Markets continue to trade marginally lower after RBI holds repo rate steady

Indian equity benchmarks continued to trade marginally lower in morning deals, after the Reserve Bank of India, as expected, kept the repo rate unchanged at 6.5 percent for the seventh straight time. The RBI also retained GDP growth forecast of 7% for 2024-25 financial year, with June quarter growth at 7%, and September quarter at 6.9%. In the third and fourth quarter the growth is expected to be 7% each. This is lower than the 7.6% expansion estimated for FY24. Traders remained cautious with ICRA’s report that growth of the Indian Securitisation market is set to slow this fiscal year keeping the trend witnessed in the last quarter of fiscal 2024 as non-banking finance companies and banks get into co-lending reducing the demand for such papers. Meanwhile, the Central Board of Direct Taxes (CBDT) has facilitated taxpayers to file their Income Tax Returns (ITRs) for the Assessment Year 2024-25 (relevant to Financial Year 2023-24) from April 1, 2024 onwards. This is for the first time in recent times, that the Income Tax department has enabled taxpayers to file their Returns on the first day of the new financial year. On the global front, Asian markets are trading mostly in red as higher energy prices and hawkish comments from Fed officials spurred concerns about the outlook for inflation and interest rates. 

The BSE Sensex is currently trading at 74179.83, down by 47.80 points or 0.06% after trading in a range of 73946.92 and 74287.02. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.40%, while Small cap index was up by 0.40%.

The top gaining sectoral indices on the BSE were Realty up by 1.60%, Healthcare up by 0.40%, Consumer discretionary up by 0.32%, FMCG up by 0.30% and Consumer Durables up by 0.29%, while Capital Goods down by 0.62%, Telecom down by 0.46%, Metal down by 0.34%, Oil & Gas down by 0.32% and Industrials down by 0.21% were the top losing indices on BSE. 

The top gainers on the Sensex were HDFC Bank up by 0.97%, Kotak Mahindra Bank up by 0.87%, Mahindra & Mahindra up by 0.72%, SBI up by 0.46% and NTPC up by 0.44%. On the flip side, Larsen & Toubro down by 1.84%, JSW Steel down by 1.15%, Ultratech Cement down by 1.10%, Axis Bank down by 1.03% and Bajaj Finance down by 0.98% were the top losers.

Meanwhile, domestic rating agency Icra in its latest report has said that the overall securitisation volume growth slowed to 4 per cent in FY24 to Rs 1.88 lakh crore due to the impact of the HDFC twins merger. In FY23, the securitisation volume had grown by 33 per cent to Rs 1.80 lakh crore, and mortgage major HDFC was the biggest originator.

In a report, the agency said it expects the volume of securitisation - where a lender typically transfers the future receivables on a loan asset against upfront payment - to cross Rs 2 lakh crore in FY25. Icra's group head for structured finance ratings Abhishek Dafria said ‘The increasing share of co-lending by NBFCs (non-bank finance companies) and HFCs (housing finance companies) would challenge the growth in the securitisation market, though at this juncture we expect an increase in both forms of funding.’  He added that if HDFC is excluded, the securitisation volumes grew 25 per cent during the fiscal year.

He stated ‘The increase in volumes was driven by both existing large originators, who securitised higher volumes during the year, and new originators. We witnessed a sharp increase in securitisation by small finance banks as well as initial steps taken by a few private sector banks in this space to support their portfolio growth, given the recent challenges in deposit growth rates.’

The CNX Nifty is currently trading at 22494.10, down by 20.55 points or 0.09% after trading in a range of 22427.60 and 22502.65. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy's Lab up by 1.16%, Divi's Lab up by 1.03%, HDFC Bank up by 0.94%, SBI Life Insurance up by 0.92% and Shriram Finance up by 0.91%. On the flip side, BPCL down by 1.94%, Larsen & Toubro down by 1.83%, JSW Steel down by 1.22%, Axis Bank down by 1.13% and Ultratech Cement down by 1.06% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 836.2 points or 2.1% to 38,936.94, Hang Seng declined 118.84 points or 0.72% to 16,606.26, Straits Times fell 22.48 points or 0.69% to 3,212.53 and KOSPI dropped 27.55 points or 1% to 2,714.45, while Jakarta Composite gained 29.04 points or 0.4% to 7,283.44.