Benchmarks trade in red terrain in morning deals

Indian equity benchmarks are trading in red terrain in morning deals, amid growing worries about recession. Weakness across most sectors pulled the headline indices lower, with Consumer Durables, Healthcare and Oil & Gas shares being the biggest contributors. Traders got anxious as referring to economic crisis in Sri Lanka, a Reserve Bank article said states are showing warning signs of building stress, and the 5 most indebted ones -- Punjab, Rajasthan, Bihar, Kerala and West Bengal -- need to take corrective measures by cutting down expenditure on non-merit goods. Traders overlooked Economic Affairs Secretary Ajay Seth’s statement that the government does not see any adverse impact on the Indian economy post the US Federal Reserve's decision to raise interest rates by 75 basis points. Meanwhile, the Goods and Services Tax (GST) Council will meet on June 28-29 to deliberate on the way forward after end of the five-year compensation period for states on June 30, including rationalization of tax rates in a phased manner, as a multi-year goal due to inflationary concerns.

On the global front, Asian markets are trading mostly in red amid rising concerns of a possible recession in the foreseeable future due to aggressive policy tightening by central banks around the world. Back home stocks related to steel industry remained in watch as rating agency ICRA revised its outlook on the domestic steel to stable from positive, mainly on the account of mounting input costs amid low steel rates. Telecom stocks remained in focus after the telecom department invites players for pre-bid conference of 5G spectrum on June 20. Airline stocks were in action as the jet fuel prices were sharply hiked by 16 per cent, recording an all-time high, in order to be in-line with the soaring international crude oil prices.

The BSE Sensex is currently trading at 51308.63, down by 187.16 points or 0.36% after trading in a range of 50921.22 and 51634.15. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.18%, while Small cap index was down by 1.16%.

The lone gaining sectoral index on the BSE was Metal up by 0.23%, while Consumer Durables down by 2.37%, Healthcare down by 2.16%, Oil & Gas down by 1.63%, Consumer Discretionary down by 1.60% and IT down by 1.41% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 1.53%, Reliance Industries up by 1.42%, Tata Steel up by 1.04%, ITC up by 0.75% and Bajaj Finance up by 0.47%. On the flip side, Dr. Reddy's Lab down by 4.94%, Titan Company down by 4.33%, Wipro down by 2.95%, Sun Pharma down by 2.63% and Asian Paints down by 2.13% were the top losers.

Meanwhile, RBI Deputy Governor M Rajeshwar Rao has said despite the improvement in asset quality, financial institutions, including banks, need to proactively undertake stress testing of loan books to examine their loss absorption limits and take steps to improve them wherever required. Rao stated the gross non-performing assets (GNPAs) and net NPAs of banks improved to 5.97 per cent and 1.7 per cent as of March 31, 2022, from 9.23 per cent and 3.66 per cent as of September 2019, respectively.

He noted although the asset quality has improved from the pre-pandemic levels, lenders should ascertain whether this is on account of better fundamentals or due to the regulatory support extended to deal with the impact of the pandemic. He said while the central bank has attempted to combat the impact of the pandemic on the financial system, (but) the task is only half done.

He said ‘We have to ensure that the financial system escapes unscathed as we exit from the pandemic-driven regulatory forbearances.’ He also added the pandemic saw the financial sector enjoying favourable momentum with an increase in liquidity, the flow of credit and normal spending on relief programmes.

The CNX Nifty is currently trading at 15286.65, down by 73.95 points or 0.48% after trading in a range of 15183.40 and 15400.40. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 1.56%, Reliance Industries up by 1.36%, Coal India up by 1.28%, Tata Steel up by 1.06% and ITC up by 0.82%. On the flip side, Dr. Reddy's Lab down by 4.94%, Titan Company down by 4.39%, HDFC Life Insurance down by 3.25%, Wipro down by 2.96% and Cipla down by 2.82% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 381.97 points or 1.45% to 26,049.23, Jakarta Composite lost 136.85 points or 1.94% to 6,913.48, Straits Times trembled 13.28 points or 0.43% to 3,084.15, KOSPI fell 11.48 points or 0.47% to 2,439.93, Shanghai Composite declined 0.64 points or 0.02% to 3,284.74 and Taiwan Weighted dropped 173.45 points or 1.1% to 15,665.16.

On the flip side, Hang Seng increased 163.57 points or 0.78% to 21,009.00.