Indian markets witness volatility in early afternoon deals

Volatility witnessed in Indian equity markets during early afternoon deals, with both Sensex and Nifty lingering around their neutral lines, impacted by heavy selling at banking and NBFC counters after the RBI raised risk weights on consumption loans, credit card exposures and loans to non-bank financiers by 25 percentage points each. Sentiments remained pessimistic, as the Reserve Bank of India (RBI) in its latest monthly bulletin for November 2023 has stated that the global economy shows signs of slowing down in the final quarter of 2023 as manufacturing languishes while services sector activity appears to have reached the end of its post-pandemic expansion. It also said that going forward, tightening financial conditions is a significant risk to the global outlook. 

On the global front, Asian markets were trading mostly in green, amid Hong Kong's unemployment rate increased slightly in the August-October period. The labour force statistics from the Census and Statistics Department showed that the seasonally adjusted unemployment rate came in at 2.9 percent in the August-October period, up from a stable rate of 2.8 percent in the July-September period. The data showed that the underemployment rate remained unchanged at 1.0 percent.

The BSE Sensex is currently trading at 65921.78, down by 60.70 points or 0.09% after trading in a range of 65639.74 and 66037.69. There were 19 stocks advancing against 9 stocks declining, while 2 stocks remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.33%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were Industrials up by 0.98%, Healthcare up by 0.88%, Capital Goods up by 0.85%, Basic Materials up by 0.74% and Consumer Discretionary up by 0.69%, while Bankex down by 1.20%, Oil & Gas down by 0.74%, Energy down by 0.49% and PSU down by 0.46% were the top losing indices on BSE.
The top gainers on the Sensex were Asian Paints up by 2.08%, Power Grid up by 1.47%, Nestle up by 1.34%, Hindustan Unilever up by 1.33% and Mahindra & Mahindra up by 0.95%. On the flip side, SBI down by 3.24%, Axis Bank down by 2.98%, Bajaj Finance down by 1.72%, ICICI Bank down by 0.80% and Bajaj Finserv down by 0.55% were the top losers.

Meanwhile, Credit rating agency ICRA in its latest report has said that the assets under management (AUM) of medium and small (M&S) non-banking financial companies (NBFCs), defined as those with AUM of up to Rs 100 billion, is likely to grow at a CAGR of 25-30% over FY2024 and FY2025. Lower base and larger share of high growth segments like affordable housing, microfinance, secured business loans (SBL), used vehicle loans, unsecured loans (personal & consumption loans and unsecured business loans), are expected to support AUM expansion of these NBFCs.

ICRA has assessed the performance of about 105 medium and small (M&S) NBFCs to bring out the key trends in this segment. This cohort of entities accounts for about 14% of the overall NBFC industry AUM (excluding infrastructure financing entities) as of March 2023 and their AUM grew at higher CAGR of 25% between March 2019 and March 2023 vis-a-vis NBFC industry AUM growth rate of 9%. 

According to the report, the reported gross stage 3 (GS3) of the cohort of M&S entities assessed by ICRA was manageable at 2.6% in March 2023 (4.2% in March 2022), which is lower than the levels reported by larger players (a sample of 39 entities considered for ICRA’s analysis), driven by write-offs and faster AUM growth. However, in the long-tail loans, the lagged GS3 were sizeably higher, e.g., two-year lagged GS3 in March 2023 for SBL and affordable housing loans in the ICRA sample set were higher at 3.2% and 3.7% vis-a-vis the reported GS3 of 1.8% and 2.3% respectively. ICRA expects the GS3 of M&S NBFCs to increase by up to 60 bps from March 2023 levels as the portfolio seasons over the next two years.

The CNX Nifty is currently trading at 19768.15, up by 2.95 points or 0.01% after trading in a range of 19667.45 and 19806.00. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were SBI Life Insurance up by 4.89%, HDFC Life Insurance up by 2.80%, Apollo Hospital Ent. up by 2.23%, Hero MotoCorp up by 2.23% and Asian Paints up by 2.12%. On the flip side, SBI down by 3.29%, Axis Bank down by 3.11%, ONGC down by 2.38%, Bajaj Finance down by 1.70% and ICICI Bank down by 0.89% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted added 37.77 points or 0.22% to 17,208.95, Jakarta Composite gained 4.96 points or 0.07% to 6,962.97, Shanghai Composite strengthened 2.38 points or 0.08% to 3,053.31 and Nikkei 225 surged 160.79 points or 0.48% to 33,585.20, while Hang Seng declined 368.98 points or 2.11% to 17,463.84, Straits Times fell 11.2 points or 0.36% to 3,121.85 and KOSPI dropped 18.33 points or 0.74% to 2,469.85.