Bourses trade near neutral lines with negative bias in late afternoon session

The Indian equity benchmarks traded near neutral lines with negative bias in late afternoon session. Traders were seen piling up positions in Auto, Consumer Discretionary and Industrials sectors while selling was witnessed in Metal, Power and Utilities sectors’ stocks. Cautiousness prevailed in the markets after India's merchandise exports in May rose by 20.55 per cent to $38.94 billion, while the trade deficit ballooned to a record $24.29 billion. Imports during May 2022 grew by 62.83 per cent to $63.22 billion. In scrip specific development, Life Insurance Corporation of India remained in focused, as LIC increased stake in Capri Global Capital, Hero MotoCorp and HUL. On the global front, Asian markets were trading mixed as investors awaited the Federal Reserve's interest-rate decision later in the day for clues on how aggressive the U.S. central bank intends to be in the coming months. European markets were trading higher despite rising headwinds to growth.

Back home, the BSE Sensex is currently trading at 52660.53, down by 33.04 points or 0.06% after trading in a range of 52538.51 and 52867.73. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.53%, while Small cap index was up by 0.51%.

The top gaining sectoral indices on the BSE were Auto up by 1.01%, Consumer Discretionary up by 0.68%, Industrials up by 0.66%, Capital Goods up by 0.60% and Healthcare was up by 0.45%, while Metal down by 0.80%, Power down by 0.78%, Utilities down by 0.71%, Oil & Gas down by 0.67% and Energy was down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 4.10%, Bajaj Finance up by 1.67%, SBI up by 1.46%, Mahindra & Mahindra up by 1.08% and Larsen & Toubro up by 0.96%. On the flip side, Tata Steel down by 3.50%, NTPC down by 2.41%, Wipro down by 1.05%, Tech Mahindra down by 0.93% and Hindustan Unilever down by 0.86% were the top losers.

Meanwhile, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that the sharp rise in the interest rate is likely to affect the volume in non-priority sector lending (PSL) securitisation in the near term, unlike that of PSL transactions, which are more driven by regulatory requirements. According to the report, the sharp rate rise of more than 1%-2% along with a challenging business environment may affect borrowers with floating interest rate loans such as home loans and loan-against-property (LAP), and especially borrowers having lesser financial flexibilities.

Ind-Ra further noted that it will continue to monitor the situation, especially the assets classes which are more susceptible to the twin shocks of rising interest rates and the challenging business environment. The agency believes that the impact of the interest rate hikes will be asymmetric, and more visible on the securitisation of the fixed interest rate asset classes such as commercial vehicles (CVs) and tractors, secured and unsecured business loans as well as the instruments where minimum holding period (MHP) norms stipulate at least a six-month seasoning before being securitised.

Hence, it said that any pools, which are now eligible, would have been originated at lower interest rates. Consequently, this would lead to lower spreads in the through certificate (PTC) transactions. Asset classes such as home loans and LAP, where interest rates are generally floating based on a benchmark rate, would not face the same issues as loan rates can be reset periodically, hence, transaction spreads may not be affected. Additionally, the securitisation of PSL pools may not see a material drop in volumes, as regulatory PSL requirements would ensure securitisation volumes.

The CNX Nifty is currently trading at 15726.15, down by 5.95 points or 0.04% after trading in a range of 15683.30 and 15783.65. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 4.31%, Tata Motors up by 2.15%, Hero MotoCorp up by 1.86%, Bajaj Finance up by 1.83% and Grasim Industries up by 1.79%. On the flip side, Tata Steel down by 3.43%, ONGC down by 2.56%, NTPC down by 2.48%, Coal India down by 1.09% and Wipro down by 1.08% were the top losers.

Asian markets were trading mixed, Nikkei 225 slipped 303.70 points or 1.14% to 26,326.16, Taiwan Weighted dropped 48.12 points or 0.3% to 15,999.25, KOSPI fell 45.59 points or 1.83% to 2,447.38 and Jakarta Composite was down by 42.83 points or 0.61% to 7,007.05. On the flip side, Straits Times advanced 7.99 points or 0.26% to 3,116.88, Shanghai Composite gained 16.50 points or 0.5% to 3,305.41 and Hang Seng was up by 240.22 points or 1.14% to 21,308.21.

European markets were trading higher, UK’s FTSE 100 increased 81.12 points or 1.13% to 7,268.58, France’s CAC increased 80.17 points or 1.35% to 6,030.01 and Germany’s DAX was up by 186.87 points or 1.4% to 13,491.26.