Benchmarks remain in red in late morning deals

Indian equity benchmarks continued to trade with a negative bias in late morning deals, as investors preferred profit-taking after the recent record-breaking run. Traders remained cautious as the RBI’s Financial Stability Report stated that the increase in risk weights for personal loans and loans to non-banking financial companies (NBFCs) may lead to a decline in the capital adequacy ratio of 71 basis points (bps) of the banking system. However, losses remain capped as traders took some support with report that the government is working on boosting domestic manufacturing and increasing exports to $500 billion by 2030 from 10-11 sectors. The 11 sectors are auto components, automobiles (including EVs), capital goods, chemicals, drones, medical devices, aerospace and defence, leather and footwear, textiles, and space. Overall, the ministry is looking at taking the country's goods and services exports to $2 trillion by 2030. On the global front, Asian markets are trading mixed amid optimism about the likelihood of near-term interest rate cuts by the US Fed, but traders are cautious and remain reluctant to make significant moves going into the end of the year and ahead of the New Year's long weekend.

The BSE Sensex is currently trading at 72194.02, down by 216.36 points or 0.30% after trading in a range of 72092.55 and 72417.01. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.25%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Auto up by 0.98%, FMCG up by 0.82%, Consumer Disc up by 0.49%, Industrials up by 0.25% and Realty up by 0.20%, while Oil & Gas down by 1.09%, Energy down by 0.97%, PSU down by 0.82%, Metal down by 0.76% and Bankex down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 4.22%, Nestle up by 0.95%, Wipro up by 0.81%, ITC up by 0.65% and Hindustan Unilever up by 0.50%. On the flip side, NTPC down by 1.46%, SBI down by 1.32%, Kotak Mahindra Bank down by 1.15%, Titan Company down by 1.14% and Infosys down by 1.04% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI's) Financial Stability Report (FSR) has said that net non-performing assets (NPA) ratio of banks declined to a multi-year low of 0.8 per cent at the end of September 2023 and the country's domestic financial system remains resilient. The resilience of the non-banking financial companies (NBFCs) sector improved with CRAR at 27.6 per cent, GNPA ratio at 4.6 per cent and return on assets (RoA) at 2.9 per cent, respectively, in September 2023. It noted that the gross non-performing assets (GNPA) ratio of banks also declined to a multi-year low of 3.2 per cent.

The report reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the Indian financial system. It further said that the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of scheduled commercial banks (SCBS) stood at 16.8 per cent and 13.7 per cent, respectively, in September 2023. It added that macro stress tests for credit risk reveal that SCBs would be able to comply with minimum capital requirements, with the system-level CRAR in September 2024 projected at 14.8 per cent, 13.5 per cent and 12.2 per cent, respectively, under baseline, medium and severe stress scenarios. 

Referring to the present state of Indian economy, it said the domestic financial system remained resilient, supported by strong macroeconomic fundamentals, healthy balance sheets of financial institutions, moderating inflation, improving external sector position and continuing fiscal consolidation. However, it said the global economy faces multiple challenges, including prospects of slowing growth, large public debt, increasing economic fragmentation, and prolonging geopolitical conflicts.

The CNX Nifty is currently trading at 21714.40, down by 64.30 points or 0.30% after trading in a range of 21680.10 and 21770.30. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 4.36%, Tata Consumer Product up by 3.35%, Adani Ports &Special up by 1.16%, Adani Enterprises up by 0.94% and Nestle up by 0.85%. On the flip side, BPCL down by 2.83%, ONGC down by 1.37%, SBI down by 1.30%, NTPC down by 1.27% and Coal India down by 1.26% were the top losers.

Asian markets are trading mixed; Shanghai Composite strengthened 9.98 points or 0.34% to 2,964.68, Straits Times rose 27.43 points or 0.85% to 3,241.83 and Taiwan Weighted added 8.52 points or 0.05% to 17,918.89.

On the flip side, Nikkei 225 slipped 175.22 points or 0.52% to 33,364.40, Hang Seng declined 76.76 points or 0.45% to 16,966.77 and Jakarta Composite plunged 26.41 points or 0.36% to 7,277.48.