Indices slip for second straight session

Indian equity benchmarks remained under selling pressure for the second straight session to end over a half per cent lower on Friday as investors turned cautious after the government hiked securities transaction tax (STT) on futures and options contracts, while lingering concerns of contagion in the global banking sector weighed. After making a cautious start, key gauges soon slipped into red amid foreign fund outflows. Provisional data from exchanges showed that FIIs were net sellers to the tune of Rs 995 crore in the cash markets on March 23.  However, key gauges managed to erase losses and traded marginally higher in afternoon deals, as traders took some support with report stating that India’s exports to the UAE are expected to touch an all-time high of $32 billion by the end of this fiscal due to the benefits of free trade agreement between the countries. Some support came after Chief Economic Advisor (CEA) V Anantha Nageswaran indicated that with global crude oil prices on the slide, India’s current account deficit (CAD), too, will drop in the current fiscal year (2022-23, or FY23) and the next (2023-24, or FY24), with the external situation being quite stable.

However, the recovery was short-lived as equity markets witnessed intense selling pressure in the fag-end of the session amid a bearish trend in Asian and European markets. Besides, shares of asset management companies also fell on Friday after the finance minister announced amendments to the Finance Bill to treat returns on debt mutual funds as short-term capital gain, which is likely to eliminate the long-term tax benefits on such investments. Traders overlooked Union Minister of State for Consumer Affairs, Food and Public Distribution, Ashwini Kumar Choubey’s statement that retail food inflation, measured by the Consumer Food Price Index (CFPI) brought out by the Ministry of Statistics and Programme Implementation (MoSPI), has declined from 8.60 percent in September 2022 to 5.95 per cent in February 2023.

On the global front, European markets were trading lower as economic uncertainties increase. It is feared that the banking sector crisis in the U.S. and Europe may add to consumers' anxiety about future incomes and weigh on global growth. Asian markets settled mostly lower on Friday as concerns about the banking crisis persisted despite comments from regulators that they would take additional steps as needed to support the financial system.
Finally, the BSE Sensex fell 398.18 points or 0.69% to 57,527.10 and the CNX Nifty was down by 131.85 points or 0.77% to 16,945.05.

The BSE Sensex touched high and low of 58,066.40 and 57,422.98, respectively. There were 5 stocks advancing against 24 stocks declining, while 1 stock remained unchanged on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.25%, while Small cap index was down by 1.37%.

The top losing sectoral indices on the BSE were Realty down by 2.28%, Metal down by 2.23%, Energy down by 1.51%, PSU down by 1.38% and Industrials down by 1.35%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 0.74%, Infosys up by 0.43%, Power Grid Corporation up by 0.18%, Tech Mahindra up by 0.16% and Asian Paints up by 0.05%. On the flip side, Bajaj Finserv down by 3.81%, Bajaj Finance down by 3.19%, Tata Steel down by 2.58%, Reliance Industries down by 1.96% and Larsen & Toubro down by 1.95% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said that the overall infrastructure credit (including banks and non-banks) registered an annualised growth of 8% in 9M FY2023 aided by a sharp pickup in Q3 FY2023, bucking the trend of the previous 18 months. It noted that non-banking financial companies - infrastructure finance companies (NBFC-IFCs) grew in line with the system and maintained their market share at around 54% as on December 31, 2022.

According to the report, the increased demand has coincided with the period during which NBFC-IFCs witnessed receding asset quality pressure, led by a few stressed asset resolutions/recoveries, sizeable write-offs, and curtailed incremental slippages. The stage 3% eased to 3.4% as on March 31, 2022, from the peak of 6.8% as on March 31, 2018. The reported gross stage 3% is expected to moderate further by 10-30 basis points (bps) in FY2024, supported by limited slippages and growth in the book.

The report stated that NBFC-IFCs are expected to benefit from the credit demand generated by the Central Government’s ambitious targets under the National Infrastructure Pipeline (NIP) and ICRA expects them to grow by 10-12% in FY2024. This, coupled with limited incremental slippages, is expected to lead to these NBFC-IFCs reporting multi-year low asset quality indicators (lowest in last six years) in FY2023 and FY2024. ICRA has revised the industry outlook for NBFC-IFCs to Positive from Stable, reflecting its expectation that the enhanced performance witnessed in FY2023 will continue in FY2024 as well, given the improvement in the solvency profile, calibrated loan book growth in the near term and better asset quality and earnings profile.

The CNX Nifty traded in a range of 17,109.45 and 16,917.35. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Cipla up by 1.07%, Kotak Mahindra Bank up by 0.48%, Apollo Hospital up by 0.37%, Tech Mahindra up by 0.32% and Infosys up by 0.32%. On the flip side, Bajaj Finserv down by 3.94%, Bajaj Finance down by 3.22%, Tata Steel down by 2.72%, Hindalco down by 2.71% and Adani Ports and SEZ down by 2.69% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 143.78 points or 1.92% to 7,355.82, France’s CAC fell 159.12 points or 2.23% to 6,980.13 and Germany’s DAX lost 346.51 points or 2.28% to 14,863.88.

Asian markets settled mostly lower on Friday due to concerns over the ongoing US banking crisis, despite Janet Yellen’s reassurance on the safety of American deposits. Chinese shares dropped as heavily indebted Evergrande Group announced its long-awaited debt restructuring deal after 2021 collapse. Japanese shares fell after a survey showed manufacturing activity in Japan contracted for a fifth straight month in March as output and new orders remained under pressure. Moreover, Seoul shares declined amid fears that the central banks of UK, Switzerland and Norway increased interest rates to curb inflation. However, some losses were capped after Wall Street’s overnight gains in anticipation that US interest rate hikes might be nearing an end.