Indian equity benchmarks made slightly positive start on Tuesday but failed to hold the momentum and turned volatile amid weakness in global peers. Markets are trading flat with negative bias in early deals due to selling in Metal, Bankex and Energy stocks. Some cautiousness came in as domestic credit ratings agency Crisil cut its FY22 growth estimate for India to 9.5 per cent from the earlier 11 per cent due to the hit to private consumption and investments following the second wave of COVID-19. Traders took note of report that FPIs remained net sellers in May to the tune of $397 million as against an outflow of $1,297 million seen in April. However, downside remained capped amid a sharp fall in Covid cases in the country and accelerated pace of vaccinations. India's daily Covid-19 cases have fallen below 100,000 after 68 days. The country reported 87,345 new infections. In view of the waning second wave, several states have decided to ease the lockdown-like curbs that were imposed to curtail the pace of infections. Also, Prime Minister Narendra Modi announced free vaccination for all adults from June 21.
On the global front, all the Asian markets were trading lower following the mixed cues from Wall Street overnight. Investors await key US inflation data due on Thursday for more indications about the Fed's policy outlook and cues about the global economic recovery. The coronavirus infection rate in the region is also keeping the underlying mood cautious.
Back home, banking stocks were in focus as global rating agency Fitch said the Indian government's bold move to privatise public sector banks (PSBs) faces risks from political opposition and structural challenges, including heightened balance-sheet stress due to Covid-19. In scrip specific development, Bank of India traded under pressure after the RBI has imposed Rs 4 crore penalty on the bank for non-compliance with rules relating to KYC and fraud reporting. However, The New India Assurance Company traded in green as its Q4FY21 net profit jumped 90.6% to Rs 241 crore from Rs 127 crore, while net premium grew by 15.9% to Rs 7,291 crore from Rs 6,289 crore, Y-o-Y.
The BSE Sensex is currently trading at 52314.11, down by 14.40 points or 0.03% after trading in a range of 52279.60 and 52432.43. There were 14 stocks advancing against 16 stocks declining on the index.
The broader indices were trading in green; the BSE Mid cap index rose 0.31%, while Small cap index was up by 0.40%.
The top gaining sectoral indices on the BSE were Utilities up by 1.24%, IT up by 1.10%, Power up by 1.06%, TECK up by 0.98%, Realty up by 0.67%, while Metal down by 1.20%, Bankex down by 0.69%, Energy down by 0.44%, Basic Materials down by 0.31%, Oil & Gas down by 0.27% were the top losing indices on BSE.
The top gainers on the Sensex were Tech Mahindra up by 1.68%, Infosys up by 1.31%, HCL Technologies up by 1.17%, Bajaj Finance up by 0.98% and NTPC up by 0.90%. On the flip side, SBI down by 1.04%, ONGC down by 0.96%, Indusind Bank down by 0.84%, Dr. Reddy’s Lab down by 0.82% and Sun Pharma down by 0.77% were the top losers.
Meanwhile, global rating agency Fitch has said the Indian government's bold move to privatise public sector banks (PSBs) faces risks from political opposition and structural challenges, including heightened balance-sheet stress due to Covid-19. The privatisation plan was announced in the Union budget for 2021-22 as is part of the government's broader divestment goals for FY22. It includes privatisation of several other non-financial state-owned entities and listing of the wholly-owned Life Insurance Corporation of India (LIC).
It said the pandemic is likely to keep bank performance subdued for the next two to three years. Lack of political support in favour of legislative changes to the Act, which are required in order to go through with the sale, could be a significant hurdle for the government. It stated there could also be more resistance from the trade unions this time around, who will be against the safety-net withdrawal of state ownership. Success of the plan would also require sufficient interest from investor(s) willing to acquire large stake(s) in state-owned banks and run them.
It added the current privatisation plan is as an extension of the government's broader agenda to reform the Indian banking sector and reduce the number of state-owned banks further. The number of PSBs came down from 27 in 2017 to 12 in 2020 after three successive rounds of consolidation. State banks in general have long been plagued with muted investor appetite due to structurally weak governance frameworks which have resulted in persistently weak performance, reflected in significant asset-quality problems.
Besides, it said the Covid-19 pandemic has further dampened business and consumer confidence. Its the impact on reported impaired loans will manifest potentially over an extended timeframe, considering the various forbearance and relief measures by the authorities. It mentioned State banks have played a more active role in extending these measures (given their quasi-policy mandate) than the private banks. This will make it more difficult to reasonably assess stress for the state banks, thus adding to the risk of weak earnings performance for a protracted period.
The CNX Nifty is currently trading at 15738.80, down by 12.85 points or 0.08% after trading in a range of 15732.70 and 15778.80. There were 21 stocks advancing against 29 stocks declining on the index.
The top gainers on Nifty were Tata Consumer Products up by 1.91%, Tech Mahindra up by 1.51%, Infosys up by 1.32%, NTPC up by 1.25% and HCL Technologies up by 1.17%. On the flip side, Hindalco down by 1.94%, SBI Life Insurance down by 1.52%, JSW Steel down by 1.44%, Tata Steel down by 1.20% and SBI down by 1.13% were the top losers.
Asian markets were trading in red; Nikkei 225 declined 76.70 points or 0.26% to 28,942.54, Straits Times lost 9.50 points or 0.30% to 3,166.31, Hang Seng dropped 96.56 points or 0.34% to 28,690.72, Taiwan Weighted fell 14.88 points or 0.09% to 17,069.03, KOSPI decreased 1.78 points or 0.05% to 3,250.34, Jakarta Composite plunged 31.70 points or 0.52% to 6,038.24 and Shanghai Composite was down by 18.29 points or 0.51% to 3,581.25.