Benchmarks remain flat in late morning session

Indian equity benchmarks remained flat in late morning session on the back of selling in metal along with dull energy stocks. Mixed cues from other Asian markets also impacted domestic markets. Some concerns also came after Crisil Ratings said in a report that non-banking financial companies are likely to witness close to Rs 18 lakh crore of their outstanding debt getting repriced at higher levels in FY23 amid the rising interest rate scenario. The agency expects borrowing cost of NBFCs (Non-Banking Financial Companies) to go up by 85-105 basis points (bps) in this fiscal owing to recent hikes in repo rate by 90 basis points in two tranches and an expected rise of another 75 bps in the remaining fiscal.

Besides, highlighting the issue of public stockholding for food security at World Trade Organization (WTO) 12th Ministerial Conference (MC12), Union Minister of Commerce and Industry, Consumer Affairs, Food & Public Distribution and Textiles, Piyush Goyal  asked, 'What is holding back WTO, still no solution to public stockholding for food security.

On the global front, Asian markets were trading mixed, after China industrial production logged a mild recovery in May and retail sales fell less than expected with the gradual relaxation of pandemic-related restrictions. According to the National Bureau of Statistics, industrial production rose 0.7 percent on a yearly basis in May, reversing the 2.9 percent fall in April. Production was forecast to drop 0.7 percent.

The BSE Sensex is currently trading at 52683.54, down by 10.03 points or 0.02% after trading in a range of 52538.51 and 52819.79. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.57%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Auto up by 1.02%, Industrials up by 0.82%, Capital Goods up by 0.76%, Consumer discretionary up by 0.62% and Utilities up by 0.47%, while Metal down by 0.25%, Energy down by 0.14%, FMCG down by 0.13%, TECK down by 0.12% and Realty down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 2.77%, SBI up by 1.38%, Bajaj Finance up by 1.17%, Mahindra & Mahindra up by 1.16% and Larsen & Toubro up by 1.05%. On the flip side, Tata Steel down by 3.35%, HDFC down by 1.04%, Hindustan Unilever down by 0.95%, Nestle down by 0.64% and NTPC down by 0.56% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that Non-banking financial companies (NBFCs) are likely to witness close to Rs 18 lakh crore of their outstanding debt getting repriced at higher levels in FY23 amid the rising interest rate scenario. It said borrowing cost of NBFCs are expected to become costlier by 85-105 basis points (bps) in this fiscal owing to recent hikes in repo rate by 90 basis points in two tranches and an expected rise of another 75 bps in the remaining fiscal. 

The agency said an analysis of its rated NBFCs shows, Rs 15 lakh crore of debt, or around 65 per cent of outstanding debt as on March 31, 2022, is due for repricing this fiscal owing to interest reset or maturity. Another Rs 3 lakh crore of incremental debt is likely to be raised to support expected growth in lending. Banks remain a major funding resource for NBFCs. The share of banks in NBFCs' total borrowings has increased to 34 per cent in March 2022 from 27 per cent in March 2018. The agency said the impact of rate hikes will vary based on the mix of fixed and floating rate borrowings in NBFC portfolios.

The report said ‘Our study shows increases or decreases in MCLR over the past five fiscals have not kept pace with the changes in the repo rate. At the same time, interest rates on repo-linked bank facilities do reflect such changes very quickly.’ It said in home loans, constituting 35-40 per cent of Assets Under Management (AUM), NBFCs should be able to pass on the higher rates to both existing and new clients since lending rates here are primarily floating in nature. But this rise won't be to the same extent as the increase in borrowing costs, amid intensifying competition from banks.

The CNX Nifty is currently trading at 15728.05, down by 4.05 points or 0.03% after trading in a range of 15683.30 and 15780.15. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 2.69%, Tata Motors up by 2.15%, Hero MotoCorp up by 1.56%, Grasim Industries up by 1.42% and Divi's Lab up by 1.34%. On the flip side, Tata Steel down by 3.36%, BPCL down by 1.42%, HDFC down by 1.33%, ONGC down by 1.03% and Hindustan Unilever down by 0.93% were the top losers.

Asian markets were trading mixed; Nikkei 225 slipped 294.60 points or 1.11% to 26,335.26, Jakarta Composite lost 72.92 points or 1.03% to 6,976.96, KOSPI fell 54.63 points or 2.19% to 2,438.34 and Taiwan Weighted dropped 22.91 points or 0.14% to 16,024.46. On the flip side, Straits Times advanced 19.00 points or 0.61% to 3,127.89, Shanghai Composite gained 46.21 points or 1.41% to 3,335.12 and Hang Seng increased 299.12 points or 1.42% to 21,367.11.