Selling pressure continues over Dalal Street

Bears were holding a tight grip over the Dalal Street as selling pressure continues, with both Sensex and Nifty trading near their intraday low points. Russia's nuclear rhetoric and the threat of world war remained on the minds of investors. Domestic sentiments were negative, amid a private report stating that the Reserve Bank of India will increase its main interest rate by 25 basis points to 6.75% in April and then pause until the end of 2023. Traders took a note of another private report stating that the Indian rupee's expected volatility against the dollar over the next one month hit its lowest level in almost seven months on Tuesday, February 21, tracking the currency's recent narrow trading range and on expectations of the central bank's continued support.

On the global front, Asian markets were trading lower, after producer prices in Japan were up 1.6 percent on year in January, after rising 1.5 percent in December. On a monthly basis, producer prices fell 0.3 percent after rising 0.1 percent in the previous month. Excluding international transportation, prices climbed 1.5 percent on year and fell 0.2 percent on month. That follows the 1.2 percent yearly increase and the 0.2 percent monthly gain a month earlier.

The BSE Sensex is currently trading at 60083.05, down by 589.67 points or 0.97% after trading in a range of 60038.63 and 60462.90. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell by 1.02%, while Small cap index was down by 0.83%.

There is no gaining sectoral index on the BSE, while Utilities down by 2.23%, Power down by 2.06%, Realty down by 1.79%, PSU down by 1.32%, Bankex down by 1.26% were the top losing indices on BSE.

The few gainers on the Sensex were ITC up by 0.51% and Sun Pharma up by 0.11%. On the flip side, Bajaj Finance down by 2.37%, NTPC down by 1.91%, Bajaj Finserv down by 1.74%, Reliance Industries down by 1.55% and SBI down by 1.37% were the top losers.

Meanwhile, global rating agency Fitch has said a sustained improvement in the financial performance of Indian banks bodes well for the sector's intrinsic risk profiles. The pace of asset quality and profitability improvement has exceeded expectations, while capital buffers are broadly in line with the projections. It stated the sector's impaired-loan ratio declined to 4.5 per cent in the first nine months of financial year ended March 2023 (9MFY23), from 6 per cent at FY'22, adding, this was nearly 60 basis points below Fitch's FY23 estimate. It said increased write-offs have been a key factor, but higher loan growth, supported by lower slippages and improved recoveries, have also played a role.

Fitch expects a further improvement by FY23, although banks still face the risk of asset-quality pressure associated with the unwinding of loan forbearance in FY24. It said ‘The sector's improving provision cover (9MFY23: 75 per cent, FY22: 71 per cent) also supports banks' ability to withstand risks, although private banks are significantly better placed than state banks due to their lower impaired loan ratio of 2.1 per cent, against state banks' 5.6 per cent.’

Besides, it said Sound economic momentum has contributed to a further drop in credit costs to 0.95 per cent in 9MFY23, as per the estimate, compared with 1.26 per cent in FY22. Lower credit costs were the primary factor driving an improvement in return on assets to 1.1 per cent in 9MFY23, outpacing Fitch's FY23 estimate of 0.9 per cent, although earnings also benefited from higher-than-expected loan growth and improving net interest margins.

The CNX Nifty is currently trading at 17650.40, down by 176.30 points or 0.99% after trading in a range of 17638.90 and 17772.50. There were 8 stocks advancing against 41 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Bajaj Auto up by 0.70%, ITC up by 0.58%, Divi's Laboratories up by 0.56%, Dr Reddy's Laboratories up by 0.35% and Cipla up by 0.32%. On the flip side, Adani Enterprises down by 9.08%, Adani Ports &Special down by 4.54%, Bajaj Finance down by 2.25%, JSW Steel down by 2.23% and Grasim Industries down by 2.13% were the top losers.

All Asian markets were trading lower; Nikkei 225 slipped 368.78 points or 1.36% to 27,104.32, Taiwan Weighted lost 144.23 points or 0.94% to 15,418.77, Jakarta Composite plunged 67.11 points or 0.98% to 6,806.30, Hang Seng declined 60.62 points or 0.3% to 20,468.87, KOSPI dropped 41.28 points or 1.71% to 2,417.68, Shanghai Composite weakened 16.49 points or 0.5% to 3,290.03 and Straits Times fell 5.89 points or 0.18% to 3,300.97.