Benchmarks snap six-day winning streak on Friday

Snapping their six-day winning streak, Indian equity benchmarks witnessed profit taking on Friday and shed over a percent, as a few big companies disappointed market sentiments with their first-quarter earnings. Weak global cues and selling by domestic institutional investors also hurt sentiments. After the initial gap-down opening, markets drifted gradually lower, as traders were concerned after latest payroll data released by the Employees’ Provident Fund Organisation (EPFO) showed that formal job creation slowed in May after recovering slightly at the turn of the fiscal year in the previous month. The number of new monthly subscribers under the EPF declined by close to 1 per cent to 883,176 in May from 891,974 in April. Sentiments remained down-beat with private report stating that private equity and venture capital (PE/VC) funds' investments into Indian entities declined by nearly a fourth to $27.5 billion in January-June 2023 against the year-ago period. 

Markets extended fall and traded deep in red in late afternoon session, as traders remained anxious with data showing that retail inflation for farm workers and rural labourers inched up marginally to 6.31 per cent and 6.16 per cent, respectively in June as compared to 5.99 per cent and 5.84 per cent in May this year. The All-India Consumer Price Index Number for Agricultural Labourers and Rural Labourers for June 2023 increased by 10 points each to 1,196 points and 1,207 points, respectively. CPI-AL and CPI-RL were 1,186 points and 1,197 points in May 2023. Traders overlooked S&P Global Ratings’ report in which it has projected Indian banking sector's weak loans will decline to 3-3.5 per cent of gross advances by March 31, 2025 as structural improvements and good economic prospects would support the resilience of financial institutions. In its mid-year global bank outlook, S&P said India's economic growth prospects should remain strong over the medium term, with GDP expanding 6-7.1 per cent annually in fiscal years 2024-2026.

On the global front, European markets were trading mostly in green as official data showed U.K. retail sales advanced 0.7 percent month-on-month in June, faster than the 0.1 percent rise in May. This was also faster than forecast of 0.2 percent. Asian markets settled mostly higher on Friday as investors looked ahead to central bank meetings in the U.S., Europe and Japan next week for further clues on the rate outlook.

Finally, the BSE Sensex fell 887.64 points or 1.31% to 66,684.26 and the CNX Nifty was down by 234.15 points or 1.17% to 19,745.00.      

The BSE Sensex touched high and low of 67,190.52 and 66,533.74, respectively. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.26%, while Small cap index was up by 0.13%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.69%, Industrials up by 1.33%, PSU up by 0.51%, Telecom up by 0.35% and Utilities up by 0.08%, while IT down by 4.40%, TECK down by 3.91%, Consumer Durables down by 1.09%, FMCG down by 0.89%, Metal down by 0.77% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.88%, NTPC up by 1.09%, SBI up by 0.78%, Kotak Mahindra Bank up by 0.70% and Tata Motors up by 0.68%. On the flip side, Infosys down by 8.18%, Hindustan Unilever down by 3.65%, HCL Technologies down by 3.33%, Reliance Industries down by 3.19% and Wipro down by 3.07% were the top losers.

Meanwhile, Credit rating agency ICRA in its latest report has revised upward the growth outlook for the current financial year (FY24) for the retail loans of Non-Bank Financial Companies (NBFC-Retail) and Housing Finance Companies (HFC-Retail), which account for the bulk of the overall sector.

According to the report, the NBFC-Retail asset under management (AUM), estimated at around Rs 14 lakh crore as of March 2023, is expected to grow at a higher pace of 18-20 per cent in FY24 vis-a-vis the previously estimated level of 12-14 per cent, as growth in the unsecured loans segment, consisting of personal & consumption loans, unsecured small enterprise loans and microfinance loans, would remain strong. At the same time, it said the HFC-Retail AUM estimated at around Rs 7 lakh crore as of March 2023, consisting of home loans (HL) and loan against property (LAP), is expected to grow at a relatively moderate 12-14 per cent (albeit higher than the previous estimate of 11-13 per cent) during the same period on the back of rising competition from banks.

The report further said with a growth expectation of 10-12 per cent in the infrastructure and other wholesale loans of NBFCs and HFCs, the total sector AUM, consisting of retail and other wholesale loans (including infrastructure loans), that stood at about Rs 40 lakh crore as of March 2023, is estimated to grow at about 13-15 per cent in FY24. The NBFC-Retail AUM grew by a robust pace of about 26 per cent in the last fiscal, on the back of an uptick witnessed in all loan segments but was primarily driven by the unsecured loans, which expanded by 44 per cent. Unsecured loans increased at a CAGR of 27 per cent over the five-year period ended FY2023, while secured loans grew at 11 per cent during the same period, and unsecured loans expected to remain the key growth driver in the current fiscal too. The jump in unsecured credit can also be partly attributed to the borrower-focused approach of entities vis-a-vis their product-focused approach in the past.

The CNX Nifty traded in a range of 19,887.40 and 19,700.00. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 3.91%, ONGC up by 2.00%, NTPC up by 0.93%, SBI up by 0.87% and Tata Motors up by 0.74%. On the flip side, Infosys down by 7.73%, Hindustan Unilever down by 3.60%, HCL Technologies down by 3.17%, Wipro down by 3.05% and TCS down by 2.58% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 8.02 points or 0.1% to 7,654.07 and France’s CAC rose 21.5 points or 0.29% to 7,406.41, while Germany’s DAX lost 67.22 points or 0.41% to 16,137.00.

Asian markets settled mostly higher on Friday, despite a mixed performance on Wall Street overnight followed by disappointing earnings. Meanwhile investors are eagerly awaiting central bank meetings in the Unites States, Europe and Japan next week for further clues on the interest rate outlook. However, Japanese shares fell after weaker than expected trade data for June, with imports falling nearly 13% from a year earlier. Japanese investors dumped semiconductor shares following weak earnings from chip giant Taiwan Semiconductor Manufacturing Co (TSMC). Chinese shares ended almost flat with negative momentum on concerns over health of Chinese property developers after rating agencies, Moody's and S&P Global sent stark warnings about China's biggest commercial real estate firm Wanda Commercial.