Benchmarks end marginally in red on Tuesday

Indian equity benchmarks recovered sharply from morning lows to end the Tuesday’s session with marginal losses amid buying in index majors Tata Consultancy Services and Reliance Industries. Markets made a gap down opening and languished deep in the red for the most part of the day, tracking heavy losses in Asian peers. Traders got anxious with provisional data available on the NSE showing that foreign institutional investors (FIIs) have net-sold shares worth Rs 538.10 crore on December 19, 2022. Some concern also came amid a private report stating that liquidity in the banking system has slipped into a deficit for the first time in three weeks, prompting banks to borrow the largest quantum of funds from the Reserve Bank of India (RBI) in around a month and a half.

However, key gauges managed to recoup most of early losses in late afternoon deals, as traders found some solace with Union Finance Minister Nirmala Sitharaman’s statement that scheduled commercial banks have written off loans amounting to Rs 10,09,511 crore in the last five financial years and the process of recovery of dues from the borrowers continues. Some support also came with Minister of state for Micro, Small and Medium Enterprises (MSMEs) Bhanu Pratap Singh Verma’s statement that 1.31 crore people were employed in the MSMEs incorporated in the financial year 2021-22 (FY22), up by 16% as against 1.13 crore employees in the MSMEs incorporated in FY21.

On the global front, European markets were trading lower as investors were reacting to comments by ECB policymaker Peter Kazimir that the 'monetary policy should tighten at a stable pace.' Asian markets settled lower on Tuesday after the Bank of Japan said it would review its yield curve control policy and widened its target band for interest rates - a move that would allow long-term interest rates to rise more. Hawkish comments on interest rates from former Federal Reserve official William Dudley also fueled worries about a worldwide recession.

Back home, telecom stocks were under pressure as the Telecom Regulatory Authority of India (Trai) in its subscribers report for October 2022 said the number of telephone subscribers in India decreased from 1,171.92 million at the end of September 2022 to 1,170.45 million at the end of October 2022, thereby showing a monthly decline rate of 0.12%. Steel industry stocks were trading lower despite Steel Minister Jyotiraditya Scindia’s statement that India's steel production has reached a historic level of 120 million tonnes per year making it the world's second-largest producer of Steel. He said India intends to double its steel production to 300 million tonnes per annum by 2030.

Finally, the BSE Sensex fell 103.90 points or 0.17% to 61,702.29 and the CNX Nifty was down by 35.15 points or 0.19% to 18,385.30.

The BSE Sensex touched high and low of 61,780.37 and 61,102.68, respectively. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.27%, while Small cap index was down by 0.02%.

The few gaining sectoral indices on the BSE were Energy up by 0.21%, IT up by 0.11% and Oil & Gas up by 0.10%, while Telecom down by 1.32%, Realty down by 1.04%, Auto down by 0.76%, FMCG down by 0.57% and Metal down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.29%, Reliance Industries up by 0.81%, Ultratech Cement up by 0.50%, Indusind Bank up by 0.43% and Axis Bank up by 0.41%. On the flip side, Tata Motors down by 1.75%, Hindustan Unilever down by 1.60%, Bharti Airtel down by 1.46%, Mahindra & Mahindra down by 1.29% and NTPC down by 1.02% were the top losers.

Meanwhile, Union Finance Minister Nirmala Sitharaman has said that scheduled commercial banks (SCBs) have written off loans amounting to Rs 10,09,511 crore during the last five financial years and the process of recovery of dues from the borrowers continues. She said recovery in NPA (non performing asset) accounts, including written-off loans, was an on-going process.

Sitharaman said according to Reserve Bank of India (RBI) data, public sector banks have recovered Rs 4,80,111 crore, including Rs 1,03,045 crore from written-off loans, during the last five financial years. The borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues. She noted that banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available. The actions include filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, through negotiated settlement and compromise and sale of NPAs. Therefore, write-off does not benefit the borrowers.

The minister said according to RBI guidelines and policy approved by banks' boards, NPAs, including those in respect of which full provisioning had been made on completion of four years, were removed from the balance sheet of the bank concerned by way of write-off. Banks evaluate and consider the impact of write-offs as part of their regular exercise to clean up their balance sheet, avail of tax benefit and optimise capital, in accordance with RBI guidelines and policy approved by their boards.

The CNX Nifty traded in a range of 18,404.90 and 18,202.65. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 2.20%, TCS up by 1.25%, Reliance Industries up by 0.79%, Axis Bank up by 0.63% and Indusind Bank up by 0.61%. On the flip side, SBI Life Insurance down by 3.01%, Eicher Motors down by 2.22%, UPL down by 1.98%, Tata Motors down by 1.93% and Hindustan Unilever down by 1.59% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 7.66 points or 0.1% to 7,353.65, France’s CAC decreased 34.42 points or 0.53% to 6,438.87 and Germany’s DAX decreased 42.58 points or 0.31% to 13,900.29.

Asian markets settled lower on Tuesday, tracking fall in Wall Street shares overnight on fears of a global recession with bets that the US Federal Reserve will continue its interest rate hikes to curb inflation. Hawkish comments from former Federal Reserve official William Dudley on interest rates also weighed on market sentiments. Japanese shares led regional losses after the Bank of Japan modified its yield curve control tolerance range and holding its ultra-low benchmark interest rates steady. Further, Chinese and Hong Kong shares slumped on uncertainty over the impact of record-high daily increases in Covid-19 cases in China. While, the People’s Bank of China (PBoC) kept its key lending rates unchanged for a fourth consecutive month.