Bourses trade in fine fettle in late afternoon session

Indian equity markets continued their fine fettle trade in late afternoon session tracking strength in Asian markets. Traders took note as Reserve Bank of India (RBI) Governor Shaktikanta Das has asked state governments to find out effective ways to address the issues related to debt and cash management. He emphasised on the need for the states to adopt prudent borrowing strategy and efficient cash management practices, keeping in view the evolving macroeconomic scenarios. Meanwhile, the share of Chinese imports in the country’s total inbound shipments has declined to 15.4 per cent in 2021-22 from 16.5 per cent in 2020-21. In stock specific, Mahindra & Mahindra (M&M) remain in focused, as the company and British International Investment (BII), have executed a binding agreement to invest up to Rs 1,925 crore each into a wholly owned subsidiary of M&M that will be newly incorporated (EVCo).

On the global front, Asian markets were trading mostly in green on easing recession fears with optimism boosted by hopes that Joe Biden will remove some Trump-era tariffs from Chinese goods, while the euro extended losses and headed close to parity with the dollar. European markets were trading lower after the shooting of Japan's former prime minister caused a pullback in Asian shares, while investors waited for key U.S. jobs data later in the session.

The BSE Sensex is currently trading at 54382.35, up by 203.89 points or 0.38% after trading in a range of 54332.94 and 54627.14. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.04%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.13%, Industrials up by 1.41%, Power up by 0.77%, Utilities up by 0.67% and Bankex was up by 0.47%, while Metal down by 1.06%, Realty down by 0.34%, Consumer Durables down by 0.30%, Basic Materials down by 0.19% and Oil & Gas was down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 4.70%, Power Grid up by 2.26%, NTPC up by 1.75%, ICICI Bank up by 1.38% and Axis Bank up by 1.24%. On the flip side, Tata Steel down by 1.75%, Maruti Suzuki down by 1.63%, Indusind Bank down by 1.46%, Asian Paints down by 1.02% and TCS down by 0.88% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) in its working paper titled ‘Banks’ Credit and Investment Dynamics: Assessing Portfolio Rebalancing and Crowding-out’ has showed that weak economic conditions and stressed asset quality encourage banks to increase their investments in government securities suggesting a portfolio rebalancing channel.

According to the released paper, higher investment by banks in government securities in the face of higher government borrowings indicates the operation of a crowding-out channel, and its impact can be mitigated to an extent by the central bank’s market operations. The crowding-out is lower for banks with better asset quality and higher capital adequacy.

Reserve Bank of India also noted that an increase in share of government securities in banks’ asset portfolio is found to have a favourable impact on profitability of public sector banks, pointing towards a better risk-adjusted return from investment in G-secs relative to loans. Overall, policies aimed at strengthening the asset quality and capital position of the banks can lead to an enhanced flow of bank credit to the productive sectors.

The CNX Nifty is currently trading at 16166.15, up by 33.25 points or 0.21% after trading in a range of 16163.80 and 16275.50. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 4.47%, Tata Motors up by 2.47%, Power Grid up by 2.33%, SBI Life Insuran up by 1.87% and Coal India up by 1.75%. On the flip side, Hindalco down by 2.18%, Tata Steel down by 2.05%, ONGC down by 1.90%, HDFC Life Insurance down by 1.86% and Maruti Suzuki down by 1.77% were the top losers.

Asian markets were trading mostly in green, Taiwan Weighted strengthened 128.26 points or 0.89% to 14,464.53, Jakarta Composite soared 87.63 points or 1.32% to 6,740.22, Hang Seng increased 82.20 points or 0.38% to 21,725.78, Nikkei 225 surged 26.66 points or 0.1% to 26,517.19 and KOSPI was up by 16.34 points or 0.7% to 2,350.61. On the flip side, Straits Times trembled 2.78 points or 0.09% to 3,126.62 and Shanghai Composite was down by 8.32 points or 0.25% to 3,356.08.

European markets were trading lower, UK’s FTSE 100 decreased 19.48 points or 0.27% to 7,169.60, France’s CAC decreased 41.46 points or 0.69% to 5,965.24 and Germany’s DAX was down by 68.32 points or 0.53% to 12,774.90.