Benchmarks continue to trade in red in morning deals

Indian equity benchmarks continued to trade in red in morning deals, weighed by FMCG, TECK and IT stocks, tracking weakness in Asian peers. Traders remained cautious as Crisil Market Intelligence and Analytics in its note has said that urban poor have been the most impacted by 15-month high consumer price inflation (CPI) in July. The high-income segment in urban areas faced the lowest inflation burden, as food has a relatively low share in their consumption basked. It noted that poorest segment in urban areas faced highest inflation rate in July. Traders overlooked Fitch Ratings’ statement that the operating environment for Indian banks has strengthened as economic risks associated with the Covid-19 pandemic have ebbed. It said India was badly affected by the pandemic, but the associated risks have now receded. The easing of pandemic-related risks has been accompanied by a strengthening of capital buffers. On the global front, Asian markets are trading mostly in red tracking weak cues from global markets amid signs of economic stress in China and uncertainty about the outlook for U.S. interest rates.

The BSE Sensex is currently trading at 65303.88, down by 235.54 points or 0.36% after trading in a range of 65257.83 and 65535.14. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.42%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.13%, Industrials up by 0.34%, Realty up by 0.29%, PSU up by 0.21% and Telecom up by 0.09%, while FMCG down by 0.59%, TECK down by 0.57%, IT down by 0.50%, Oil & Gas down by 0.38% and Metal down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 1.43%, Axis Bank up by 0.73%, SBI up by 0.39%, Indusind Bank up by 0.32% and Maruti Suzuki up by 0.32%. On the flip side, ITC down by 1.58%, Power Grid Corporation down by 1.35%, Nestle down by 1.06%, TCS down by 0.80% and Infosys down by 0.70% were the top losers.

Meanwhile, Fitch Ratings has said the operating environment for Indian banks has strengthened as economic risks associated with the Covid-19 pandemic have ebbed. It said India was badly affected by the pandemic, but the associated risks have now receded. The easing of pandemic-related risks has been accompanied by a strengthening of capital buffers.

It also said a number of prudential indicators for the sector have also improved compared to pre-pandemic levels, and the operating environment score continues to benefit from the economy’s well-diversified structure, which helps to reduce banks' exposure to specific sector-focused shocks. The large size of the economy and India’s favourable demographics should offer banks opportunities to generate profitable business and diversify risk and revenue. Fitch revised its OE (operating environment) mid-point score for Indian banks to 'bb' from 'bb+' in March 2020 after assessing that the pandemic was likely to worsen the existing OE stresses facing the sector.

Besides, Fitch said it expects banks to benefit from the gradual formalisation of the SME sector through initiatives like the Goods and Services Tax and rapid digitalisation (including payment systems), which will improve the prospects for providing services at acceptable levels of risk to this substantial part of the market.

The CNX Nifty is currently trading at 19401.80, down by 63.20 points or 0.32% after trading in a range of 19377.55 and 19461.55. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Adani Ports &SEZ up by 1.86%, Titan Company up by 1.50%, Axis Bank up by 0.79%, Dr. Reddy's Lab up by 0.69% and Adani Enterprises up by 0.49%. On the flip side, LTIMindtree down by 1.68%, ITC down by 1.58%, Power Grid Corporation down by 1.39%, Cipla down by 1.06% and Nestle down by 0.93% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 21.24 points or 0.12% to 18,308.06, KOSPI dropped 7.49 points or 0.3% to 2,518.15, Straits Times fell 12.24 points or 0.38% to 3,201.34 and Nikkei 225 slipped 142.92 points or 0.45% to 31,623.90. On the flip side, Shanghai Composite strengthened 0.16 points or 0.01% to 3,150.29 and Taiwan Weighted added 71.22 points or 0.43% to 16,518.00.