip side, Ultratech Cement down by 2.03%, Mahindra & Mahindra down by 1.36%, Infosys down by 1.08%, Bajaj Finance down by 0.85% and Reliance Industries down by 0.73% were the top losers. (Provisional)

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 ended at 17276.30, down by 28.30 points or 0.16% after trading in a range of 17219.20 and 17380.80. There were 18 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Coal India up by 2.61%, SBI Life Insurance up by 2.14%, HDFC up by 1.22%, Bajaj Auto up by 0.97% and Larsen & Toubro up by 0.77%. On the flip side, ONGC down by 2.24%, Cipla down by 2.06%, Divi's Lab down by 2.00%, Ultratech Cement down by 1.84% and Shree Cement down by 1.51% were the top losers. (Provisional)

European markets were trading mostly in green, UK’s FTSE 100 increased 13.98 points or 0.19% to 7,551.35 and France’s CAC increased 30.44 points or 0.44% to 6,977.26, while Germany’s DAX was down by 6.99 points or 0.05% to 15,260.64.

Most of the Asian markets ended lower on Friday as the risk aversion protruded in the market followed by US warning on an imminent Russian attack on Ukraine. Albeit, Russia accused the West of stoking tensions. However, the selling pressure somehow eased after US secretary of state Antony Blinken agreed to meet with Russian foreign minister Sergei Lavrov next week, raising hopes for a diplomatic solution to the ongoing standoff. Japan’s Nikkei ended lower amid bets of roll back of pandemic-driven stimulus after the country posted slowest inflation rate in January and on receding concerns over geo-political concerns in Ukraine. Though, China’s Shanghai finished higher on anticipations of more monetary stimulus in property sector. Chinese Finance ministry’s affirmation on corporate tax rates trimming, stemming targeted fiscal spending, and tightened fiscal discipline this year as part of efforts to stabilise the macro economy, also boosted the investments in the equity market.