Barometer gauges maintain gains

Stock markets were trading in fine fettle in the noon session due to heavy buying in Metal, Basic Materials and Utilities sectors. Healthy buying was observed in blue-chip stocks like Bajaj Finserv, Tata Steel and Power Grid. Sentiments were upbeat as India's dominant services industry expanded at the fastest pace in over eleven years in June amid strong demand but stubborn inflation remains a concern as prices charged rose at the sharpest rate in almost five years. The S&P Global India Services Purchasing Managers' Index rose to 59.2 in June from 58.9 in May, highest since April 2011. Additional support came as India's merchandise exports rose by 16.78 per cent to $37.94 billion in June 2022 as compared to $32.49 billion in the same month last year. On the sectoral front, gold related stocks were in focus as government source states that India's gold imports in June nearly trebled from year-ago levels on correction in prices and as jewellers replenished inventories after robust sales during a key festival.

On the global front, Asian markets were trading mostly higher on growing speculation that US President Joe Biden is about to roll back some of the Trump-era tariffs on Chinese goods as he looks for ways to rein in inflation, though sentiment remains at a premium owing to fears of a recession. Back home, the BSE Sensex is currently trading at 53853.82, up by 619.05 points or 1.16% after trading in a range of 53437.98 and 53857.49. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.78%, while Small cap index was up by 1.31%.

The top gaining sectoral indices on the BSE were Metal up by 2.45%, Basic Materials up by 1.49%, Utilities up by 1.40%, Power up by 1.34% and Capital Goods was up by 1.29%, while FMCG was down by 0.03% was the only losing index on the BSE.

The top gainers on the Sensex were Bajaj Finserv up by 2.86%, Tata Steel up by 2.47%, Power Grid up by 2.07%, Reliance Industries up by 2.06% and Bajaj Finance was up by 2.03%. On the flip side, ITC down by 1.66%, Maruti Suzuki down by 0.54% and Indusind Bank was down by 0.05% were the few losers.

Meanwhile, Crisil Ratings in its latest report has said that non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) are likely to see revival in their profitability in the current fiscal (FY23), helped by the flexibility to set lending rates under the new regulatory framework for MFIs and lower credit cost. It said the present rising interest rate scenario is unlikely to impact the profitability of NBFC-MFIs as higher borrowing costs would be offset by steeper lending rates, cushioning net interest margins.

According to the report, enhanced flexibility to set lending rates will be one of the drivers supporting a revival in the profitability of NBFC-MFIs this fiscal. It said the other factors that will support the improvement in profitability include a reduction in credit cost and an increase in permissible household income limit. These, in turn, will help enlarge the market in terms of target borrowers and geographies, especially in hinterland. A number of NBFC-MFIs have increased their lending rates by 150-250 basis points in recent months and this provides reasonable headroom to absorb higher borrowing costs.

The report further said lenders can also dip into their contingency provision buffer created over the past two fiscals to manage asset-quality challenges, if any, in specific states due to natural calamities or socio-political issues - without material impact on profitability. The higher income eligibility threshold and enhanced flexibility to price loans will spur deeper penetration into existing markets and entry into new geographies. That, together with rising demand for loans in rural India should drive NBFC-MFIs' credit growth, which is expected at 25-30 per cent this year. With asset-quality pressures gradually easing and sizable provision buffers created, these lenders' credit cost is expected to decline to around 2.5-2.8 per cent this fiscal.

The CNX Nifty is currently trading at 16025.00, up by 189.65 points or 1.20% after trading in a range of 15891.55 and 16025.75. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.33%, Bajaj Finserv up by 2.68%, Apollo Hospital up by 2.51%, Tata Steel up by 2.51% and Tata Motors was up by 2.33%. On the flip side, ITC down by 1.34%, Britannia Inds down by 1.32%, Maruti Suzuki down by 0.51%, HDFC Life Insurance down by 0.38% and Hero MotoCorp was down by 0.11% were the top losers.

Asian markets were trading mostly higher; Hang Seng increased 17.31 points or 0.08% to 21,847.66, KOSPI rose 41.44 points or 1.8% to 2,341.78, Jakarta Composite soared 101.40 points or 1.53% to 6,740.57, Taiwan Weighted strengthened 132.14 points or 0.93% to 14,349.20 and Nikkei 225 was up by 269.66 points or 1.03% to 26,423.47.

On the flip side, Straits Times trembled 12.33 points or 0.4% to 3,107.91 and Shanghai Composite was down by 19.13 points or 0.56% to 3,386.30.