Benchmarks trim losses in noon deals

Indian equity benchmarks trimmed some of their losses in noon session, but continue to trade below the neutral lines with Sensex and Nifty trading below 52700 and 15700 marks, respectively. Sentiments were dampened as CRISIL lowered its India real gross domestic product growth forecast for the current financial year to 7.3% from 7.8% earlier. Higher oil prices, slowing global demand for India’s exports, and higher inflation are acting as the major drag factors. Additional pressure came as seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) stood at 53.9 in June, lower than 54.6 in May. The latest reading showed the weakest pace of growth since last September. However, downside remain capped as growth of eight core infrastructure industries grew to 13-month high of 18.1 per cent in May 2022, led by healthy growth in coal, crude oil, fertilisers, cement and electricity production.

On the global front, all Asian markets were trading lower after a quarterly report by Japan’s central bank renewed worries about the world’s third largest economy. On the sectoral front, oil exploration and production stocks were under pressure as government tightened exports of oil. The government slapped an export tax on petrol, diesel and jet fuel (ATF) and imposed a windfall tax on crude oil produced locally by companies. The government imposed Rs 6 per litre tax on export of petrol and ATF and Rs 13 per litre tax on export of diesel.

The BSE Sensex is currently trading at 52642.21, down by 376.73 points or 0.71% after trading in a range of 52094.25 and 52863.34. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.04%, while Small cap index was down by 0.46%.

The few gaining sectoral indices on the BSE were FMCG up by 1.34%, Realty up by 0.97% and Healthcare was up by 0.03%, while Energy down by 3.68%, Oil & Gas down by 3.25%, PSU down by 1.37%, Auto down by 1.05% and Telecom was down by 0.90% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 3.02%, ITC up by 2.65%, Asian Paints up by 2.41%, Bajaj Finance up by 2.16% and Indusind Bank was up by 1.19%. On the flip side, Reliance Industries down by 5.93%, Titan Co down by 2.65%, Maruti Suzuki down by 1.42%, Power Grid down by 1.39% and Bharti Airtel was down by 1.16% were the top losers.

Meanwhile, Reserve Bank of India (RBI) in its Financial Stability Report (FSR) report has said that the bad loans of banks are expected to further decline to 5.3 per cent of total advances by March 2023 from a six-year low on the back of growth in credit and declining trend in the stock of NPAs. However, it cautioned that the proportion of bad loans may increase if the macroeconomic environment worsens.

According to the report, the gross non-performing asset (GNPA) ratio of banks fell to a six-year low of 5.9 per cent in March 2022. It said the GNPA ratio of scheduled commercial banks (SCBs) stood at 7.4 per cent in March 2021. It also said support measures provided by the regulator during the COVID-19 pandemic aided in arresting GNPA ratios of SCBs even with the winding down of regulatory reliefs. It noted that under the assumption of no further regulatory reliefs as well as without taking the potential impact of stressed asset purchases by NARCL into account, stress tests indicate that GNPA ratio of all SCBs may improve from 5.9 per cent in March 2022 to 5.3 per cent by March 2023 under the baseline scenario driven by higher expected bank credit growth and declining trend in the stock of GNPAs, among other factors.

The RBI further said if the macroeconomic environment worsens to a medium or severe stress scenario, the GNPA ratio may rise to 6.2 per cent and 8.3 per cent, respectively. At the bank group level too, the GNPA ratios may shrink by March 2023 in the baseline scenario. In the severe stress scenario, however, the GNPA ratios of public sector banks (PSBs) may increase from 7.6 per cent in March 2022 to 10.5 per cent a year later. The GNPA ratios would go up from 3.7 per cent to 5.7 per cent for private sector banks and 2.8 per cent to 4 per cent for foreign banks over the same period.

The CNX Nifty is currently trading at 15656.55, down by 123.70 points or 0.78% after trading in a range of 15511.05 and 15719.95. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were ITC up by 2.96%, Bajaj Finserv up by 2.93%, Asian Paints up by 2.50%, Bajaj Finance up by 2.29% and Cipla was up by 1.45%. On the flip side, ONGC down by 11.94%, Reliance Industries down by 6.05%, Bajaj Auto down by 2.71%, Titan Co down by 2.52% and Coal India was down by 1.56% were the top losers.

All Asian markets were trading in red; Nikkei 225 slipped 457.42 points or 1.73% to 25,935.62, Straits Times trembled 7.20 points or 0.23% to 3,095.01, Shanghai Composite declined 12.32 points or 0.36% to 3,386.30, KOSPI fell 27.22 points or 1.17% to 2,305.42, Jakarta Composite lost 65.22 points or 0.94% to 6,846.36 and Taiwan Weighted was down by 482.65 points or 3.26% to 14,343.08.