Domestic indices maintain solid gains in late morning deals

Domestic equity indices maintained their solid gains in late morning deals as market participants indulged in enlarging positions. Meanwhile, broader indices on the BSE were trading higher with gains in the range of 0.45-0.60%. Sentiments remained upbeat after robust economic data from the U.S., which eased fears of a slowdown. Further, sentiments also got a boost with Reserve Bank Governor Shaktikanta Das’ statement that the Indian economy has made a solid recovery and is among the fastest-growing large economies despite heightened uncertainties and formidable headwinds. On the sectoral front, traders were seen pilling up positions in IT, TECK, Auto, Realty and Healthcare, while selling was witnessed in Telecom, Utilities, Power and FMCG.

On the global front, Asian markets were trading mostly higher following positive cues from US markets overnight. Bank home, banking industry’s stocks were in focus as Reserve Bank of India’s (RBI) bi-annual Financial Stability Report has said that the Indian banking system's asset quality strengthened to a decadal best, with the gross non-performing assets (GNPAs) ratio falling to 3.9 per cent as of March 2023.

The BSE Sensex is currently trading at 64367.67, up by 452.25 points or 0.71% after trading in a range of 64068.44 and 64414.84. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.45%, while Small cap index up by 0.58%.

The top gaining sectoral indices on the BSE were IT up by 1.92%, TECK up by 1.68%, Auto up by 1.55%, Realty up by 0.82% and Healthcare up by 0.81%, while Telecom down by 0.37%, Utilities down by 0.36%, Power down by 0.24% and FMCG down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.15%, Sun Pharma up by 2.92%, Infosys up by 2.51%, TCS up by 2.26% and Indusind Bank up by 1.96%. On the flip side, ICICI Bank down by 0.50%, Kotak Mahindra Bank down by 0.41%, ITC down by 0.21%, Hindustan Unilever down by 0.17% and NTPC down by 0.16% were the top losers.

Meanwhile, Reserve Bank of India’s (RBI) bi-annual Financial Stability Report has said that the Indian banking system's asset quality strengthened to a decadal best, with the gross non-performing assets (GNPAs) ratio falling to 3.9 per cent as of March 2023. It said GNPAs of the scheduled commercial banks (SCBs) are expected to improve further to 3.6 per cent by March 2024, as per the baseline scenario.It can be noted that the banking system NPAs peaked in the second half of the last decade after the RBI launched an asset quality review and forced banks to recognize hidden stress to ensure that books represent the true picture. The report said the net NPAs of the banking system improved to 1 per cent, a level that was last seen way back in July 2011. The quarterly slippage ratio - which is the share of standard advances slipping into NPAs - moderated further to 0.3 per cent, but there was a jump in the write-offs to GNPAs ratio to 28.5 per cent at the end of FY23 on the back of more classification by private banks lately.

According to the report, the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of SCBs rose to historical highs of 17.1 per cent and 13.9 per cent, respectively, in March 2023. Macro stress tests for credit risk have revealed that all banks would comply with the minimum capital requirements even under a severe stress scenario. It said the increased focus on retail lending by banks has resulted in the share of corporate loans - the mainstay in banks' loan books - falling to 46.4 per cent in March 2023 against 51.1 per cent in March 2020. 

It also noted that the share of large loans in the overall GNPAs has also come down to 53.9 per cent in March 2023 from 75.7 per cent three years ago. GNPAs for large borrower loans of over Rs 5 crore improved to 4.5 per cent from 12.2 per cent three years ago, while the asset quality of top 100 borrowers also improved, with their share in SCBs' GNPA declining to 1.6 per cent in March 2023 from 6.8 per cent as of March 2022.

The CNX Nifty is currently trading at 19096.65, up by 124.55 points or 0.66% after trading in a range of 19024.60 and 19108.20. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 3.23%, Sun Pharma up by 2.97%, Hero MotoCorp up by 2.73%, Infosys up by 2.61% and TCS up by 2.26%. On the flip side, Adani Ports down by 2.21%, HDFC Life Insurance down by 1.76%, Adani Enterprises down by 1.38%, Apollo Hospital down by 1.17% and BPCL down by 0.63% were the top losers.

Asian markets were trading mostly higher; Hang Seng advanced 38.96 points or 0.21% to 18,973.32, Shanghai Composite strengthened 26.63 points or 0.83% to 3,209.01, KOSPI increased 17.43 points or 0.68% to 2,567.45 and Straits Times rose 3.1 points or 0.1% to 3,210.38. However, Nikkei 225 slipped 64.49 points or 0.19% to 33,169.65 and Taiwan Weighted lost 26.76 points or 0.16% to 16,915.54.