Benchmarks continue to trade flat in morning deals

Indian equity benchmarks continued to trade flat in morning deals, amid weak global cues. Traders remained cautious as India Ratings and Research’s report stated that the Indian manufacturing sector, which received a fillip in FY22 due to export growth, is likely to be hit by a slump in foreign trade activity in FY23. Some cautiousness also came as an RBI article has warned that big bang privatisation of public sector banks can do more harm than good, and asked the government to take a nuanced approach on the issue. Besides, the central bank data showed reserve Bank of India turned net seller of the US currency in June after it sold $3.719 billion on a net basis. However, traders took some support with The PHD Chamber of Commerce and Industry (PHDCCI) in its report stated that increasing domestic production in sectors such as chemicals, automotive components, drug formulations and consumer electronics will help in reducing imports worth about $35 billion from China in the coming times. On the global front, Asian markets are trading mixed as recession clouds gathered over Europe and highlighted the relative outperformance of the U.S. economy.

The BSE Sensex is currently trading at 60296.56, down by 1.44 points after trading in a range of 60245.48 and 60411.20. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.20%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Power up by 1.61%, Utilities up by 1.48%, Telecom up by 1.10%, IT up by 1.00% and Industrials up by 0.97%, while Healthcare down by 0.52%, PSU down by 0.42%, FMCG down by 0.29%, Oil & Gas down by 0.19% and Bankex down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 1.96%, Larsen & Toubro up by 1.66%, Kotak Mahindra Bank up by 1.25%, Infosys up by 1.17% and Wipro up by 1.00%. On the flip side, Indusind Bank down by 1.69%, Power Grid Corporation down by 1.49%, Bajaj Finance down by 1.04%, Sun Pharma down by 0.95% and Hindustan Unilever down by 0.93% were the top losers.

Meanwhile, big bang privatisation of public sector banks (PSBs) can do more harm than good, the Reserve Bank of India (RBI) article has warned asking the government to take a nuanced approach on the issue. It said while private sector banks (PVBs) are more efficient in profit maximisation, their public sector counterparts have done better in promoting financial inclusion.

It mentioned ‘Privatisation is not a new concept, and its pros and cons are well known. From the conventional perspective that privatisation is a panacea for all ills, the economic thinking has come a long way to acknowledge that a more nuanced approach is required while pursuing it.’ It also said the gradual approach to privatisation adopted by the government can ensure that a void is not created in fulfilling the social objective of financial inclusion and monetary transmission.

Further, quoting various studies, it said, PSBs have played a key role in catalysing financial investments in low-carbon industries, thereby promoting green transition in countries such as Brazil, China, Germany, Japan, and in the European Union. It stated evidence suggests that public sector banks are not entirely guided by the profit maximisation goal alone and have integrated the desirable financial inclusion goals in their objective function unlike private sector banks.

Besides, it said ‘Our results also point out the countercyclical role of PSB lending. In the recent years, these banks have also gained greater market confidence. Despite the criticism of weak balance sheets, data suggests that they weathered the Covid-19 pandemic shock remarkably well.’ Recent mega merger of PSBs has resulted in consolidation of the sector, creating stronger and more robust and competitive banks.

The CNX Nifty is currently trading at 17956.00, down by 0.50 points after trading in a range of 17933.70 and 17992.20. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Adani Ports &SEZ up by 4.77%, Tech Mahindra up by 1.99%, Larsen & Toubro up by 1.68%, Kotak Mahindra Bank up by 1.25% and Infosys up by 1.20%. On the flip side, BPCL down by 1.73%, Indusind Bank down by 1.68%, Power Grid Corporation down by 1.56%, HDFC Life Insurance down by 1.16% and Apollo Hospital down by 1.07% were the top losers.

Asian markets are trading mixed; Straits Times trembled 24.12 points or 0.74% to 3,249.36, KOSPI fell 11.95 points or 0.48% to 2,496.10, Nikkei 225 slipped 8.93 points or 0.03% to 28,933.21 and Shanghai Composite declined 0.21 points or 0.01% to 3,277.33.

On the flip side, Jakarta Composite soared 12.01 points or 0.17% to 7,198.57, Taiwan Weighted strengthened 28.95 points or 0.19% to 15,425.71 and Hang Seng increased 75.79 points or 0.38% to 19,839.70.