Positive trade continues over Dalal Street

A positive trade continued over the Dalal street in early afternoon deals, with both Sensex and Nifty managing to keep their heads above water, on the back of positive cues from other Asian markets along with buying at Banking and Utilities counters, after minutes from the Federal Reserve's September meeting indicated more rate cuts. Sentiments remained upbeat, as the Reserve Bank of India (RBI) in its latest ‘Industrial Outlook Survey of the Manufacturing Sector for Q2:2024-25’ has said that manufacturers maintained their optimism on demand conditions for Q3:2024-25. Besides for Q3:2024-25, cost of financing and salary outgo are likely to rise, while pressures from raw material cost are expected to ease, and selling price growth momentum may continue. The business expectations index (BEI) improved to 120.3 in Q3:2024-25 from 119.1 in the previous quarter.

On the global front, Asian markets were trading mostly in green, after the value of overall bank lending in Japan was up 2.7 percent on year in September, coming in at 624.24 trillion yen. That was shy of expectations for an increase of 2.9 percent and down from 3.0 percent in August. Excluding trusts, lending was up an annual 3.1 percent at 546.61 trillion yen, while lending from trusts added 0.6 percent on year to 77.62 trillion yen.

The BSE Sensex is currently trading at 81696.20, up by 229.10 points or 0.28% after trading in a range of 81542.65 and 82002.84. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell by 0.05%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Bankex up by 0.91%, Utilities up by 0.86%, Industrials up by 0.86%, PSU up by 0.83% and Power up by 0.81%, while Healthcare down by 0.84%, IT down by 0.30%, TECK down by 0.27%, FMCG down by 0.15%, Consumer Durables down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 3.35%, NTPC up by 1.52%, Power Grid up by 1.47%, Mahindra & Mahindra up by 1.13% and Indusind Bank up by 0.91%. On the flip side, Infosys down by 1.04%, Hindustan Unilever down by 0.95%, Titan down by 0.92%, Asian Paints down by 0.85% and Sun Pharma down by 0.83% were the top losers.

Meanwhile, Reserve Bank of India (RBI) has come across instances of investors pushing some non-banking finance companies (NBFCs) to grow aggressively, which is leading to inappropriate business practices. Flagging risks like poor customer service, entities’ own finances coming under strain and even a possible dent to financial stability through such practices, RBI Governor Shaktikanta Das warned that the RBI will ‘not hesitate’ to take action against errant entities if they continue to follow such practices. He made it clear that the risk is not at a systemic level and it is only a few entities where the RBI has observed certain issues.

Das said driven by the significant accretion to their capital from both domestic and overseas sources, and sometimes under pressure from their investors, some NBFCs - including microfinance institutions (MFIs) and housing finance companies (HFCs) - are chasing excessive returns on their equity. He said such tendencies are leading to practices such as unreasonably high processing fees and frivolous penalties. He added that the same is further accentuated by what appears to be a ‘push effect’, wherein business targets are driving retail credit growth rather than actual demand. The consequent high-cost and high indebtedness could pose financial stability risks, if not addressed by these NBFCs.

He said it is essential for entities to follow sustainable lending practices, a compliance first culture, strong risk management and be sincere on addressing customer grievances. He noted that the Reserve Bank is closely monitoring these areas and will not hesitate to take appropriate action, if necessary and the central bank will desire a self-correction by NBFCs.

The CNX Nifty is currently trading at 25026.30, up by 44.35 points or 0.18% after trading in a range of 24990.50 and 25134.05. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 3.36%, Bharat Electronics up by 1.81%, NTPC up by 1.54%, Power Grid up by 1.50% and Mahindra & Mahindra up by 1.38%. On the flip side, Cipla down by 2.24%, Adani Enterprises down by 2.11%, Trent down by 1.77%, Apollo Hospital Ent. down by 1.28% and Hero MotoCorp down by 1.03% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite strengthened 43.01 points or 1.3% to 3,301.87, Hang Seng advanced 634.27 points or 2.98% to 21,271.51, KOSPI increased 4.80 points or 0.18% to 2,599.16 and Nikkei 225 surged 102.93 points or 0.26% to 39,380.89, while Jakarta Composite plunged 9.56 points or 0.13% to 7,491.73 and Straits Times fell 6.05 points or 0.17% to 3,589.61.