Nifty regains 14,500 mark; India VIX rises 2%

The barometers bounced back in early afternoon trade. At 12:20 IST, the barometer index, the S&P BSE Sensex, rose 24.95 points or 0.05% at 49,294.27. The Nifty 50 index gained 29.45 points or 0.20% at 14,514.20.

Gains were capped as the Reserve Bank of India (RBI) warned that an expected doubling of bad loans and soaring financial markets in the nation's weakened economy threaten financial stability.

In the broader market, the S&P BSE Mid-Cap index added 0.79% while the S&P BSE Small-Cap index rose 0.34%.

The market breadth was positive. On the BSE, 1,523 shares rose and 1,307 shares fell. A total of 140 shares were unchanged.

Derivatives:

The Nifty 28 January 2021 futures were trading at 14,537.55, at a premium of 23.35 point compared with the spot at 14,514.20. The NSE's India VIX, a gauge of market's expectation of volatility over the near term, rose 2.02% to 22.8350.

The Nifty option chain for 28 January 2021 expiry showed maximum Call OI of 20.20 lakh contracts at the 15,000 strike price. Maximum Put OI of 29.70 lakh contracts was seen at 14,000 strike price.

Economy:

RBI Governor Shaktikanta Das, in his foreword for the financial stability report released on Monday, said: "Stretched valuations of financial assets pose risks to financial stability. Banks and financial intermediaries need to be cognizant of these risks and spillovers in an interconnected financial system."

The financial stability report has also warned that banks' bad loans may double by September 2021. The RBI sees gross bad loans account for 13.5% of total loans by September even in a base case scenario.

The RBI expects banks' capital ratios will erode to 14% in September from 15.6% in September 2020, the report showed. This may worsen to 12.5% in a very severe stress scenario, under which nine banks may fall short of meeting the minimum capital requirement of 9%.

Meanwhile, UBS Global Research, in a research report, stated that, with number of active COVID-19 cases falling sharply, India's economy is expected to clock the fastest growth among Asian peers with higher than 11.5% growth in FY 2022.

Coronavirus Update:

Total COVID-19 confirmed cases worldwide stood at 9,08,91,380 with 19,44,750 deaths. India reported 2,16,558 active cases of COVID-19 infection and 1,51,327 deaths while 1,01,11,294 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India.

Bharat Biotech reportedly inked a purchase agreement with the Government of India on January 11 to provide 55 lakh doses of COVID-19 vaccine Covaxin at Rs 295 per dose. The pharma firm will be providing its coronavirus vaccine directly to 12 states, and the process will be completed in two days by January 14. Dispatches will begin from Hyderabad starting January 12. Bharat Biotech will be providing 38.5 lakh doses of the COVID-19 vaccine in stage 1 and 16.5 doses in stage 2.

Buzzing Index:

The Nifty Realty index advanced 2.61% to 338.15. The index added 6.89% in five days.

DLF (up 8.22%), Indiabulls Real Estate (up 3.97%), Sunteck Realty (up 1.68%), Brigade Enterprises (up 1.66%) and Oberoi Realty (up 1.01%) jumped.

Stocks in Spotlight:

Laurus Labs rose 0.59%. The pharmaceutical ingredients maker said that its wholly-owned subsidiary, Laurus Synthesis, incorporated a subsidiary by the name of Laurus Ingredients with effect from 9 January 2021. Laurus Ingredients, a step-down subsidiary of Laurus Labs, will undertake ingredients business and will also set up greenfield projects for new synthesis business.

Force Motors rallied 5.82% after the company said that its board on Monday (11 January 2021) approved raising upto Rs 500 crore through issue of non-convertible debentures.

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