Weak trade continues over Dalal Street

Weak trade continued over the Dalal Street in early afternoon deals, with both Sensex and Nifty remaining marginally lower, amid profit booking by investors after the latest gains and mixed cues from other Asian markets. However, the decline was limited as the US Federal Reserve finally paused its key interest policy in the latest meeting. Besides, Moody's Investors Service in its latest report has said that the credit quality of Indian banks and non-bank financial institutions will remain resilient despite a challenging environment for banks globally.

The street took a note of reports that the Department for Promotion of Industry and Internal Trade (DPIIT) is all set to discuss issues related to further reducing compliance burden and promoting ease of doing business for the retail sector at a meeting of retail traders on June 16. 

On the global front, Asian markets were trading mixed, as Japan posted a seasonally adjusted merchandise trade deficit of 1,362.5 billion yen in May. That missed expectations for a shortfall of 1,331.9 billion following the 432.3 billion yen deficit in April. Exports were up 0.6 percent on year to 7,292.6 billion yen, exceeding forecasts for a 0.8 percent decline following the 2.6 percent gain in the previous month.

The BSE Sensex is currently trading at 63115.87, down by 112.64 points or 0.18% after trading in a range of 63032.62 and 63310.96. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.38%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.21%, Auto up by 0.64%, Consumer Durables up by 0.46%, FMCG up by 0.42% and Capital Goods up by 0.26%, while Bankex down by 0.55%, TECK down by 0.47%, IT down by 0.43%, Metal down by 0.32% and PSU down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.89%, Maruti Suzuki up by 1.14%, ITC up by 0.74%, Nestle up by 0.66% and Larsen & Toubro up by 0.53%. On the flip side, Wipro down by 1.74%, Indusind Bank down by 1.57%, Infosys down by 1.09%, Kotak Mahindra Bank down by 0.81% and TCS down by 0.73% were the top losers.

Meanwhile, Moody's Investors Service in its latest report has said that the credit quality of Indian banks and non-bank financial institutions will remain resilient despite a challenging environment for banks globally. It said strong domestic demand in India, improving credit conditions for bank borrowers, and strengthened solvency and funding of Indian financial institutions will support their credit quality. 

Moody's said credit conditions in India have gradually improved, with a significant reduction in the banks' legacy problem in loans over the past three years. Stress among non-bank financial institutions in India too has abated. It further noted that banks globally are facing liquidity pressures amid tighter monetary policy, outflows of excess liquidity built up during the coronavirus pandemic into more profitable investments and increased risk aversion among investors because of stress in the US banking sector. However, it said Indian banks have strong domestic funding franchises and ample liquidity to support growth in their loans in line with India's strong economic conditions.  

Capitalization at Moody’s rated banks has improved following capital raising from the equity market as well as capital infusions from the government in the case of public sector banks. Moody’s expects the average return on tangible assets for rated banks to hold steady at 1.0%-1.2% over the next two years, which will support asset growth of around 15% while keeping capital at current levels.

The CNX Nifty is currently trading at 18742.15, down by 13.75 points or 0.07% after trading in a range of 18710.25 and 18794.10. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Dr Reddy's Laboratories up by 2.79%, Divi's Laboratories up by 2.21%, Apollo Hospital up by 1.94%, Mahindra & Mahindra up by 1.90% and Adani Enterprises up by 1.46%. On the flip side, Wipro down by 1.65%, Indusind Bank down by 1.64%, HDFC Life Insurance Company down by 1.50%, Infosys down by 0.99% and Kotak Mahindra Bank down by 0.77% were the top losers.

Asian markets were trading mixed; Hang Seng advanced 310.27 points or 1.6% to 19,718.69, Taiwan Weighted added 96.84 points or 0.56% to 17,334.98, Shanghai Composite strengthened 21.82 points or 0.68% to 3,250.81 and Straits Times rose 15.71 points or 0.49% to 3,233.85, while KOSPI dropped 10.54 points or 0.4% to 2,608.54, Jakarta Composite plunged 11.13 points or 0.17% to 6,688.59 and Nikkei 225 slipped 16.93 points or 0.05% to 33,485.49.