Sensex, Nifty remain under pressure in late morning session

Indian equity benchmarks remained under pressure in late morning session, with both Sensex and Nifty under a grip of bears, on the back of negative cues from other Asian markets. Traders got cautious, after the CBDT said that the Income Tax department has detected unaccounted income of over Rs 100 crore after it recently raided a diversified business group engaged in the export of handicraft and real estate among others.

Adding some concerns, the Reserve Bank of India (RBI) in its latest data has showed that operating profit growth of listed private companies decelerated across broad sectors in the January-March quarter of 2021-22 (Q4FY22), on the back of rise in expenditure. On the sectoral front, banking stocks were in focus, after the Reserve Bank gave three more months to banks and NBFCs issuing credit and debit cards to comply with certain norms including activation of cards without consent of customers.

On the global front, all Asian markets were trading in red, even after Hong Kong's consumer price inflation eased unexpectedly in May, though marginally. The data released by the Census and Statistics Department showed that consumer prices climbed 1.2 percent year-over-year in May, following a 1.3 percent increase in April.

The BSE Sensex is currently trading at 52053.47, down by 478.60 points or 0.91% after trading in a range of 51879.78 and 52272.85. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.20%, while Small cap index was down by 0.51%.

The top losing sectoral indices on the BSE were Metal down by 3.57%, Basic Materials down by 2.02%, Oil & Gas down by 1.84%, Consumer Durables down by 1.71% and Utilities down by 1.63%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were TCS up by 0.78%, Maruti Suzuki up by 0.31%, Infosys up by 0.28%, Hindustan Unilever up by 0.14% and HDFC up by 0.02%. On the flip side, Tata Steel down by 3.81%, Indusind Bank down by 3.24%, Titan Co down by 2.91%, Bajaj Finserv down by 2.26% and Bajaj Finance down by 1.82% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that new equated monthly instalment scheme introduced by power ministry can help electricity distribution companies (discoms) save a quarter of their additional payouts and clear around Rs 20,000 crore payments to generation firms (gencos) this fiscal (FY23). It noted that under this scheme, overdues, including past Late Payment Surcharge (LPS) as on the cut-off date of June 3, 2022, will be converted into Equated Monthly Instalments (EMIs) that discoms have to pay over 12 to 48 months, based on different slabs.’

The report further said if discoms clear the fresh dues and EMIs on time, going forward, they won't be billed for LPS by gencos. Success of the scheme will depend on two factors, firstly, how discoms are able to enhance their revenues, and secondly, an enforcement mechanism that ensures timely payment to gencos. The scheme aims to provide immediate liquidity to gencos. That's because, along with commencement of payments, the receivables can also be discounted by banks based on the assurance of timely payment of EMIs. This would help free up working capital limits for gencos to buy coal, the prices of which have soared because of geopolitical tensions.

In fiscal 2021, the central government unveiled the Aatmanirbhar Bharat package worth Rs 1.35 lakh crore to clear discom dues. However, its impact was short-lived and most discoms continue to face liquidity challenges following operating losses and their dues remain high at Rs 1.2 lakh crore as on May 31, 2022.

The CNX Nifty is currently trading at 15471.65, down by 167.15 points or 1.07% after trading in a range of 15426.60 and 15565.40. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 1.30%, BPCL up by 1.20%, TCS up by 0.72%, Maruti Suzuki up by 0.25% and Infosys up by 0.21%. On the flip side, UPL down by 5.46%, Hindalco down by 5.23%, Tata Steel down by 4.05%, JSW Steel down by 3.66% and ONGC down by 3.13% were the top losers.

All Asian markets were trading in red; Nikkei 225 slipped 17.95 points or 0.07% to 26,228.36, Hang Seng decreased 275.88 points or 1.28% to 21,283.71, Taiwan Weighted dropped 330.34 points or 2.1% to 15,398.30, Jakarta Composite lost 31.11 points or 0.44% to 7,012.96, Straits Times trembled 10.52 points or 0.34% to 3,106.96, KOSPI fell 46.68 points or 1.94% to 2,362.25 and Shanghai Composite declined 13.18 points or 0.4% to 3,293.54.