Benchmarks extend their losses in late morning

Benchmarks extended their losses in late morning deals due to sustained selling by funds amid a weakening trend on other Asian bourses in tandem with overnight losses in the US markets, following disappointing corporate results and soft economic data, mainly dampened the trading sentiment. Some cautiousness also came in as the Global ratings agency Moody’s underscored that India’s economic recovery is likely to be slow in the second half of 2014 and the outcome of general elections could have an impact on the growth prospects.

On the global front, most of the Asian markets were trading in the red terrain at this point of time with Japanese Nikkei extending its losses from the previous session as stronger yen weighed on investor sentiment. Back home, traders were buying, Oil & Gas, Auto and Metal while, selling was seen in IT, Teck and Bankex on the BSE. 

The market breadth on BSE remains negative with advances to declines in the ratio of 832:954. BSE Sensex and NSE Nifty were comfortably trading near their psychological 21,200 and 6,250 levels respectively. The BSE Sensex is currently trading at 21201.11 down by 64.07 points or 0.30% after trading in a range of 21270.11 and 21185.52. There were 22 stocks advancing against 8 declines on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.16% and Small cap index lost 0.04%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 1.04%, Auto up by 0.71%, Metal up by 0.58%, Realty up by 0.58% and Healthcare up by 0.53%, while IT down by 1.57%, Teck down by 1.23%, and Bankex down by 0.74% were the only losers on the sectoral index.

The top gainers on the Sensex were Cipla up by 1.91%, Tata Power up by 1.73%, Mahindra & Mahindra up by 1.14%, Sun Pharma up by 1.12% and Gail India up by 1.09%. On the flip side, TCS was down by 4.22%, HDFC was down by 2.29%, HDFC Bank was down by 2.07%, Wipro was down by 1.90% and Axis Bank was down by 1.22% were the top losers on the Sensex.

Meanwhile, As per the industry body Assocham, the growth of Indian banking industry is likely to remain under pressure with gross non-performing assets (NPAs) expected to touch 5 percent of total loans by March this year. Presenting a somber picture for industry growth, Assocham noted that sluggish economic growth and high interest rates are putting pressure on the corporates’ margins and increasing their probability of default. If the same economic scenario continues in future, there is no doubt that asset quality would suffer further, it added. The asset quality of Indian banks has been showing downward trend since global financial crisis, 2008.

Further, industry body noted that other factors like lax credit appraisal and complacency in monitoring by banks as well as delays in obtaining statutory and other approvals are also responsible for deteriorating asset quality. The ratio of gross NPA to advances for banks increased significantly to 3.92 percent in June 2013 from 2.36 percent in March 2011.  Assocham study noted that Iron & steel, infrastructure, aviation, textiles and mining sectors are the largest contributors to NPAs of the public sector banks, accounting for around 51 percent of their total stressed advances at the end of September 2013. These five sectors account for around 24 percent of total advances of all banks.

Indian banking industry is the most dominant segment of the country’s financial sector. Rising NPA of the industry has become a concern as banking industry plays an important role in the economic development of the country. Banks help channel savings to investments and encourage economic growth by allocating savings to investments that have potential to yield higher returns. The Indian banking industry’s contribution to GDP moves along with growth in the Indian economy.

The CNX Nifty is currently trading at 6,305.60 down by 13.30 points or 0.21% after trading in a range of 6,327.10 and 6,301.90. There were 33 stocks advancing against 17 stock declines on the index.

The top gainers of the Nifty were BPCL up by 3.34%, Jindal Steel up by 1.94%, Cipla up by 1.94%, Tata Power up by 1.86% and Ambuja Cement up by 1.24%. On the flip side, TCS down by 4.22%, Wipro down by 2.14%,  HDFC down by 2.04%, HDFC Bank down by 1.81% and Axis Bank down by 1.09% were the top losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 11.37 points or 0.56% to 2,012.33, Jakarta Composite slipped 1.94 points or 0.04% to 4,410.54, Straits Times dipped 2.62 points or 0.34% to 1,950.47, Seoul Composite decreased 6.74 points or 0.33% to 1,950.87 and Taiwan Weighted was down by 12.04 points or 0.14% to 8,599.31. On the flip side, Hang Seng was up by 177.88 points or 0.77% to 23,164.29 and Nikkei 225 was up by 30.01 points or 0.20% to 15,778.37.

The Malaysian market remained shut for the trade today in observance of Thaipusam.