Benchmarks trade flat in morning deals

Indian equity benchmarks erased initial losses to trade flat in morning deals, tracking losses in Asian peers, which declined as reports of Russian missile striking Poland raised geo-political tensions. Traders remained cautious as global ratings agency Moody's Investors Service has given a 'negative outlook' to credit worthiness of countries globally including India, for 2023, saying high prices of food and energy would curb economic growth and raise social tensions. It said tighter financial conditions and economic scarring will push some debt burdens to unsustainable levels, while rising borrowing costs will erode debt affordability. However, traders took some support with the Central Board of Direct Taxes (CBDT) chairman Nitin Gupta stating that direct tax collections are likely to be 25-30% more than the budget estimate (BE) of Rs 14.2 trillion for the current fiscal.

On the global front, Asian markets are trading mostly in red amid increased geopolitical tensions following reports of civilian killings in Poland from Russian missiles. Meanwhile, a smaller than expected increase in U.S. producer prices raised hopes the US Fed will slow the pace of interest rate hikes. Back home, stocks related to steel industry remained in watch as ICRA in its report said after a challenging September quarter, the profitability of domestic steel makers in the October-December quarter is expected to improve on back of increased demand and lower input costs.

The BSE Sensex is currently trading at 61882.62, up by 9.63 points or 0.02% after trading in a range of 61708.63 and 61931.12. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.06%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were IT up by 0.45%, Auto up by 0.44%, PSU up by 0.36%, TECK up by 0.32% and Industrials up by 0.30%, while Metal down by 1.02%, Realty down by 0.56%, FMCG down by 0.52%, Utilities down by 0.40% and Healthcare down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy's Lab up by 1.19%, Maruti Suzuki up by 0.83%, Kotak Mahindra Bank up by 0.81%, TCS up by 0.77% and Infosys up by 0.51%. On the flip side, Tata Steel down by 1.29%, Hindustan Unilever down by 0.95%, ITC down by 0.88%, Bajaj Finance down by 0.85% and Asian Paints down by 0.76% were the top losers.

Meanwhile, Crisil in its latest report has said that riding on a broad-based economic recovery and stronger, cleaner balance sheets, lenders are expected to see their credit growing at 15 per cent this fiscal and the next. It expects credit growth this year to be driven more by retail and MSME segments, while corporate credit could be the larger contributor next fiscal. Credit growth so far this fiscal has printed in at around 18 per cent, which is a decadal high. Already, large lenders have seen corporates flocking to banks for funds for capital expenditure and also for working capital as the demand side of the economy is faring better.

The agency said that its forecast is based on an expected 7 per cent GDP growth this fiscal, as well as the expected continuation of the credit push from government's infrastructure spends, higher working capital demand in a high-inflation environment, and some substitution of debt capital market borrowings. The report admits that even though growth would moderate next fiscal (consensus is around or under 6 per cent), this would be on a higher base, thereby having limited impact on credit demand.

In the past four-five years, the report noted that asset quality challenges resulting in higher gross non-performing assets, the RBI putting many banks under the prompt corrective action (PCA) framework, and limited capital buffers have constrained credit growth, particularly for public sector banks. It also said but now after a significant clean-up and strengthening of balance sheets, along with substantial equity infusion, state-run banks are eyeing higher growth. As a result, their credit growth is seen at 12 per cent over this fiscal and next, still lower than the 17 per cent expected for private banks.

The CNX Nifty is currently trading at 18400.60, down by 2.80 points or 0.02% after trading in a range of 18354.70 and 18417.65. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 1.55%, Dr. Reddy's Lab up by 1.09%, TCS up by 0.88%, Bajaj Auto up by 0.87% and Kotak Mahindra Bank up by 0.87%. On the flip side, JSW Steel down by 1.57%, Hindalco down by 1.52%, Divi's Lab down by 1.44%, Apollo Hospital down by 1.38% and Tata Steel down by 1.38% were the top losers.

Asian markets are trading mostly in red; Hang Seng decreased 209.63 points or 1.14% to 18,133.49, Jakarta Composite lost 40.70 points or 0.58% to 6,994.80, Taiwan Weighted dropped 34.67 points or 0.24% to 14,511.64, KOSPI fell 15.80 points or 0.64% to 2,464.53, Shanghai Composite declined 6.75 points or 0.22% to 3,127.33 and Straits Times trembled 1.98 points or 0.06% to 3,273.30.

On the flip side, Nikkei 225 surged 10.80 points or 0.04% to 28,000.97.