Dear Trader…
Indian equity benchmarks were trading volatile during today 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.
Nifty futures opened at 18097.75 points against the previous close of 18138.00 and opened at a low of 18073.85 points. Nifty Future closed with an average movement of 104.55 points and a decline of around 15.65 points and 18122.35 points…!!
On the NSE, the midcap 100 index will rise 0.13% and smallcap 100 index is closing decline 0.07%. Speaking of various sectoral indices, the NSE saw gains in only Auto, Media, Realty and FMCG stocks, while all other sectoral indices closed lower.
At the start of intra-day trading, February gold opened at Rs.54923 fell from a high of Rs.54950 points to a low of Rs.54607 with a decline of 247 points, a trend of around Rs.54750 and March Silver opened at Rs.69659, fell from a high of Rs.69860 points to a low of Rs.68921, with a decline of 325 points, a trend of around Rs.69476.
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.
Technically, the important key resistances are placed in Nifty future are at 18202 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 18727 – 18303 levels. Immediate support is placed at 18088 – 18008 levels.
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