Local equities continue to sink in red

Indian bourses extended their losses in noon session with Sensex and Nifty trading down by 666 and 211 points respectively. Selling pressure in the realty and PSU stocks influenced the markets. Sentiments were fragile 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. Traders were also worried as Foreign Institutional Investors (FIIs) stood as net sellers in the capital market as they offloaded shares worth Rs 1,706.00 crore on Thursday, exchange data showed. In scrip specific developments, IRCTC jumped on looking to monetise its bank of passenger data while conducting business with private and government companies, while One 97 Communications declined as Paytm faces a crucial test of investor confidence, when shareholders will decide whether they want Vijay Shekhar Sharma at the helm of a fintech pioneer that made one of the worst debuts in Indian history. On the global front, Asian markets were trading mostly lower due to risk aversion in the market amid concerns over soaring inflation data and global recession fears.

The BSE Sensex is currently trading at 59631.93, down by 666.07 points or 1.10% after trading in a range of 59629.31 and 60411.20. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 1.02%, while Small cap index was down by 0.65%.

The top gaining sectoral indices on the BSE were IT up by 0.37%, TECK up by 0.36%, Power up by 0.27%, Utilities up by 0.20% and Capital Goods was up by 0.17%, while Realty down by 2.03%, PSU down by 1.54%, Bankex down by 1.43%, Auto down by 1.26% and Metal was down by 1.10% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.57%, Tech Mahindra up by 0.88%, Infosys up by 0.81%, Wipro up by 0.33% and HCL Tech was up by 0.27%. On the flip side, Indusind Bank down by 3.37%, Bajaj Finserv down by 2.63%, Bajaj Finance down by 2.48%, Power Grid down by 2.23% and SBI was down by 1.97% were the top losers.

Meanwhile, Reserve Bank of India (RBI) article has said 'going forward, as the economy recovers, Non-Banking Financial Companies (NBFCs) need to be wary of rising borrowing costs on account of normalisation of monetary policy'. It also said the non-banking lenders are poised for an expansion aided by strong capital buffers, adequate provisions and sufficient liquidity on their books.

Since May this year, the RBI has raised the policy rate by 140 basis points to tame inflation which is hovering above its tolerance band of 4-6 per cent. Following these hikes, banks have raised their lending rates, which resulted into higher borrowing cost for borrowers. It said while NBFCs have largely realigned their business models by leveraging digital channels to improve their accessibility and acquisition of new customers, this might prove to be a challenge for smaller NBFCs which may have to ramp up their technological capabilities.

It further said on the regulatory front, recognising the increasing scale and complexity of NBFCs' operations along with their rising interconnectedness with other entities in the financial system. It noted that under these regulations, the focus has been shifted from an activity-based regulation to one based on riskiness and scale of operations, following the principle of proportionality. Bank-like regulatory initiatives such as Prompt Corrective Action (PCA) Framework and Income Recognition, Asset Classification and Provisioning (IRACP) norms would further bridge the gap in regulation of NBFCs vis-a-vis banks. These regulations are expected to strengthen the NBFC sector in the times to come.

The CNX Nifty is currently trading at 17744.70, down by 211.80 points or 1.18% after trading in a range of 17741.70 and 17992.20. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 3.04%, Larsen & Toubro up by 1.60%, Tech Mahindra up by 0.83%, Infosys up by 0.77% and Eicher Motors was up by 0.41%. On the flip side, Indusind Bank down by 3.35%, Bajaj Finserv down by 2.75%, Bajaj Finance down by 2.44%, Power Grid down by 2.23% and Coal India was down by 2.19% were the top losers.

Asian markets were trading mostly lower; Hang Seng decreased 43.13 points or 0.22% to 19,720.78, Shanghai Composite declined 14.40 points or 0.44% to 3,263.14, Nikkei 225 slipped 11.81 points or 0.04% to 28,930.33, KOSPI fell 15.36 points or 0.61% to 2,492.69, Straits Times trembled 24.22 points or 0.74% to 3,249.26

On the flip side, Taiwan Weighted strengthened 12.02 points or 0.08% to 15,408.78 and Jakarta Composite was up 16.39 points or 0.23% to 7,202.95.