Domestic indices trade firm in early deals on positive global cues

Indian equity benchmarks made optimistic start on Tuesday tracking overnight gains on Wall Street as well as a dip in US Treasury yields. Domestic indices are trading firm in early deals with gains of around 0.40% each on account of value buying after two consecutive session of losses. Traders took note of Moody's Investors Service’s statement that the RBI's decision to tighten norms for unsecured personal loans is credit positive because lenders will need to allocate higher capital for such loans, thus improving their loss-absorbing buffers. However, foreign fund outflows limit the upside. Provisional data from the National Stock Exchange showed that foreign institutional investors net sold shares worth Rs 645.72 crore on November 20. 

On the global front, Asian markets are trading mixed as investors looked ahead to the release of minutes from Federal Reserve's latest meeting later in the day for additional clues on the rate outlook. Back home, retail inflation for agricultural labourers and rural workers rose marginally to 7.08 per cent and 6.92 per cent in October, respectively, from 6.70 per cent and 6.55 per cent respectively in September 2023 due to higher prices of certain food items. In stock specific development, Jio Financial Services rose after it plans to raise Rs 5,000 - Rs 10,000 crore via its maiden bond sale.

The BSE Sensex is currently trading at 65935.79, up by 280.64 points or 0.43% after trading in a range of 65849.17 and 65960.62. There were 22 stocks advancing against 8 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 0.60%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.21%, Realty up by 0.89%, Basic Materials up by 0.85%, IT up by 0.43% and TECK up by 0.42%, while Energy down by 0.40%, Capital Goods down by 0.28%, Oil & Gas down by 0.08%, FMCG down by 0.08% and PSU down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 1.59%, Tata Steel up by 1.25%, Reliance Industries up by 1.21%, Titan Company up by 1.02% and HDFC Bank up by 0.82%. On the flip side, Maruti Suzuki down by 0.30%, Larsen & Toubro down by 0.21%, Nestle down by 0.20%, Hindustan Unilever down by 0.17% and Kotak Mahindra Bank down by 0.14% were the top losers.

Meanwhile, Moody's Investors Service has said that the Reserve Bank of India’s (RBI’s) decision to tighten norms for unsecured personal loans is credit positive because lenders will need to allocate higher capital for such loans, thus improving their loss-absorbing buffers. The RBI last week raised risk weights on unsecured retail loans, credit cards and lending to non-banking finance companies (NBFCs) by 25 percentage points.

Moody's said unsecured loans have been growing rapidly in the past few years, exposing financial institutions to a potential spike in credit costs in case of sudden economic or interest rate shocks. It said that over the past few years, India's unsecured lending segment has become very competitive, with banks, NBFCs and financial technology (fintech) companies, including several new entrants, aggressively growing loans in this category. It noted in the past two years, personal loans grew around 24 per cent and credit card loans rose 28 per cent on an average compared with the overall banking sector's credit growth of around 15 per cent.

Moody's said ‘We expect banks would be able to absorb higher risk weights on their capital because the overall banking sector's exposure to unsecured retail credit is small at around 10 per cent of loans as of September 2023 and the sector's overall capitalization is at historically high levels with a Common Equity Tier 1 ratio of 13.9 per cent as of March 2023’. However, the impact of the new underwriting rules could vary among individual lenders depending on their exposure to unsecured loans.

The CNX Nifty is currently trading at 19774.40, up by 80.40 points or 0.41% after trading in a range of 19754.05 and 19790.05. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 3.05%, Hindalco up by 2.11%, Tata Steel up by 1.45%, JSW Steel up by 1.35% and Adani Ports & SEZ up by 1.23%. On the flip side, Coal India down by 3.55%, ONGC down by 2.53%, Britannia Industries down by 0.64%, Apollo Hospital down by 0.57% and Maruti Suzuki down by 0.37% were the top losers.

Asian markets are trading mixed; Taiwan Weighted surged 187.44 points or 1.08% to 17,397.91, Hang Seng rose 173.14 points or 0.96% to 17,951.21, KOSPI increased 23.78 points or 0.95% to 2,514.98 and Shanghai Composite was up by 13.98 points or 0.45% to 3,082.30. On the other hand, Nikkei 225 slipped 30.45 points or 0.09% to 33,357.58, Jakarta Composite fell 30.27 points or 0.43% to 6,964.62 and Straits Times was down by 8.86 points or 0.29% to 3,102.72.