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Choppiness continues on Dalal Street in early noon deals
Feb-20-2020

Indian equity benchmarks are trading choppy in early noon deals as investors remained on sidelines and awaited more clarity on U.S. President Donald Trump’s statement ahead of his visit to India that the two countries were working on a major trade deal. Trump has said that he was not sure if the trade deal with India would be completed before the US presidential election in November. Traders also took note with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that it will have a limited impact on India but the global Gross Domestic Product (GDP) and trade will definitely get affected due to the large size of the Chinese economy. In scrip specific developments, Thomas Cook (India) traded jubilantly as board mulls share buyback and Max Financial zoomed on report of Axis Bank eyeing stake in Max Life.

The BSE Sensex is currently trading at 41317.81, down by 5.19 points or 0.01% after trading in a range of 41220.81 and 41346.33. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.93%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.89%, Basic Materials up by 0.74%, Metal up by 0.71%, Auto up by 0.66% and Bankex up by 0.61%, while Energy down by 0.33%, FMCG down by 0.29% and Power down by 0.02% were the few losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 4.13%, Tata Steel up by 2.09%, ONGC up by 1.57%, SBI up by 1.36% and Sun Pharma up by 1.09%. On the flip side, Hindustan Unilever down by 1.48%, Asian Paints down by 1.29%, Nestle down by 0.95%, NTPC down by 0.54% and HDFC down by 0.52% were the top losers.

Meanwhile, rating agency Fitch in its latest report has said that the Indian financial institutions (FIs) sector may continue to face tough operating environment amid the macroeconomic slowdown and weak funding conditions. It said the stress in non-banking financial companies (NBFCs), small and medium enterprises (SMEs) and the real estate sector will continue to put asset-quality pressures on financial institutions in the country. Fitch cut its growth forecast for India to 4.6 percent in 2019-20 from 6.8 percent in 2018-19, due to credit squeeze and deterioration in business and consumer confidence. However, it expects growth to gradually recover to 5.6 percent in 2020-21.

The report said asset-quality tensions are likely to intensify if stresses on non-banks, real estate and SMEs remain unresolved. Idiosyncratic stress in the telecom sector has also pushed up asset-quality risks for banks, which are vulnerable due to weak capital and income buffers. It noted that the potential for contagion for banks, thus, exists as a result of their direct exposure to non-banking financial institutions (NBFIs) as well as the second-order economic impact of being exposed to the sectors that are adjusting to the credit squeeze as the NBFIs cut back exposure.

The rating agency said the recent fundraising trends by a few NBFCs in January and February 2020 indicate improvement in funding environment. It also expects NBFIs to continue to tap the offshore market, but access is likely to remain uneven and limited largely to retail-focused NBFIs and those backed by large corporate groups. It added that wholesale and housing finance companies are the most at risk as they will continue to find it difficult to raise funds, given their greater exposure to the real-estate sector where there is pressure on cash flows and collateral values.

The CNX Nifty is currently trading at 12127.75, up by 1.85 points or 0.02% after trading in a range of 12092.80 and 12136.15. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.08%, Zee Entertainment up by 2.44%, Tata Steel up by 2.05%, Yes Bank up by 1.56% and ONGC up by 1.47%. On the flip side, Hindustan Unilever down by 1.45%, Cipla down by 1.36%, Asian Paints down by 1.27%, Nestle down by 1.08% and Wipro down by 0.73% were the top losers.

Asian markets were trading mostly in red; Straits Times declined 20.77 points or 0.65% to 3,192.94, Hang Seng dropped 119.38 points or 0.43% to 27,536.43, Taiwan Weighted slipped 33.75 points or 0.29% to 11,725.09 and KOSPI was down by 9.94 points or 0.45% to 2,200.40.

On the flip side, Nikkei 225 gained 78.45 points or 0.34% to 23,479.15, Jakarta Composite rose 6.64 points or 0.11% to 5,935.43 and Shanghai Composite was up by 29.09 points or 0.98% to 3,004.49.
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