Domestic indices trade lower on profit booking

Domestic equity indices were trading lower with cut of quarter a percent in late morning deals, which dragged both the Sensex and Nifty below their psychological 63,300 and 18,800 levels respectively, as traders booked profits after the recent strength in the markets. Weak cues from global markets weighted on the domestic markets. Further, depreciation in Indian rupee against dollar too weighed down sentiments. Rupee weakened by 8 paise to 81.98 against the dollar at the Inter-bank Foreign Exchange market on account of increased demand for the American currency from importers and banks. Besides, traders were also concerned with a private report warning that with the delayed monsoon, there is no scope for complacency on inflation even though official data for May has shown a cool-off. It expects the average Consumer Price Inflation (CPI) for FY24 to come to 5.2 per cent against the 5.1 per cent estimate of the Reserve Bank of India.

On the global front, Asian markets were trading lower following weak cues from US markets, and ahead of the central bank’s loan prime rate decision on Tuesday. Back home, on the BSE sectoral front, traders were seen pilling up position in Industrials, Capital Goods, Consumer Durables, Healthcare and Metal, while selling was witnessed in Telecom, Bankex, Power, Utilities and Energy. 

The BSE Sensex is currently trading at 63223.19, down by 161.39 points or 0.25% after trading in a range of 63192.15 and 63574.69. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.46%, while Small cap index up by 0.42%.

The top gaining sectoral indices on the BSE were Industrials up by 1.00%, Capital Goods up by 0.93%, Consumer Durables up by 0.68%, Healthcare up by 0.64% and Metal up by 0.42%, while Telecom down by 0.90%, Bankex down by 0.84%, Power down by 0.49%, Utilities down by 0.48% and Energy down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.85%, Titan up by 1.50%, Bajaj Finance up by 1.34%, Bajaj Finserv up by 1.16% and Sun Pharma up by 0.76%. On the flip side, Kotak Mahindra Bank down by 1.77%, Axis Bank down by 1.55%, ICICI Bank down by 1.20%, NTPC down by 1.14% and Indusind Bank down by 1.06% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that private sector banks' slippages and write-offs from loans restructured after the COVID-19 pandemic are nearly double than that of public sector banks (PSBs). It said private sector banks have seen slippages and loan write-offs at 44 per cent, as against 23 per cent in case of PSBs. 

The domestic rating agency analysed annual results of lenders for FY23. It found that the peak of restructured assets in bank books was in September 2022, when the overall quantum of recast loans had touched Rs 2.2 lakh crore. It said while there could be some more slippages, banks are of the view that the performance of the restructured portfolio would broadly mirror the performance of the overall portfolio. It can be noted that in the aftermath of the pandemic, which led to a hasty lockdown that led to a contraction in the economy, the RBI had announced a restructuring scheme followed by another one. It said the COVID restructuring experience has been relatively benign, despite the unpleasant experiences in the past with similar schemes. 

On the overall asset quality front, Ind-Ra said banks are close to a clean slate as all of them reported improvement on asset front in FY23. Banks are seeing the best-ever asset quality in the past 10 years and the gross non-performing assets (GNPAs) ratio for the banking system improved to 4 per cent at the end of FY23. For state-owned banks, GNPAs improved to 5 per cent in FY23 from the peak of 14.1 per cent in FY18, while the same for private sector banks stands at 2.3 per cent from 6.3 per cent. Both categories of banks are also seeing a convergence in their asset quality and credit cost related parameters.

The CNX Nifty is currently trading at 18778.50, down by 47.50 points or 0.25% after trading in a range of 18767.45 and 18881.45. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 1.80%, Titan up by 1.44%, Bajaj Finance up by 1.28%, Bajaj Finserv up by 1.02% and Sun Pharma up by 0.76%. On the flip side, Kotak Mahindra Bank down by 1.98%, Axis Bank down by 1.94%, ICICI Bank down by 1.26%, Adani Enterprises down by 1.13% and NTPC down by 1.12% were the top losers. 

All Asian markets were trading lower; Taiwan Weighted lost 1.82 points or 0.01% to 17,287.09, Hang Seng declined 239.55 points or 1.21% to 19,800.82, Shanghai Composite weakened 14.95 points or 0.46% to 3,258.38, KOSPI dropped 19.73 points or 0.76% to 2,606.06, Jakarta Composite plunged 16.27 points or 0.24% to 6,682.28, Straits Times fell 23.07 points or 0.71% to 3,236.96 and Nikkei 225 slipped 360.3 points or 1.08% to 33,345.78.