Bears hold grip over Dalal Street in late morning session

Bears were holding a tight grip over the Dalal Street in late morning session, with both Sensex and Nifty trading in deep red, on the back of negative cues from other Asian markets. Sentiments were downbeat as there was heavy selling in Consumer Durables, Realty and FMCG sectors. Adding some worries, Automobile dealers' body Federation of Automobile Dealers Associations (FADA) has said retail sales of passenger vehicles grew last month of current year (May 2022) but the sales of two-wheeler and commercial vehicles remained low compared to the pre-COVID month of May 2019.

Traders overlooked reports that the Finance Ministry has released the 3rd monthly installment of Post Devolution Revenue Deficit (PDRD) Grant of Rs.7,183.42 crore to 14 States. The Fifteenth Finance Commission has recommended a total Post Devolution Revenue Deficit Grant of Rs 86,201 crore to 14 states for the financial year 2022-23.

On the global front, Asian markets were trading mostly in red, after Thailand's consumer price inflation accelerated at a faster-than-expected pace in May to reach its highest level in nearly fourteen years, mainly due to surging energy prices. The figures from the Ministry of Commerce revealed that the consumer price index climbed 7.1 percent year-over-year in May, faster than the 4.65 percent rise in the previous month.

The BSE Sensex is currently trading at 54995.90, down by 679.42 points or 1.22% after trading in a range of 54882.41 and 55387.77. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.19%, while Small cap index was down by 0.83%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.28%, Energy up by 1.06%, Utilities up by 0.73%, Power up by 0.60% and PSU up by 0.45%, while Consumer Durables down by 3.11%, Realty down by 2.02%, FMCG down by 1.57%, Capital Goods down by 1.52% and Basic Materials down by 1.52% were the top losing indices on BSE.

The only gainers on the Sensex were NTPC up by 0.39% and Power Grid up by 0.27%. On the flip side, Titan Co down by 4.52%, Hindustan Unilever down by 2.81%, Dr. Reddy's Lab down by 2.81%, Ultratech Cement down by 2.52% and Larsen & Toubro down by 2.49% were the top losers.

Meanwhile, Reserve Bank of India (RBI) has came out with a set of norms for provisioning for standard assets by large Non-Banking Financial Companies (NBFCs) in view of the increasing role played by such entities in the financial system. In October last year, RBI had issued a framework for scale-based regulation for NBFCs. Regulatory structure for NBFCs comprise four layers based on their size, activity, and perceived riskiness.

In case of individual housing loans and loans to Small and Micro Enterprises (SMEs), the rate of provision has been specified at 0.25 per cent and for housing loans extended at teaser rates, it has been fixed at 2 per cent. The latter will decrease to 0.4 per cent after 1 year from the date on which the rates are raised. For Commercial Real Estate - Residential Housing (CRE - RH) sector, the rate of provision is 0.75 per cent, and for CRE, other than residential housing, it will be 1 per cent. Further, RBI said the rate of provision for restructure loans will as per the stipulation in the applicable prudential norms. The rate of provision for medium enterprises has been fixed at 0.4 per cent.

It also said the current credit exposures arising on account of the permitted derivative transactions shall attract provisioning requirement as applicable to the loan assets in the 'standard' category, of the concerned counterparties. The upper layer comprises those NBFCs which are specifically identified by RBI as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology. The top ten eligible NBFCs in terms of their asset size shall always reside in the upper layer, irrespective of any other factor.

The CNX Nifty is currently trading at 16376.85, down by 192.70 points or 1.16% after trading in a range of 16347.10 and 16487.25. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were ONGC up by 5.03%, Coal India up by 1.39%, BPCL up by 0.59%, Bajaj Auto up by 0.40% and Power Grid up by 0.16%. On the flip side, Titan Co down by 4.50%, UPL down by 3.22%, Hindustan Unilever down by 2.91%, Dr. Reddy's Lab down by 2.69% and Ultratech Cement down by 2.68% were the top losers.

Asian markets were trading mostly in red; Straits Times trembled 7.10 points or 0.22% to 3,219.53, Hang Seng decreased 25.53 points or 0.12% to 21,628.37, KOSPI fell 35.83 points or 1.34% to 2,634.82 and Taiwan Weighted dropped 92.37 points or 0.56% to 16,513.59. On the flip side, Nikkei 225 surged 80.14 points or 0.29% to 27,996.03, Jakarta Composite soared 33.64 points or 0.47% to 7,130.22 and Shanghai Composite gained 15.63 points or 0.48% to 3,252.00.