Markets remain in red in late morning deals

Indian equity markets remained in red in late morning deals, on account of hectic selling in IT industry related stocks namely TCS, Infosys and HCL Technologies. Meanwhile, broader indices were also trading in red with the BSE Small cap index and Mid cap index falling in the range of 0.20-0.50%. Weak cues from the global markets weighed on the domestic sentiments. Sentiments were also weak as the data released by the Finance Ministry showed that India's external debt rose to $ 711.8 billion as of September this year, up 4.3 per cent over June 2024. On the BSE sectoral front, traders were seen pilling up positions in Capital Goods, PSU, Metal, Industrials and Healthcare, while selling was witnessed in IT, TECK, Realty, Utilities and Consumer Disc. 

On the global front, Asian markets were trading mostly in red as investors assessed China’s manufacturing growth that missed expectations. China’s purchasing managers’ index for December came in at 50.1, missing expectations, signaling that Beijing’s stimulus measures were not sufficient to meaningfully boost the country’s ailing economy. Back home, in the stock specific development, Rail Vikas Nigam (RVNL) climbed after the company emerged as the lowest bidder for project from Central Railway.  The project is valued at Rs 137.15 crore and is set to be completed within 24 months.

The BSE Sensex is currently trading at 78032.48, down by 215.65 points or 0.28% after trading in a range of 77560.79 and 78069.39. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.49%, while Small cap index down by 0.21%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.69%, PSU up by 0.50%, Metal up by 0.43%, Industrials up by 0.43% and Healthcare up by 0.32%, while IT down by 1.74%, TECK down by 1.51%, Realty down by 0.97%, Utilities down by 0.70% and Consumer Disc down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 2.11%, Sun Pharma up by 0.98%, Tata Motors up by 0.82%, SBI up by 0.77% and Tata Steel up by 0.62%. On the flip side, Tech Mahindra down by 2.87%, TCS down by 1.96%, Zomato down by 1.79%, Infosys down by 1.61% and HCL Technologies down by 1.08% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has said that asset quality of banks improved further and their gross non-performing assets (NPAs) or bad loans ratio declined to a 12-year low of 2.6 per cent in September 2024 on the back of falling slippages and steady credit demand. The RBI also flagged concern over a sharp rise in write-offs, especially among private sector banks (PVBs), which could be partly masking worsening asset quality in unsecured lending segment and dilution in underwriting standards.

According to the RBI's December 2024 issue of the Financial Stability Report (FSR), the net NPA ratio or the proportion of net non-performing assets in net loans and advances was at around 0.6 per cent. The Financial Stability Report reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability. Buoyed by falling slippages, higher write-offs and steady credit demand, the gross nonperforming assets (GNPA) ratio of 37 scheduled commercial banks (SCBs) fell to a multi-year low of 2.6 per cent.

The report said fresh accretion of NPAs in retail loan portfolios was also dominated by slippages in the unsecured loan book, with 51.9 per cent from unsecured loans as of September 2024. The improvement in asset quality of SCBs was broad-based across sectors and bank groups. It also said that the banking system liquidity coverage ratio (LCR) declined from 135.7 per cent in September 2023 to 128.5 per cent in September 2024, driven by an increase in net cash outflows, which, in turn, is influenced by a rise in less stable sources of funding.

According to the FSR, the share of large borrowers in GNPA of SCBs has steadily declined over the past two years. The asset quality of banks’ large borrower portfolios has improved considerably, with the GNPA ratio falling from 4.5 per cent in March 2023 to 2.4 per cent in September 2024. In the large borrower segment, the share of standard assets in total funded amount has consistently improved over the past two years. Within the large borrowers’ cohort, the share of top 100 borrowers has decreased to 34.6 per cent in September 2024, reflecting a growing credit appetite among medium-sized borrowers.

The CNX Nifty is currently trading at 23596.40, down by 48.50 points or 0.21% after trading in a range of 23460.45 and 23611.95. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 2.20%, Bharat Electronics up by 2.00%, ONGC up by 1.35%, Sun Pharma up by 0.93% and Tata Motors up by 0.85%. On the flip side, Adani Enterprises down by 3.00%, Tech Mahindra down by 2.60%, TCS down by 2.00%, Infosys down by 1.63% and Wipro down by 1.55% were the top losers.

Asian markets were trading mostly in red; Shanghai Composite weakened 26.39 points or 0.78% to 3,380.94, Straits Times fell 8.13 points or 0.21% to 3,787.60 and Taiwan Weighted lost 107.18 points or 0.46% to 23,083.02. However, Hang Seng advanced 18.53 points or 0.09% to 20,059.95 and Jakarta Composite gained 43.33 points or 0.61% to 7,079.90.