IGI Logo

Indian equity benchmarks were trading volatile during early afternoon deals, with both Sensex and Nifty altering between green and red terrain, amid negative cues from other Asian markets. Traders remained cautious as India Ratings and Research (Ind-Ra) in its ‘Research and Ratings Compendium’ said that the ratio of Upgrades/Downgrades is likely to moderate, amid higher inflation, slowing exports and an improving but still weak domestic demand. The agency expects the economic growth to slow down to 4.0% - 4.5% in 2HFY23 from 9.7% in 1HFY23. Adding some worries, the Reserve Bank of India (RBI) in its 'Trends and Progress of Banking in India' report for FY22 said that retail loans, long considered a panacea for the banking system, may become a systemic risk.

On the global front, Asian markets were trading mostly in red, after industrial output in Japan fell a seasonally adjusted 1.0 percent on month in November. That beat expectations for a decline of 0.3 percent following the 3.2 percent drop in October. On a yearly basis, industrial production sank 1.3 percent - missing expectations for a gain of 1.0 percent following the 3.0 percent increase in the previous month.

The BSE Sensex is currently trading at 60934.01, up by 6.58 points or 0.01% after trading in a range of 60713.77 and 61015.16. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.25%, while Small cap index was up by 0.47%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.56%, Utilities up by 1.43%, Power up by 1.34%, Oil & Gas up by 0.78% and Energy up by 0.75%, while Healthcare down by 0.32%, TECK down by 0.30%, IT down by 0.16%, Metal down by 0.15% and Telecom down by 0.14% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 3.26%, Indusind Bank up by 1.71%, Maruti Suzuki up by 1.35%, Mahindra & Mahindra up by 1.35% and NTPC up by 1.15%. On the flip side, Bharti Airtel down by 1.06%, Bajaj Finserv down by 0.73%, Reliance Industries down by 0.53%, Tata Motors down by 0.47% and Sun Pharma down by 0.32% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) in its 'Trends and Progress of Banking in India' report for FY22 has said that retail loans, long considered a panacea for the banking system, may become a systemic risk. The central bank, however, was quick to add that it is well-equipped with its policy toolkit to handle any systemic risk that may arise.

RBI stated that empirical evidence suggests that a build-up of concentration in retail loans may become a source of systemic risk. It can be noted that in the recent past, banks – which faced huge loan reverses on the large exposure front – had switched focus towards the retail assets building front to avoid any major reverses in asset quality as done after the asset quality review. The report said in recent years, Indian banks appear to have displayed a herding behaviour in diverting from the industrial sector towards retail loans, and the decline was evident across all groups of banks, including state-owned, private and foreign.

The report explained that 'systemic as a herd' refers to a phenomenon when institutions which are not individually systemically important behave in a way similar to the market leaders and, as a result, get exposed to common risks. This could amplify systemic risk through higher co-movement of performance of banks, even though individually they may focus on reducing their standalone bank risk through portfolio diversification.

The CNX Nifty is currently trading at 18131.00, down by 1.30 points or 0.01% after trading in a range of 18068.35 and 18152.75. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Titan Compnay up by 3.23%, Indusind Bank up by 1.86%, Maruti Suzuki up by 1.27%, Grasim Industries up by 1.23% and Mahindra & Mahindra up by 1.23%. On the flip side, Apollo Hospital down by 1.26%, Bharti Airtel down by 1.15%, Hindalco down by 0.82%, Divi's Lab down by 0.81% and ONGC down by 0.76% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 107.37 points or 0.41% to 26,340.50, Shanghai Composite declined 7.99 points or 0.26% to 3,087.58, Taiwan Weighted dropped 155.33 points or 1.08% to 14,173.10, Jakarta Composite lost 78.41 points or 1.13% to 6,844.62, KOSPI fell 52.34 points or 2.24% to 2,280.45 and Straits Times trembled 3.75 points or 0.11% to 3,262.63, while Hang Seng increased 262.22 points or 1.34% to 19,855.28.

Above views are of the author and not of the website kindly read disclaimer