Domestic indices trade flat with negative bias in late morning deals

Domestic equity markets were trading flat with bit of negative bias in late morning deals after the Reserve Bank of India (RBI) kept its key interest rate unchanged on Friday, but lowered the economic growth forecast to 6.6 per cent for FY25 from the earlier projection of 7.2 per cent. Selling in Bajaj Finserv, Infosys, Ultratech Cement, TCS and Hindustan Unilever dragged the markets to trade below neutral lines. However, broader indices were trading in green with BSE Mid cap index and Small cap index gaining in the range of 0.15-0.40%. On the BSE sectoral front, traders were seen pilling up positions in Consumer Durables, PSU, Utilities, Oil & Gas and Telecom, while selling was witnessed in Realty, TECK, IT and Healthcare. 

On the global front, Asian markets were trading mixed following negative cues from the US markets. Traders were reluctant to make significant moves ahead of the release of the closely watched monthly US jobs data later in the day that will offer clues on the US Fed's interest rate moves. Back home, in the stock specific development, Rites gained after the company was appointed as a project management consultant (PMC) for the execution, supervision, monitoring, and development of phase II campus of the Indian Institute of Management Raipur (Chhattisgarh) project. 

The BSE Sensex is currently trading at 81721.54, down by 44.32 points or 0.05% after trading in a range of 81506.19 and 81925.91. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.16%, while Small cap index up by 0.38%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.95%, PSU up by 0.79%, Utilities up by 0.78%, Oil & Gas up by 0.69% and Telecom up by 0.64%, while Realty down by 0.54%, TECK down by 0.39%, IT down by 0.30% and Healthcare down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.49%, Titan up by 1.25%, ITC up by 1.22%, Power Grid up by 0.73% and Mahindra & Mahindra up by 0.56%. On the flip side, Bajaj Finserv down by 0.96%, Infosys down by 0.77%, Ultratech Cement down by 0.65%, TCS down by 0.63% and Hindustan Unilever down by 0.57% were the top losers.

Meanwhile, credit rating agency ICRA in its latest report has highlighted a significant slowdown in microfinance growth in FY25 amidst mounting asset quality concerns. This is likely to result in subdued disbursements and a sharp moderation in Non-banking finance companies - microfinance institutions’ (NBFC-MFIs) Assets under management (AUM) growth to 0-5% in FY25 from 29% in FY24. Following two years of robust expansion, the sector is facing challenges stemming from borrower over-leveraging, socio-political disruptions, and operational challenges, largely related to employee attrition. 

Further, the report said the sharp increase in the overall overdue book in H1 FY25 poses significant downside risks to the near-term loan quality of the sector. The overall credit cost is, therefore, projected by ICRA at 5.4-5.6% for FY25 vis-a-vis 2.2% in FY24. It noted that in July 2024, one of the industry’s self-regulatory organisations had introduced guardrails for responsible lending, to strengthen lending practices and address concerns regarding the overleveraging of borrowers. These guidelines further tightened in November 2024, include the following norms, apart from other guidelines for strengthening the credit process:

According to the report, the sector’s profitability is expected to face significant headwinds in FY25 due to rising credit costs and compressed net interest margins (NIMs). Declining lending rates and higher funding costs are projected to moderate the return on managed assets (RoMA) to 0.4-0.8% in FY25, down from a record 3.6% in FY2024. ICRA has a Negative outlook on the sector, given the significant near-term headwinds on growth, asset quality and profitability. Nonetheless, NBFC-MFIs continue to demonstrate adequate capitalisation with managed gearing estimated at 3.8 times as of September 2024. Incremental capital requirement for FY25 remains moderate in view of the expected slowdown in growth. 

The CNX Nifty is currently trading at 24678.40, down by 30.00 points or 0.12% after trading in a range of 24620.50 and 24751.05. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 2.23%, Axis Bank up by 1.41%, ITC up by 1.32%, BPCL up by 1.31% and Titan up by 1.15%. On the flip side, Cipla down by 1.28%, Bajaj Finserv down by 0.99%, HDFC Life Insurance down by 0.88%, Infosys down by 0.82% and TCS down by 0.78% were the top losers.

Asian markets were trading mixed; Straits Times fell 12.93 points or 0.34% to 3,809.75, KOSPI dropped 12.12 points or 0.5% to 2,429.73, Nikkei 225 slipped 368.61 points or 0.94% to 39,026.99 and Taiwan Weighted lost 60.25 points or 0.26% to 23,207.69. However, Hang Seng advanced 269.71 points or 1.38% to 19,830.15, Jakarta Composite gained 26.21 points or 0.36% to 7,339.52 and Shanghai Composite strengthened 32.65 points or 0.97% to 3,401.51.