Benchmarks trade flat with positive bias in morning deals

Indian equity benchmarks erased initial losses and were trading flat with positive bias in morning deals, led by gains in IT, Healthcare and TECK stocks. Traders took some support with Additional Secretary and DGFT Director General Santosh Kumar Sarangi’s statement that Indian e-commerce exports are likely to touch $200 billion in the next 6-7 years and will play a critical role in achieving the $2 trillion goods and services export target. Some support also came as Chief Economic Advisor (CEA) to the Union government V Anantha Nageswaran stated that startups will play an important role in helping India become the third largest economy in the world. However, gains remain capped as some concern came with exchange data showing that Foreign Institutional Investors (FIIs) offloaded equities worth Rs 477.76 crore on Friday. On the global front, Asian markets are trading mostly in green as recent weak U.S. data bolstered optimism that the Federal Reserve will refrain from raising interest rates over the next several months before cutting rates in mid-2024.

The BSE Sensex is currently trading at 65806.54, up by 11.81 points or 0.02% after trading in a range of 65645.52 and 65844.01. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.35%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were IT up by 0.92%, Healthcare up by 0.79%, TECK up by 0.57%, Realty up by 0.57% and PSU up by 0.55%, while Auto down by 0.41%, Capital Goods down by 0.31% and FMCG down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.60%, Wipro up by 1.25%, Tech Mahindra up by 1.08%, TCS up by 0.75% and SBI up by 0.55%. On the flip side, Mahindra & Mahindra down by 1.52%, Ultratech Cement down by 0.66%, Larsen & Toubro down by 0.64%, Bajaj Finance down by 0.64% and Hindustan Unilever down by 0.57% were the top losers.

Meanwhile, S&P Global Ratings has said that the Reserve Bank of India’s (RBI’s) decision to tighten norms for consumer credit by raising risk weight for unsecured personal loans is likely to hit banks' capital adequacy by 60 basis points. The move will curtail riskier bank lending to consumers and is expected to squeeze the nonbank sector in particular.

It stated the RBI increased risk weights on unsecured personal loans, credit cards, and lending to nonbank finance companies (NBFCs) by 25 percentage points. This will likely lead to higher lending rates, lower credit growth, and increase the need for capital raising among weak lenders. It added that higher risk weights will ultimately support asset quality. Further, it said these changes will not have any immediate effect on India's financial sector ratings, and this will also not affect the risk-adjusted capital ratio for the rated banks and finance companies.

S&P Global Ratings credit analyst Geeta Chugh said ‘Slower loan growth and an increased emphasis on risk management will likely support asset quality in the Indian banking system. 'However, the immediate effect will likely be higher interest rates for borrowers, slower loan growth for lenders reduced capital adequacy, and some hit on profits. We estimate that the Tier-1 capital adequacy of banks will decline by about 60 basis points. Finance companies will be worse affected as their incremental bank borrowing costs will surge, in addition to the capital adequacy impact.’

The CNX Nifty is currently trading at 19747.10, up by 15.30 points or 0.08% after trading in a range of 19701.40 and 19756.45. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Divi's Lab up by 3.71%, LTIMindtree up by 1.51%, HCL Technologies up by 1.44%, Wipro up by 1.26% and Tech Mahindra up by 1.08%. On the flip side, Mahindra & Mahindra down by 1.58%, SBI Life Insurance down by 0.66%, Bajaj Finance down by 0.66%, Hindustan Unilever down by 0.58% and Larsen & Toubro down by 0.58% were the top losers.

Asian markets are trading mostly in green; Hang Seng advanced 263.41 points or 1.49% to 17,717.60, KOSPI increased 27.76 points or 1.11% to 2,497.61, Jakarta Composite gained 16.12 points or 0.23% to 6,993.79 and Shanghai Composite strengthened 15.85 points or 0.52% to 3,070.22.

On the flip side, Nikkei 225 slipped 152.76 points or 0.46% to 33,432.44, Taiwan Weighted lost 33.14 points or 0.19% to 17,175.81 and Straits Times fell 15.38 points or 0.49% to 3,109.29.