Benchmarks continue firm trade in morning session

Local equity markets continued their firm trade in the morning session on account of buying in front line counters. Some solace came as private report stated that hiring activity witnessed a 6 per cent year-on-year growth in March this year, supported by a rebound in economic activities and led by sectors such as banking and telecom. Traders overlooked the International Monetary Fund’s (IMF) report in which it has slashed its gross domestic product (GDP) growth forecast of India to 8.2 per cent for fiscal year 2022-23 (FY23) from 9 per cent forecasted earlier. It said that higher commodity prices will weigh on private consumption and investment. This was one of the steepest cuts for emerging economies compared to the IMF’s January WEO forecasts. Besides, Crisil Ratings in its latest report stated that financial conditions are going to tighten in the country over the next few months due to the likely increase in capital outflows, driven by rising external shocks, coupled with greater domestic vulnerability. Meanwhile, the government said 1.03 lakh new manufacturing and service units were set up under its flagship scheme PMEGP along with creation of over 8.25 lakh jobs in the last financial year.

On the global front, Asian markets are trading mostly in green following the broadly positive cues overnight from Wall Street, as traders reacted positively to some of the latest corporate earnings news. Back home, fertilizer industry stocks remained in focus with a private report that India’s fertiliser subsidy expenses could touch Rs 2 trillion in 2022-23 because of a sharp spike in global prices of urea, di-ammonium phosphate (DAP) and muriate of potash (MoP) in the last one year.

BSE Sensex is currently trading at 56989.89, up by 526.74 points or 0.93% after trading in a range of 56521.33 and 57036.26. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.10%, while Small cap index up by 1.16%.

The top gaining sectoral indices on the BSE were Energy up by 2.07%, Auto up by 2.07%, Oil & Gas up by 1.52%, TECK up by 1.47% and IT up by 1.39%, while Capital Goods down by 0.16% and Bankex down by 0.13% were the few losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.69%, Maruti Suzuki up by 2.67%, Dr. Reddy's Lab up by 2.67%, TCS up by 2.38% and Ultratech Cement up by 1.98%. On the flip side, Bajaj Finance down by 1.52%, Larsen & Toubro down by 1.43%, Power Grid Corporation down by 0.92%, Kotak Mahindra Bank down by 0.90% and Axis Bank down by 0.63% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has announced a slew of regulatory changes for non-banking lenders by amending the October 2021 circulars on scale-based regulations, which have brought in large NBFCs almost on par with bankers when it comes to addressing their credit risk concentration. The regulator issued four separate circulars: Large exposures framework for NBFCs -- upper layer; Disclosures in their financial statements; Scale-based regulation for capital requirements - upper layer; and Regulatory restrictions on their loans and advances. These are improvements on the October 22, 2021, circulars.

On the large exposure framework with the upper layer, the regulator said these prudential guidelines are aimed at addressing credit risk concentration in NBFCs and are set out to identify large exposures, refine the criteria for grouping of connected counterparties and put in place reporting norms for large exposures. The regulator said the sum of all the exposure value of an NBFC to a single counterparty cannot exceed 20 per cent of its available eligible capital base at all times.

However, the board can allow an additional 5 per cent exposure beyond 20 per cent but at no time higher than 25 per cent of its eligible capital base, if the NBFC has a board-approved policy, setting out conditions under which over 20 per cent exposure may be considered; and if it informs the RBI in writing the exceptional reasons for which exposure beyond 20 per cent is being allowed in a specific case. But the new norms allow an NBFC into infrastructure financing can exceed the exposure limit by 5 per cent of its tier I capital to a single counterparty - means 30 per cent of the tier I capital -- if the additional exposure is on account of infrastructure loan and/or investment in which case it can go up to 35 per cent.

However, the new norms retain the definition of tier I capital as defined in the master direction issued in 2016 for systemically important NBFC and said profit accrued during the year will be reckoned as tier I capital after making necessary adjustments as per the guidelines applicable. It said regulated entities have to obtain an external auditor's certificate on completion of the augmentation of capital and submit the same to the Reserve Bank before reckoning the additions to capital funds, and added an eligible capital base means tier I capital.

The CNX Nifty is currently trading at 17120.95, up by 162.30 points or 0.96% after trading in a range of 16978.95 and 17137.45. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 3.84%, Tata Motors up by 2.73%, Maruti Suzuki up by 2.70%, Dr. Reddy's Lab up by 2.69% and Reliance Industries up by 2.62%. On the flip side, Larsen & Toubro down by 1.70%, Bajaj Finance down by 1.34%, Power Grid Corporation down by 0.86%, Kotak Mahindra Bank down by 0.70% and Axis Bank down by 0.58% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 231.72 points or 0.86% to 27,216.81, Hang Seng increased 172.30 points or 0.82% to 21,200.06, Taiwan Weighted strengthened 69.98 points or 0.41% to 17,063.38, Straits Times advanced 23.06 points or 0.7% to 3,330.19 and KOSPI rose 4.66 points or 0.17% to 2,723.55.

On the flip side, Jakarta Composite lost 5.58 points or 0.08% to 7,193.65 and Shanghai Composite declined 6.80 points or 0.21% to 3,187.23.