Equity benchmarks continue to trade in red territory

Domestic equity benchmarks continued their trade in red territory in morning session due to sustained selling pressure from foreign institutional investors. Foreign institutional investors (FII) sold shares worth Rs 424.88 crore on March 1, the National Stock Exchange's provisional data showed. Sentiments remained down-beat with Chief Economic Advisor V Anantha Nageswaran’s statement that the performance of the manufacturing sector and growth rate in private consumption expenditure in the December quarter of 2022-23 is appearing ‘depressed’ because of higher base.  Sectorally, banking stocks remained in watch as India Ratings said the gross non-performing assets (NPA) ratio of banks is expected to improve to 3.3 percent in next financial year from 4.2 percent in FY23. A loan turns to NPA if there are no repayments of interest or principal for a period of 90 days. On the global front, Asian markets are trading mixed after the latest inflation indicators in the United States underlined the possibility of a prolonged high-interest rate regime.

The BSE Sensex is currently trading at 59112.75, down by 298.33 points or 0.50% after trading in a range of 59025.55 and 59423.79. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.03%, while Small cap index was up by 0.15%.

The top gaining sectoral indices on the BSE were Realty up by 0.84%, Utilities up by 0.62%, Metal up by 0.37%, Capital Goods up by 0.36% and Industrials up by 0.33%, while TECK down by 1.26%, IT down by 1.20%, Auto down by 0.55%, FMCG down by 0.48% and Bankex down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.04%, Bajaj Finserv up by 0.65%, Ultratech Cement up by 0.61%, ICICI Bank up by 0.35% and Tata Steel up by 0.14%. On the flip side, TCS down by 1.74%, Axis Bank down by 1.70%, Infosys down by 1.61%, Tech Mahindra down by 1.54% and Maruti Suzuki down by 1.47% were the top losers.

Meanwhile, India Ratings and Research in its latest report has said mobilising required deposits without compromising on margins and the heightened provisions as the system shifts to a new model of loan provisioning will be the key challenges for Indian banking in FY24. Maintaining its neutral outlook on the important sector for the economy for the upcoming fiscal year, India Ratings said the key financial metrics are likely to improve further in FY24 on stronger balance sheets, higher credit demand and more stability in interest rates.

It mentioned the banking sector's challenges include mobilising deposits while minimising the impact on margins, and provisions that could emerge in the near-medium term on account of the expected transition to the Expected Credit Loss (ECL) regime for provisions. It estimated the deposit growth to come at a low 9-11 per cent in FY24. Deposit repricing will continue to happen in a 'competitive environment', it said, pointing out that banks have drawn on almost Rs 5 lakh crore of liquidity since March 2022, which has enabled reasonably priced and evenly paced deposit mobilisation.

It said as banks grow their books at higher rates than seen in the preceding five to seven years, some of the improvements in low-cost deposits could reverse especially for public sector banks (PSBs). Further, it stated credit growth, which stood at 18.8 per cent as of December 2022 growth, will continue to race ahead of deposit growth that lagged at 11.8 per cent in the same quarter. It added that this will keep pushing up deposit rates.

The CNX Nifty is currently trading at 17370.75, down by 80.15 points or 0.46% after trading in a range of 17343.95 and 17445.80. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 2.89%, Coal India up by 1.99%, Adani Ports &SEZ up by 1.72%, Hero MotoCorp up by 1.32% and BPCL up by 1.06%. On the flip side, TCS down by 1.82%, Axis Bank down by 1.74%, Infosys down by 1.61%, Maruti Suzuki down by 1.54% and Tech Mahindra down by 1.51% were the top losers.

Asian markets are trading mixed; Taiwan Weighted added 5.78 points or 0.04% to 15,604.27, Shanghai Composite strengthened 5.91 points or 0.18% to 3,318.26, KOSPI increased 19.93 points or 0.83% to 2,432.78 and Jakarta Composite gained 20.19 points or 0.29% to 6,865.13

On the flip side, Straits Times fell 16.74 points or 0.51% to 3,238.34, Nikkei 225 slipped 8.06 points or 0.03% to 27,508.47 and Hang Seng declined 83.18 points or 0.41% to 20,536.53.