Local equities stage robust recovery in late morning trade

Local equity benchmarks staged a robust recovery after choppy opening session and traded with gains of over a percent in late morning session, led by gains in FMCG, Auto and Healthcare stocks. Sentiments got up-beat with a private report that India's world record beating economic growth rate together with robust tax revenues, a fast expanding digital and financial infrastructure and a strong manufacturing sector will give the new government a base for unleashing next generation reforms that may make the country a developed nation by 2047. Traders overlooked private survey showed growth in India's services activity growth slowed to a five-month low in May as robust domestic demand weakened. The final HSBC India Services purchasing managers' index, compiled by S&P Global, fell to 60.2 in May 2024 from April's 60.8, confounding a preliminary reading for a rise to 61.4. However, it remained above the 50 mark separating growth from contraction for the 34th straight month. On the global front, Asian markets are trading mostly in green as a softening US labour market firmed up bets of an interest rate cut in September from the Federal Reserve ahead of a crucial payrolls report this week. 

The BSE Sensex is currently trading at 72824.69, up by 745.64 points or 1.03% after trading in a range of 71879.44 and 73027.88. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.53%, while Small cap index was up by 0.47%.

The top gaining sectoral indices on the BSE were FMCG up by 6.20%, Auto up by 3.28%, Healthcare up by 2.77%, Consumer Discretionary up by 2.46% and IT up by 2.43%, while Capital Goods down by 3.42%, PSU down by 2.50%, Industrials down by 2.36%, Realty down by 2.07% and Power down by 1.78% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 8.97%, Nestle up by 5.34%, Asian Paints up by 5.06%, Mahindra & Mahindra up by 4.51% and ITC up by 4.32%. On the flip side, Larsen & Toubro down by 5.26%, Power Grid Corporation down by 3.53%, SBI down by 2.67%, NTPC down by 1.81% and Bharti Airtel down by 1.04% were the top losers.

Meanwhile, credit rating agency ICRA in its latest report has said that the overall securitisation volumes, originated mainly by non-banking financial companies (NBFCs) and housing finance companies (HFCs), is estimated at Rs 38,000 crore in Q3 FY2024, reflecting a sequential de-growth of around 17% from around Rs 46,000 crore recorded in Q2 FY2024. The volumes for Q3 FY2024 also trailed around Rs 43,000 crore securitised in Q3 FY2023, mainly due to the exit of a large HFC from the securitisation market in the current fiscal. 

ICRA expects securitisation activity to pick up again and touch Rs 50,000 crore in Q4 of the current fiscal, which is typically the busiest quarter of the year. It said despite a tepid Q3, the securitisation volumes in 9M FY2024 expanded by 20% to around Rs 1,40,000 crore on a YoY basis on the back of a strong H1. NBFCs and HFCs continue to rely on securitisation as a key funding tool to support their portfolio growth. The securitisation market has witnessed a higher share of pass-through certificates issuances vis-a-vis direct assignments, following the exit of a large HFC this year, which had been securitising its assets predominantly through direct assignments. 

The report further stated that vehicle loans continue to be the largest asset class with 35-40% share in the overall securitisation volumes, followed by microfinance loans with 22-25% share.  Mortgage-backed loans have a share of 18-20%. Unsecured loans, the share of which was on the rise in the last couple of years in the overall securitisation volumes, could be impacted in the near term because of the RBI’s circular in November 2023.

The CNX Nifty is currently trading at 22130.10, up by 245.60 points or 1.12% after trading in a range of 21791.95 and 22142.95. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 8.57%, Hero MotoCorp up by 8.27%, Britannia Industries up by 7.20%, Tata Consumer Product up by 5.61% and Nestle up by 5.23%. On the flip side, Larsen & Toubro down by 5.03%, BPCL down by 4.44%, Power Grid Corporation down by 3.29%, SBI down by 3.09% and Grasim Industries down by 2.96% were the top losers.

Asian markets are trading mostly in green; Straits Times rose 8.14 points or 0.24% to 3,347.08, KOSPI increased 33.94 points or 1.27% to 2,696.04, Taiwan Weighted added 149.17 points or 0.7% to 21,505.79 and Hang Seng advanced 64.61 points or 0.35% to 18,508.72.

On the flip side, Jakarta Composite plunged 98.45 points or 1.41% to 7,000.86, Shanghai Composite weakened 11.18 points or 0.36% to 3,080.02 and Nikkei 225 slipped 450.72 points or 1.16% to 38,386.74.