Bloodbath continues on Dalal Street on geopolitical concerns

Indian equity benchmarks continued to trade with a cut of over a percentage point as geopolitical concern continued to spook streets’ sentiments. Persistent selling pressure witnessed on Dalal Street as there was no immediate relief from Russia-Ukriane conflict woes that have rapidly worsened. As per reports, the US is mulling to impose sanctions on Russia today. However, markets off day’s lows and gauges recaptured their crucial 56,900 (Sensex) and 17,000 (Nifty) levels as traders went for bargain hunting in fundamentally strong stocks. Traders also got some support with NITI Aayog CEO Amitabh Kant’s statement that Indian economy growing at 9.2%, among fastest-growing large economies. He added the Indian economy is expected to grow at similar rates in the coming years.

The BSE Sensex is currently trading at 56932.90, down by 750.69 points or 1.30% after trading in a range of 56394.85 and 56934.58. All the 30 stocks were declining on the index.

The broader indices were trading in red; the BSE Mid cap index shed 1.06%, while Small cap index was down by 1.59%.

The top losing sectoral indices on the BSE were Telecom down by 2.02%, Industrials down by 1.64%, TECK down by 1.62%, IT down by 1.55% and PSU was down by 1.47%, while there were no gainers on the BSE sectoral front.

The top losers on the Sensex were TCS down by 3.12%, Tata Steel down by 2.44%, Bharti Airtel down by 2.28%, Dr. Reddy's Lab down by 2.23% and Larsen & Toubro was down by 1.90%, while there were no gainers on the Sensex.

Meanwhile, India Ratings and Research in its latest report has said that facing intense competition from banks, gold  loan Non-Banking Financial Companies (NBFCs) are likely to adopt aggressive strategies to maintain and expand their gold loan franchise. It mentioned many banks, both private and public, have become fairly active in the gold loan space, enticed by high yield and liquid security. For example, gold loan portfolio across banks has jumped by more than 89 per cent year-on-year to Rs 60,700 crore in FY21 and Rs 70,900 crore in the first nine months of FY22.

Further, it said the gold loan auctions by NBFCs rose in April-December period of FY22, perhaps the highest since FY14 when gold saw larger volatility in its prices. NBFCs offering gold loans faced higher auction pressures in the first nine months of FY22, largely due to the COVID-19 impact on borrowers' cash flows and gold price correcting by around 10 per cent during mid-June to September 30, 2021.

It stated ‘We believe that auctions by gold loan NBFCs would normalise in the fourth quarter of FY22 as gold prices have stabilised since October 2021, after periods of corrections seen since December 2020, along with normalcy returning in business activities.’ Besides, it said while NBFCs have seen a sharp rise in loan auctions, the situation at banks have been less intensive as the regulations ensure that the Loan-To-Value (LTV) ratio remains lower throughout the tenor of the loans, increasing the incentive for borrowers to arrange for the redemption of gold loans from lenders.

The CNX Nifty is currently trading at 17002.75, down by 203.90 points or 1.19% after trading in a range of 16843.80 and 17004.20. There were 3 stocks advancing against 48 stocks declining on the index.

The few gainers on Nifty were ONGC up by 0.28%, Eicher Motors up by 0.22% and Hindalco up by 0.21%. On the flip side, TCS down by 3.20%, UPL down by 2.58%, BPCL down by 2.56%, Tata Steel down by 2.53% and Adani Ports down by 2.38% were the top losers.

All the Asian markets are trading in red; Nikkei 225 slipped 454.39 points or 1.69% to 26,456.48, Straits Times fell 31.09 points or 0.90% to 3,405.27, Hang Seng plunged 788.73 points or 3.26% to 23,381.34, Taiwan Weighted tumbled 246.69 points or 1.35% to 17,974.80, KOSPI lost 38.19 points or 1.39% to 2,705.61, Jakarta Composite declined 55.18 points or 0.80% to 6,847.79 and Shanghai Composite was down by 49.92 points or 1.43% to 3,440.69.