Bears hold grip over Dalal Street

Bears were holding their tight grip over the Dalal Street in late morning session, with both Sensex and Nifty trading in deep red. Negative cues from other Asian markets impacted domestic sentiments. Traders were cautious, after the Reserve Bank said it has decided not to activate the countercyclical capital buffer at this point in time as it is not required. Besides, automobile dealers' body FADA said that domestic passenger vehicle retail sales in March declined by 4.87 per cent to 2,71,358 units, as compared to the same month last year. According to the Federation of Automobile Dealers Associations (FADA), PV sales stood at 2,85,240 units in March 2021.

On the global front, Asian markets were trading in red, after China's service sector contracted notably in March as the recent rise in COVID-19 cases and restrictions to limit the spread of the virus led to a marked drop in activity. The survey results from S&P Global showed that the Caixin services Purchasing Managers' Index fell to 42.0 in March from 50.2 in February. This was the steepest fall since the initial onset of the pandemic in February 2020.

The BSE Sensex is currently trading at 59656.47, down by 520.03 points or 0.86% after trading in a range of 59509.84 and 59941.57. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.43%, while Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were Telecom up by 1.83%, Utilities up by 1.79%, Power up by 1.67%, Metal up by 1.20% and Oil & Gas up by 0.92%, while Bankex down by 1.19%, IT down by 1.08%, TECK down by 0.90%, Auto down by 0.53% and Realty down by 0.45% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.82%, Tata Steel up by 2.02%, Bharti Airtel up by 0.97%, Larsen & Toubro up by 0.91% and Ultratech Cement up by 0.62%. On the flip side, HDFC Bank down by 2.85%, HDFC down by 2.76%, Tech Mahindra down by 1.83%, HCL Tech. down by 1.74% and TCS down by 1.42% were the top losers.

Meanwhile, rating agency ICRA in its latest report has said that the outlook for banks is expected to be stable amid improvement in credit growth of 8.9-10.2 per cent and decline in provisions in the current fiscal (FY23). In terms of asset quality, it said the Gross Non-Performing Advances (GNPAs) of banks are expected to decline to 5.6-5.7 per cent by March, 2023 as against estimate of 6.2-6.3 per cent by March, 2022 while the net non-performing advances will decline to 1.7-1.8 per cent as against estimate of 2 per cent by March 2022.

According to the report, credit growth would come from non-food segment borrowing which continues to be driven by retail and MSME segments, and partially by co-lending arrangements with non-banking finance companies (NBFCs). In the wholesale credit segment, it said growth will be supported by demand shift from debt capital market to bank credit in a rising yield scenario as was seen in FY19. It expects treasury income to decline materially during FY23 in a rising bond yield scenario. Credit and other provisions are estimated to decline to 1.3-1.4 per cent of advances in FY23 as against estimated 1.7-1.8 per cent in FY22. On the other hand, the deposit growth is expected to slowdown to 7.3-7.9 per cent in FY23 as against 8.3 per cent estimated in FY22.

In terms of regulatory and growth capital requirements, the report said public sector banks will be self-sufficient in FY23 while the incremental capital requirement for private sector lenders are estimated at less than Rs 10,000 crore. It also said credit growth will reduce liquidity surplus in the banking system to Rs 1.5-2.5 lakh crore, and RBI may also suck out surplus liquidity. It added that major growth drivers will be strong corporate credit ratio, tightened underwriting in retail and MSME segments, reducing bounce rates and improving collections.

The CNX Nifty is currently trading at 17821.45, down by 135.95 points or 0.76% after trading in a range of 17779.85 and 17901.00. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Coal India up by 3.49%, NTPC up by 2.82%, Tata Steel up by 2.05%, UPL up by 1.44% and JSW Steel up by 1.17%. On the flip side, HDFC Bank down by 2.92%, HDFC down by 2.86%, HDFC Life Insurance down by 1.96%, Tech Mahindra down by 1.87% and HCL Tech. down by 1.75% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 320.45 points or 1.42% to 22,181.86, Nikkei 225 slipped 417.36 points or 1.5% to 27,370.62, Jakarta Composite lost 50.98 points or 0.71% to 7,097.32, Shanghai Composite declined 7.27 points or 0.22% to 3,275.45, KOSPI fell 21.76 points or 0.79% to 2,737.44, Straits Times trembled 14.36 points or 0.42% to 3,430.65 and Taiwan Weighted dropped 130.14 points or 0.74% to 17,495.45.