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Weak trade continued over the Dalal Street in early afternoon deals, with both Sensex and Nifty trading lower, on the back of negative cues from other Asian markets. Heavy selling at Consumer Durables and Metal counters kept indices down, while Titan fell the most on BSE. Sentiments remained downbeat, as credit rating agency Crisil in its latest report has said that as much as 43% of India’s micro, small and medium enterprises (MSME) universe by value is expected to remain below the pre-pandemic (fiscal 2020) level in terms of earnings before interest, tax, depreciation and amortisation (EBITDA) margin this fiscal (FY23) because of inability to completely pass on the high prices in some commodities as well as an unfavourable exchange rate.

On the global front, Asian markets were trading mostly in red, as the value of non-oil domestic exports in Singapore was down a seasonally adjusted 3.7 percent on month in October, coming in at SGD15.9 billion. That missed expectations for a decline of 2.3 percent following the upwardly revised 3.9 percent contraction in September (originally -4.0 percent). On a yearly basis, NODX was down 5.6 percent - again missing forecasts for a decline of 0.6 percent after rising 3,1 percent a month earlier.

Back home, banking stocks remained in watch, as global rating agency Standard and Poor’s said polarisation in the performance of Indian banks may persist in FY23 as many large public-sector banks are still saddled with weak assets, high credit costs, and poor earnings.

The BSE Sensex is currently trading at 61869.16, down by 111.56 points or 0.18% after trading in a range of 61768.96 and 62050.80. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.33%, while Small cap index was down by 0.25%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.25%, Industrials up by 0.69%, Telecom up by 0.35% and FMCG up by 0.05%, while Consumer Durables down by 1.46%, Metal down by 1.06%, Auto down by 0.92%, IT down by 0.79% and Utilities down by 0.73% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.24%, ICICI Bank up by 0.70%, ITC up by 0.62%, Bajaj Finance up by 0.52% and Axis Bank up by 0.36%. On the flip side, Titan Co down by 2.02%, Tech Mahindra down by 1.45%, Dr. Reddy's Lab down by 1.39%, Tata Steel down by 1.31% and Mahindra & Mahindra down by 1.23% were the top losers.

Meanwhile, Credit rating agency Crisil in its latest report has said that as much as 43% of India’s micro, small and medium enterprises (MSME) universe by value is expected to remain below the pre-pandemic (fiscal 2020) level in terms of earnings before interest, tax, depreciation and amortisation (EBITDA) margin this fiscal (FY23) because of inability to completely pass on the high prices in some commodities as well as an unfavourable exchange rate.

The report stated that almost all the MSMEs, however, are expected to cross the pre-pandemic level of revenue. It said assessing the pandemic’s impact on MSMEs has been a challenge because of information asymmetry and lack of high-frequency data points in this space. The report plugs this hole by covering 69 sectors and 147 clusters that logged aggregate revenue of Rs 56 lakh crore, representing 20-25% of India’s gross domestic product (implying coverage of two-thirds of the MSME universe).

According to the report, sectors such as chemicals and construction roads are expected to witness EBITDA margin contraction to the tune of 250-300 basis points (bps) and 200-250 bps respectively this fiscal compared with the pre-pandemic levels on account of rise in crude prices. Agriculture-based sectors such as milk & dairy and packaged foods are expected to witness EBITDA margin contraction of 50-100 bps on account of rising milk prices. Notably, a few sectors are yet to reach the pre-pandemic level in terms of revenue. These include air freight & courier services and travel agents, which have lagged because of inherent structural issues. For instance, the shift towards online travel aggregators has changed the dynamics of the travel industry, impacting SMEs. Similarly, digitalisation has impacted courier SMEs.

The CNX Nifty is currently trading at 18372.60, down by 37.05 points or 0.20% after trading in a range of 18350.30 and 18417.60. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.28%, Tata Consumer Products up by 1.95%, HDFC Life Insurance up by 1.25%, UPL up by 0.96% and ICICI Bank up by 0.74%. On the flip side, Titan Co down by 2.07%, Apollo Hospital Ent. down by 1.84%, Tata Motors down by 1.56%, Hindalco down by 1.49% and Tech Mahindra down by 1.47% were the top losers.

Asian markets were trading mostly in red; KOSPI fell 27.50 points or 1.11% to 2,449.95, Shanghai Composite declined 12.55 points or 0.4% to 3,107.43, Taiwan Weighted dropped 2.12 points or 0.01% to 14,535.23, Hang Seng decreased 294.31 points or 1.61% to 17,962.17 and Nikkei 225 slipped 97.73 points or 0.35% to 27,930.57, while Jakarta Composite soared 21.27 points or 0.3% to 7,035.65 and Straits Times advanced 11.87 points or 0.36% to 3,278.04.

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