Key benchmark indices continued to hover in negative terrain in afternoon trade. The Nifty slipped below 12,250 and descended towards 12,200 mark.
At 13:24 IST, the barometer index, the S&P BSE Sensex, was down 53.66 points or 0.13% at 41,521.48. The Nifty 50 index was down 13.60 points or 0.11% at 12,232.20.
Investors locked profits in frontline stocks after a recent rally, which propelled key barometers to record high levels. An improving outlook on the global economy and optimism surrounding US-China trade deal had sent domestic equities to an all-time high recently.
Firmness in crude oil prices also spoiled sentiment. India is heavily dependent on oil imports for satisfying its domestic demand. A high crude price directly maps into a high trade deficit and in turn a high current account deficit (CAD). At the same time, being an important input for the aggregate economy, a crude price shock also leads to a spike in domestic inflation.
The broader market continued to outperform the benchmark index. The S&P BSE Mid-Cap index rose 0.16% while The S&P BSE Small-Cap index advanced 0.53%
The market breadth was positive. On the BSE, 1238 shares rose and 1128 shares fell. A total of 176 shares were unchanged. In Nifty 50 index, 26 stocks advanced while 24 stocks declined.
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Economy:
The Reserve Bank of India (RBI) released the 20th issue of the Financial Stability Report (FSR) on Friday, 27 December 2019. The report said India's financial system remains stable notwithstanding weakening domestic growth; the resilience of the banking sector has improved following recapitalisation of public sector banks (PSBs) by the government. Risks arising out of global/domestic economic uncertainties and geopolitical developments, however, persist.
Scheduled commercial banks' (SCBs) credit growth remained subdued at 8.7% year-on-year (y-o-y) in September 2019, though private sector banks (PVBs) registered double digit credit growth of 16.5%. SCBs' capital adequacy ratio improved significantly after the recapitalisation of public sector banks (PSBs) by the Government. SCBs' gross non-performing assets (GNPA) ratio remained unchanged at 9.3 per cent between March and September 2019. Provision Coverage Ratio (PCR) of all SCBs rose to 61.5% in September 2019 from 60.5% in March 2019 implying increased resilience of the banking sector.
Further, the report said that the Insolvency and Bankruptcy Board of India (IBBI) continued to make steady progress in the resolution of stressed assets. The Insurance Regulatory and Development Authority of India (IRDAI) has taken initiatives for growth of InsurTech and strengthening insurers' corporate governance processes. The Pension Fund Regulatory and Development Authority (PFRDA) continued to bring more citizens under the pension net.
Stocks in Spotlight:
Tata Motors (up 2.07%), Sun Pharmaceutical Industries (up 1.47%), Eicher Motors (up 1.09%), Hero MotoCorp (up 0.85%) and Nestle India (up 0.84%) advanced.
Hindalco Industries (down 1.76%), State Bank of India (down 1.19%), Yes Bank (down 1.04%), ICICI Bank (down 0.97%) and Infosys (down 0.89%) declined.
Bharti Airtel advanced 1.41% to Rs 461.70 after the media reported that the telecom major raised the minimum monthly recharge for prepaid users to Rs 45 with immediate effect from Sunday. According to media reports, it will be mandatory to recharge with a voucher of Rs 45 or above every 28 days to avail services. Prior to this Rs 45 plan, consumers could get an additional 28-day validity through a recharge of Rs 23 which included only incoming calls and messages.
JSW Steel slipped 0.06% to Rs 268.65. The steel major said that its wholly-owned subsidiary, JSW Steel (Netherlands) B.V., entered into an agreement for selling 39% out of its 49% stake held in Geo Steel LLC, a joint venture (JV) based in Georgia, to its JV partner - Georgian Steel Group Holdings. Post the completion of the aforesaid sale, JSW Steel (Netherlands) B.V. will continue to hold 10% stake in Geo Steel LLC.
Adani Ports and Special Economic Zone (APSEZ) rose 0.71% to Rs 366.25. APSEZ said that its wholly-owned subsidiary, Adani Logistics (ALL), acquired 6,72,54,119 equity shares representing 40.25% stake of Snowman Logistics (Snowman) from Gateway Distriparks (GDL) at Rs 44 per equity share, aggregating to Rs 295.92 crore. The acquisition gives ALL platform to double its capacity in next 5 years.
Adani Logistics will also make an open offer for a maximum of 26% of the public shareholding in Snowman Logistics at Rs 44 per share.
Foreign Markets:
European markets opened lower while Asian markets continued to trade lower on Monday as investors locked profits after strong gains last week.
US stocks drifted higher on Friday, setting up the major indexes for a strong end to the week. Investor sentiment was buoyed by reports of strong holiday sales and a report on Chinese industrial production, but some year-end tax related selling pressured the market late in the day.
As per reports, China's industrial firms grew at the fastest pace in eight months in November. Industrial profits in November rose 5.4% from a year earlier to 593.9 billion yuan ($84.93 billion), compared with a 9.9% drop in October.
As per reports, investors saw the Chinese data as a sign that a slowdown in the world's second-largest economy, amid a trade policy conflict with the U.S., may not produce as severe a downturn as feared.
China's central bank over the weekend said that it will use the loan prime rate as a new benchmark for pricing current floating-rate loans, which analysts say could lower borrowing costs and boost growth, media reports said.
Markets in Europe, Japan and South Korea will be closed tomorrow, on New Year's Eve. Australia, Hong Kong and Singapore will close early by around mid-day.
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