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Benchmarks turn negative in late afternoon session
Dec-04-2019

Indian equity benchmarks turned negative in late afternoon session, amid negative signals from other Asian markets. After entering the red zone on bout of selling pressure, market started drifting lower, benchmark 31-share index -- Sensex is trading lower with loss of around 62 points, below the psychological 40,700 level. While, 50-share index, Nifty, shedding close to 17 points. Meanwhile, broader indices, BSE Mid cap and Small cap are also showing mixed trend. Traders were concerned with a private report stating that it reduced India’s GDP growth estimate to 5.3% from 6% amid a rash of similar actions, especially after the September quarter growth slowed to a 26-quarter low of 4.5%. Traders took note of a report that the GST Council is likely to discuss the revenue position in its upcoming meeting amid states demanding release of pending GST compensation.

On the global front, all Asian markets were trading in red after President Donald Trump said a trade deal with China may not come until after the 2020 presidential election. After weeks of broad optimism -- and White House claims -- that the economic superpowers were close to a partial agreement, the president said he could be happy to wait until after next year's elections. Back home, sectorally, telecom stocks remained in focus with industry body COAI’s statement that telecom operators have proposed sector regulator Trai to fix a minimum price for mobile internet as no company on its own is in a position to decide on it due to fierce competition in the market. However, private telecom operators want call rates to continue to remain unregulated.

The BSE Sensex is currently trading at 40613.49, down by 61.96 points or 0.15% after trading in a range of 40544.82 and 40790.12. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.14%, while Small cap index was down by 0.03%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.75%, Healthcare up by 0.69%, IT up by 0.68%, Bankex up by 0.60% and TECK was up by 0.55%, while Energy down by 1.18%, Capital Goods down by 1.17%, Oil & Gas down by 0.44%, Metal down by 0.43% and Telecom was down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 4.87%, Tata Motors - DVR up by 4.64%, Yes Bank up by 3.87%, ICICI Bank up by 2.41% and Sun Pharma Industries up by 1.72%. On the flip side, Larsen & Toubro down by 1.69%, Reliance Industries down by 1.67%, Tata Steel down by 1.60%, HDFC down by 0.94% and Asian Paints down by 0.90% were the top losers.

Meanwhile, global rating agency, Fitch Ratings in its latest report has said that Indian banks will require an additional $7 billion (Rs 50,000 crore) equity by FY21 (2020-21) in order to support loan growth, achieve 75 percent non-performing loan (NPL) cover, and build a buffer over the minimum Basel III capital standards. It also said that slowdown in economy could worsen asset-quality tensions for a sector which is already struggling with weak recoveries and ageing provisions.

According to the report, public sector banks (PSBs) need most of this capital as the $10 billion being injected into banks in 2019-20 will go mainly towards bridging regulatory capital gaps, providing for ageing impaired loans, and absorbing the costs of merging 10 state banks into four by April 2020. It noted that the improvement in the impaired-loans ratio in 2018-19 is unlikely to be sustained if stresses on non-banks, real estate and SMEs remain unresolved, due to both tight liquidity and the macroeconomic slowdown.

Rating agency further said that net interest margins (NIMs) are expected to face pressure as floating-rate loans have to be linked to external benchmarks in a bid to ensure effective monetary transmission. It also pointed out that this will cause a further narrowing in state banks' income buffers which have declined in recent years due to poor asset quality and lower growth, leaving both earnings and equity vulnerable to higher-than-expected credit costs. It added that the systemic stress across non-banks would deal a significant setback to recovery in the banking sector, reversing recent improvements in performance, and posing solvency risks to banks with the thinnest buffers.

The CNX Nifty is currently trading at 11977.00, down by 17.20 points or 0.14% after trading in a range of 11951.55 and 12026.50. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 4.77%, Yes Bank up by 3.87%, ICICI Bank up by 2.37%, Sun Pharma Industries up by 1.76% and Adani Ports & SEZ up by 1.70%. On the flip side, Larsen & Toubro down by 1.74%, Reliance Industries down by 1.65%, Bharti Infratel down by 1.61%, Tata Steel down by 1.60% and JSW Steel down by 1.46% were the top losers.

All Asian markets were trading red; Hang Seng decreased 281.94 points or1.07% to 26,109.36, Nikkei 225 slipped 244.58 points or1.05% to 23,135.23, Jakarta Composite lost 26.91 points or 0.44% to 6,106.99, Taiwan Weighted dropped 21.11 points or 0.18% to 11,510.47, KOSPI fell 15.18 points or 0.73% to 2,068.89, Shanghai Composite declined 9.56 points or0.33% to 2,875.14 and Straits Times was down by 8.79 points or 0.28% to 3,164.29.
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