Benchmarks close flat after choppy session on Wednesday

Indian equity benchmarks closed flat after a choppy session on Wednesday amid weak global markets and profit taking by investors after two straight days of gains. After making a negative start, markets altered between gains and losses for whole day, as subdued foreign flows weighted down on the domestic sentiments. Foreign institutional investors (FIIs) sold shares worth Rs 867.65 crore on December 27, according to the provisional data available on the NSE. Some cautiousness also came in as the latest data on public debt showed that the total liabilities of the government increased to Rs 147.19 lakh crore at September-end from Rs 145.72 lakh crore at the end of June this fiscal year. In percentage terms, it reflects a quarter-on-quarter increase of 1 per cent in second quarter of 2022-23.

Sentiments remained in lackluster mood in late afternoon deals, as India Ratings and Research (Ind-Ra) in its ‘Research and Ratings Compendium’ said that the ratio of Upgrades/Downgrades is likely to moderate, amid higher inflation, slowing exports and an improving but still weak domestic demand. The agency expects the economic growth to slow down to 4.0% - 4.5% in 2HFY23 from 9.7% in 1HFY23. Adding some worries, the Reserve Bank of India (RBI) in its 'Trends and Progress of Banking in India' report for FY22 said that retail loans, long considered a panacea for the banking system, may become a systemic risk. Further, the report stated that Indian banks' gross non-performing assets (GNPA) declined to 5.8 per cent in March 2022, but the present macroeconomic environment can impact lenders' health. It stated the GNPAs, which touched a peak in FY18 following the asset quality review, have been declining sequentially to reach 5 per cent in September 2022.

On the global front, European markets were trading mostly in green as investors pinned hopes of a recovery in demand after China moved to remove some of its most stringent travel restriction measures. Asian markets settled mostly down on Wednesday following the mostly negative cues from Wall Street, as traders remain cautious in the last week of 2022 amid lingering concerns about the economic outlook and the prospects of interest rate hikes continuing in to the next year. Besides, the Ministry of Economy, Trade and Industry said Industrial production in Japan was down a seasonally adjusted 1.0 percent on month in November.

Back home, pharma stocks were in watch with a private report that after recording 7 per cent growth last fiscal, the pharmaceuticals industry is projected to grow 9-11 per cent in this and next fiscal years. This will be led by steady domestic demand following price hikes across key therapy areas. There were some reaction in road sector stocks as credit rating agency Crisil said aided by regulatory guardrails and structural benefits, infrastructure investment trusts (InvITs) in the road sector have enhanced the credit quality of around Rs 46,000 crore debt till now. According to Crisil, since 2016, 19 InvITs have been registered in India and these include 11 from the roads sector of which nine have been floated or are set to be launched soon.

Finally, the BSE Sensex fell 17.15 points or 0.03% to 60,910.28 and the CNX Nifty down by 9.80 points or 0.05% to 18,122.50.

The BSE Sensex touched high and low of 61,075.33 and 60,713.77, respectively. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.23%, while Small cap index was up by 0.45%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.57%, Oil & Gas up by 1.26%, Energy up by 1.22%, Utilities up by 1.18% and Power up by 1.15%, while Metal down by 0.47%, Healthcare down by 0.39%, Telecom down by 0.34%, TECK down by 0.31% and Capital Goods down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 3.10%, Mahindra & Mahindra up by 1.57%, Power Grid Corporation up by 1.39%, Maruti Suzuki up by 1.27% and Indusind Bank up by 0.98%. On the flip side, Bharti Airtel down by 1.39%, Tata Steel down by 1.08%, Ultratech Cement down by 0.87%, Bajaj Finserv down by 0.86% and Axis Bank down by 0.81% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) in its 'Trends and Progress of Banking in India' report for FY22 has said that Indian banks' gross non-performing assets (GNPA) declined to 5.8 per cent in March 2022, but the present macroeconomic environment can impact lenders' health. It stated the GNPAs, which touched a peak in FY18 following the asset quality review, have been declining sequentially to reach 5 per cent in September 2022.

The decrease in the GNPAs was attributed to lower slippages and also a reduction in outstanding GNPAs through recoveries, upgradations and write-offs. It asserted ‘Although presently the Indian banking sector remains robust and resilient with improved asset quality and strong capital buffers, the policymakers remain mindful of dynamically evolving macroeconomic conditions that may impinge on the health of regulated entities.’

However, it mentioned the restructured assets ratio increased by 1.1 percentage points for all the borrowers and by 0.5 percentage points for large borrowers, adding that the efforts to help individuals and small businesses with the loan recast scheme has been successful.

The CNX Nifty traded in a range of 18,173.10 and 18,068.35. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 2.85%, Mahindra & Mahindra up by 1.61%, Power Grid Corporation up by 1.53%, Maruti Suzuki up by 1.32% and UPL up by 1.19%. On the flip side, Bharti Airtel down by 1.41%, Apollo Hospital down by 1.25%, Bajaj Finserv down by 1.12%, Axis Bank down by 1.06% and Hindalco down by 1.02% were the top losers.

European markets were trading mostly in green: UK’s FTSE 100 increased 59.65 points or 0.8% to 7,532.66 and France’s CAC increased 1.00 points or 0.02% to 6,551.66, while Germany’s DAX decreased 11.43 points or 0.08% to 13,983.67.

Asian markets settled mostly down on Wednesday as Treasury yields advanced with uncertainty about US Fed's policy path overshadowed optimism from China’s reopening plans. Moreover, overnight fall in Wall Street shares also dampened markets' sentiments. Japanese shares fell on lingering worries over China's Covid-19 situation. While, data showed Japan's industrial output declined for the third month in a row in November. However, Hong Kong shares rallied after Chief Executive John Lee announced further easing of its Covid restrictions.