Sensex, Nifty off day’s low

Indian equity benchmarks trimmed their losses in early afternoon session, with both Sensex and Nifty coming off their intraday low points. Losses got pared, amid a private report stating that India is growing faster than what is captured by the country's official data, and it presents a case for an upgrade of equities outlook. Some relief also came after the government said it will take steps to support farmers for increasing pulses production and also streamline imports as part of its objective to make available the products at affordable rates. The Department of Consumer Affairs will take all necessary steps required to support Indian farmers to produce more pulses. However, trade was in red on the back of selling at Power and PSU counters and negative cues from other Asian markets.

On the global front, Asian markets were trading mostly in red, as the manufacturing sector in Japan continued to contract in December, and at a faster pace, with a manufacturing PMI score of 48.8. That's down from 49.0 in November and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction. Amid ongoing reports of muted customer demand, both output and new orders fell solidly, but at slightly softer rates than in November, and input buying declined at the quickest pace since September 2020.

The BSE Sensex is currently trading at 61657.01, down by 142.02 points or 0.23% after trading in a range of 61364.17 and 61893.22. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.07%, while Small cap index was down by 0.48%.

The few gaining sectoral indices on the BSE were Energy up by 0.43%, Telecom up by 0.38% and Oil & Gas up by 0.27%, while Power down by 1.15%, PSU down by 1.01%, Utilities down by 0.97%, Auto down by 0.95% and Realty down by 0.93% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.09%, Tech Mahindra up by 0.81%, Larsen & Toubro up by 0.67%, Bharti Airtel up by 0.65% and Bajaj Finance up by 0.30%. On the flip side, Mahindra & Mahindra down by 2.01%, Dr. Reddy's Lab down by 1.94%, ITC down by 1.82%, SBI down by 1.06% and Kotak Mahindra Bank down by 0.90% were the top losers.

Meanwhile, rating agency ICRA in its latest report has said that non-banking financial companies (NBFCs) are likely to close the current fiscal (FY23) and the next with a loan growth of 10-12 per cent and see around 50 basis points improvement in profitability, led by retail-focused players. It said retail-focused NBFCs are expected to grow 12-14 per cent while the housing finance companies may grow at 10-12 per cent. The forecast is based on the asset quality improvement and the overall pick up in credit demand.

However, the report stated that microfinance and personal loans, which together constitute a quarter of the Rs 25-lakh crore shadow banking sector, will continue to grow at high pace. Sectoral profitability will improve by 40-50 basis points (bps) this fiscal, supported by stable margins and lower credit cost, and will reach the pre-pandemic levels. It also said that while growth will be broad-based across various sub-sectors, microfinance and personal loans will be leading the growth chart. On the other hand, it said vehicle financing loans (commercial vehicle finance, passenger vehicle finance), which has remained significantly subdued since FY20, are also expected to report higher growth numbers, following an improvement in the operating environment.

According to the report, asset quality of non-banks has been improving steadily since December 2021 as borrowers gradually recovered from the pandemic-induced stress. The improvement has been on the back of higher collections, lower-than-anticipated share of restructured portfolio estimated at 2 per cent of total asset under management as of September 2022 and controlled slippages from this book and reported ratios also benefiting from the base effect of high growth. Overall, the majority stress from the restructured book is likely to be absorbed in FY23 and slippages are expected to remain range-bound. The agency, therefore, expects the NBFCs to report some moderation in reported asset quality indicators and credit costs by March 2023.

The CNX Nifty is currently trading at 18365.80, down by 49.10 points or 0.27% after trading in a range of 18270.95 and 18440.95. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 1.09%, ONGC up by 1.05%, HDFC Life Insurance up by 0.77%, Eicher Motors up by 0.75% and Tech Mahindra up by 0.70%. On the flip side, Mahindra & Mahindra down by 2.04%, ITC down by 1.87%, Dr Reddy's Laboratories down by 1.85%, Hero MotoCorp down by 1.40% and SBI down by 1.14% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 524.58 points or 1.87% to 27,527.12, Taiwan Weighted dropped 205.58 points or 1.4% to 14,528.55, Straits Times trembled 27.30 points or 0.83% to 3,246.45, Shanghai Composite declined 8.13 points or 0.26% to 3,160.52 and KOSPI fell 0.95 points or 0.04% to 2,360.02, while Jakarta Composite soared 22.88 points or 0.34% to 6,774.74 and Hang Seng increased 88.99 points or 0.46% to 19,457.58.