Benchmarks continue to trade in green in morning deals

Indian equity benchmarks continued to trade in green in morning deals, led by gains in TECK, IT, banking and Telecom stocks. Sentiments remained positive with Fitch Ratings’ report that strengthening economic recovery and stable financial metrics will help state-owned banks have stable earnings during the next financial year, aided by the gradual unwinding of regulatory forbearance through the year. It also said private sector banks are better placed to reap the benefits of recovery and will continue to increase their market share both in credit as well as deposits. Some support also came with Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that prudent budget assumptions for FY23 will ensure that the macro-fundamentals will be able to hold-up in the near-term amid heightened concerns over the impact of the Russian invasion of Ukraine on the Indian economy. On the global front, Asian markets are trading mostly in red as traders track developments in the Ukraine war and diplomatic efforts to bring the crisis to an end, while this week's Federal Reserve meeting is in focus as it prepares to start lifting interest rates.

The BSE Sensex is currently trading at 55782.60, up by 232.30 points or 0.42% after trading in a range of 55556.47 and 55868.92. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.63%, while Small cap index was down by 0.16%.

The top gaining sectoral indices on the BSE were TECK up by 1.25%, IT up by 1.18%, Bankex up by 0.89%, Telecom up by 0.48% and Healthcare up by 0.03%, while Realty down by 1.63%, Oil & Gas down by 1.38%, Auto down by 1.06%, Metal down by 0.96% and Energy down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 2.27%, Infosys up by 2.07%, Wipro up by 1.18%, ICICI Bank up by 1.17% and Axis Bank up by 0.87%. On the flip side, Hindustan Unilever down by 2.14%, Bajaj Finance down by 1.60%, Tata Steel down by 1.08%, Mahindra & Mahindra down by 0.92% and Ultratech Cement down by 0.82% were the top losers.

Meanwhile, Fitch Ratings in its latest report has said that strengthening economic recovery and stable financial metrics will help state-owned banks have stable earnings during the next financial year, aided by the gradual unwinding of regulatory forbearance through the year. It also said private sector banks are better placed to reap the benefits of recovery and will continue to increase their market share both in credit as well as deposits. Noting that regulatory forbearance has suppressed state-owned banks' immediate capital requirements by deferring recognition of stressed loans, the report said private banks are most competitive on this front, too.

It expects earnings and profitability of banks to recover next fiscal on the back of falling loan impairment charges that improved to 1.2% in H1 of FY22, from 1.7% a year ago, because forbearance will limit fresh loan impairments. Asset quality pressure will ease on the back of improving recoveries from impaired loans, while earnings are supported by adequate pre-provision profit of 3.6% in H1, up 10 basis points against a year ago, thanks to stable net interest margins and operating costs.

But, it said waning forbearance is likely to pressure profitability, and average operating profit/risk-weighted assets will remain commensurate with banks' current earnings and profitability scores. On the other hand, it stated earnings of private banks should continue to outperform state-owned banks, supported by higher pre-provisioning income buffers and more profitable loan mix along with greater diversification of income base. However, it warned any rise in loan impairment charges after forbearance unwinds should be somewhat offset by robust loan growth and rising fee income amid steady cost/income ratios. It said the banking market is focused on traditional banking, as reflected in the high share of loans at 55% of assets.

The CNX Nifty is currently trading at 16663.10, up by 32.65 points or 0.20% after trading in a range of 16606.50 and 16702.55. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were HDFC Bank up by 2.35%, Infosys up by 2.10%, Wipro up by 1.15%, ICICI Bank up by 1.00% and Tech Mahindra up by 0.78%. On the flip side, Tata Motors down by 2.83%, Indian Oil Corporation down by 2.67%, BPCL down by 2.29%, Hindustan Unilever down by 2.14% and Eicher Motors down by 1.70% were the top losers.

Asian markets are trading mostly in red; Hang Seng decreased 782.32 points or 3.81% to 19,771.47, Shanghai Composite declined 43.02 points or 1.3% to 3,266.73, Straits Times trembled 21.99 points or 0.68% to 3,227.67, Taiwan Weighted dropped 21.13 points or 0.12% to 17,243.61 and KOSPI fell 16.41 points or 0.62% to 2,644.87.

On the flip side, Jakarta Composite soared 31.92 points or 0.46% to 6,954.52 and Nikkei 225 surged 261.30 points or 1.04% to 25,424.08.