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Nifty50: 18,812 ▲ 54 (+0.2%)
Sensex: 63,284 ▲ 184 (+0.2%)

Greetings, folks!

Red may be Australia’s favourite colour right now as red flares filled the sky after their team’s emphatic win over Denmark. But, Indian markets are painting the town ‘green’.

• Markets continue their upward momentum. Sensex hit a record high for the sixth straight session, and Nifty for the fourth straight session.
• In all, 23 of the Nifty50 stocks closed in the green.
• All eyes now on the RBI’s policy meet  scheduled early next week.

Among the Nifty sectoral indices, IT (+2.4%) and PSU Bank (+2.1%) were the top winners, while Oil and Gas (-0.5%) and FMCG (-0.3%) were the top losers.

What’s trending

⭐ Car sales zoom

MARUTI (NSE): 8,960 ▼ 14 (-0.1%), TATAMOTORS (NSE): 438 ▼ 1.4 (-0.3%) 

Indian car makers reported robust sales numbers in November. Maruti Suzuki’s domestic passenger vehicle (PV) sales rose by 20% year-on-year (YoY) to 1.3 lakh units. Meanwhile, Tata Motors’ PV sales stood at 46,425, up 55% YoY. Similarly, SUV maker Mahindra & Mahindra reported a 56% rise in PV sales to 30,392 units.

⭐ Sundaram Finance banks on growth

SUNDARMFIN (NSE): 2,250 ▲ 24 (+1.0%)

The management of Chennai-based non-banking financial company Sundaram Finance expects its assets under management (AUMs) to cross ₹50,000 crore in three years. It currently has an AUM base of ₹31,980 crore at the end of September 2022. The company also proposes to reduce the share of medium and heavy commercial vehicle loans to under 20% in the medium term. Currently, 25% of all loans are sanctioned to this segment.

⭐ Realty up as Mumbai hits a home run

LODHA (NSE): 1,000 ▲ 14 (+1.4%), GODREJPROP (NSE): 1,330 ▲ 25 (+1.9%)

Shares of leading real estate companies were up Thursday on data showing 15% YoY jump in property registrations in Mumbai. The city is India’s biggest real estate market.  Data compiled by Knight Frank India showed  Mumbai and its suburbs recorded sales of 8,756 units in November, 4% more than the previous month. Special festive offers were one of the key factors behind the boost in property registration. 

⭐ India factory activity at 3-month high

India’s factory activity increased at its fastest pace in three months in November. This came as inflation softened, reducing input prices. The increase in the Manufacturing Purchasing Managers’ Index (PMI) is an indicator of strong demand in the economy. PMI came in at 55.7 in November as compared to 55.3 in October 2022.

In Focus

NBFCs AUM poised for growth

NBFC (Non-banking finance  companies) AUMs are expected to double in the next fiscal, per a new report from CRISIL. The credit rating company expects NBFC AUM to grow by nearly 14% in the next fiscal from 7% in FY22. AUMs or assets under management is the total market value of loans given out by NBFCs for the purchase of home and vehicles. Here are key factors that will drive this growth:

1. A strong balance sheet and a reduction in bad loans is allowing NBFCs to capitalise on a fresh demand for loans. The NBFC sector currently contributes nearly 16% to India’s credit demand.

2. Home loans make up nearly 45% of the NBFC AUM. This could grow further as housing demand is still intact despite interest rate hike and property price increase.

3. Vehicle finance which is the second largest contributor to NBFC AUMs and could be estimated to grow at 14% next fiscal. This will be driven by pent-up demand and new launches which are expected to drive auto sales.

4. The AUM from the unsecured loans could grow by 22% as demand for consumer loans stays  high across durables, travel and other personal consumption categories.

Amidst these bright spots, the NBFC sector could face few challenges. RBI hiking rates could increase borrowing costs for NBFCs, making their loans less competitive as compared to banks. In addition, geopolitical issues and out-of-hand inflation could also impact growth. 

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Good to know

What is loan evergreening? 

Loan evergreening is a method used by some lenders to prevent a rise in non-performing assets (NPAs). A bank tries to revive a loan account that is likely to default by lending it more money. This means the lender doesn’t have to recognise the loan as an NPA in the near term. However, this can hurt the lender’s balance sheet in the long run as defaults could sharply rise in the future.

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