Markets likely to remain range-bound; banks, telecom stocks, Lupin in focus

MUMBAI: Markets are likely to be remain range-bound on Friday while trends in SGX Nifty suggest a flat opening of Indian benchmark indices. On Thursday, the BSE Sensex ended at 52,318.60, down 164.11 points or 0.31% and thee Nifty ended at 15,680, down 41.50 points or 0.26%

Asian stocks were mixed on Friday as traders weighed a rally in US shares to a record and positive covid-19 vaccine developments against the regional spread of the delta virus strain. An Opec+ dispute bolstered oil.

Shares rose in Japan but slid in China and Hong Kong. S&P 500 contracts were stable after the index posted its longest winning streak since February, helped by cyclical sectors like energy, while technology lagged. Data signalled solid US manufacturing growth and an ongoing labor market recovery. Johnson & Johnson said its inoculation neutralizes the fast-spreading delta virus strain.

Back home, RBI said that banks should brace themselves for another wave of stress as bad loans may touch 9.8% of their loan book by the end of the fiscal year from 7.5% in FY21. Within the bank groups, RBI stress tests showed that public sector bank’s gross non-performing ratio of 9.54 per cent in March 2021 could touch 12.52 per cent by March 2022. Private sector banks could see bad loans touching 5.82% and foreign banks could see bad loans at 4.9% by March 2022.

Bharti Airtel chairman Sunil Mittal on Thursday said tariffs need to go up amid "tremendous stress" in the telecom sector, and Airtel will not hesitate to raise prices, but it will not do so unilaterally.

Drug firm Lupin on Thursday said it's US-based arm has received approval from the US health regulator for its supplemental new drug application to expand the use of Solosec to include the treatment of trichomoniasis, a sexually transmitted disease.

The dollar held a climb and Treasuries were little changed ahead of Friday’s monthly payrolls report, which will help guide views on when the Federal Reserve may start pulling back on stimulus.

Crude traded above $75 a barrel after the OPEC+ alliance descended into infighting, casting doubt on an agreement that could ease a surge in prices.

Investors are parsing data prints like the upcoming payrolls report for a sense of how close the Fed is to tapering policy accommodation as employment improves and inflationary pressures build. The International Monetary Fund said America’s central bank will likely begin to scale back asset purchases in the first half of 2022, and probably needs to raise interest rates later that year or in early 2023.

(Bloomberg contributed to the story)