NIFTY50 and SENSEX trade in range; banking and micro-finance shares shine

Volatility continued to hit Indian equity markets in the late morning session on the back of negative cues from other Asian markets. Selling occurred in almost all sectors except Banking after the Reserve Bank of India (RBI) lowered risk weights for bank finance to NBFCs and microfinance loans, a move that will unlock more funds and boost credit.

A lower risk weight means that lenders must set aside less funds as a safety net for consumer loans, implying an increase in their lending capacity.

Indices struggled for direction due to uncertainty over U.S. President Donald Trump's trade policies and ongoing FII selling. However, the downside remained capped.

On the global front, Asian markets were trading mostly in red, as Malaysia's producer prices increased for the second straight month in January. The figures from the Department of Statistics showed that producer prices climbed 0.8%year-on-year in January, reversing a 0.5 %rise in December. The expected increase was 0.7%. Among sectors, the price index for agriculture, forestry, and fishing grew the most by 16.5% from last year.

The SENSEX traded at 74629.85, up by 27.73 points or 0.04% after trading in a range of 74556.41 and 74834.09. The index had 12 stocks advancing and 18 stocks declining.

The broader indices were trading in red; the BSE mid-cap index fell by 1.02%, while the small-cap index was down by 1.85%.

The NIFTY50 traded at 22532.85, down by 14.70 points or 0.07% after trading in a range of 22524.20 and 22613.30. The index had 17 stocks advancing and 33 stocks declining.