Local bourses continue to trade lower in morning session

The Indian equity benchmarks extended their losses in morning session, with the Sensex and the Nifty falling around 400 and 130 points, respectively. Weakness was also visible in the broader markets with the S&P BSE Mid-cap and the S&P BSE Small-cap indices losing around half a percent each. A level of pressure was seen on frontline stocks, especially Hindalco, JSW Steel and Vedanta. Sentiments remained pessimistic with Chief Economic Adviser Krishnamurthy Subramanian’s statement that India has some distance to go in fully shifting from pro-crony to pro-business policies. Traders failed to draw any sense of relief with the IMF's October World Economic Outlook report showing that India became world's fifth largest economy in 2019 in terms of nominal GDP, leapfrogging France and the UK. Traders took note of the Reserve Bank of India (RBI) governor Shaktikanta Das’ statement that the RBI is reviewing the retail inflation targeting framework behind monetary policy decision as well as its effectiveness and also plans to hold stakeholders consultations including with the government in June. Sector wise, pharmaceutical companies stocks were trading in red as rating agency ICRA revised its outlook on Indian pharmaceutical industry to negative from stable amid ongoing lockouts in parts of China following the outbreak of coronavirus.

Weak global cues also dampened the sentiments with all the Asian markets were trading lower after the country raised its coronavirus alert to the ‘highest level’ following a rapid spike in cases over the weekend. Back home, in scrip specific development, Lasa Supergenerics shined on acquiring Harishree Aromatics and Chemicals, and Muthoot Finance gained on raising $550 million from international bond markets.

The BSE Sensex is currently trading at 40735.03, down by 435.09 points or 1.06% after trading in a range of 40673.38 and 41037.01. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.49%, while Small cap index was down by 0.43%.

The only gaining sectoral indices on the BSE were IT up by 0.62% and TECK was up by 0.29%, while Metal down by 3.25%, Auto down by 1.49%, Utilities down by 1.40%, Power down by 1.36% and Bankex was down by 1.24% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma Industries up by 1.47%, Infosys up by 1.41%, Tech Mahindra up by 1.30%, SBI up by 0.43% and Ultratech Cement up by 0.22%. On the flip side, Tata Steel down by 3.40%, ONGC down by 2.92%, HDFC down by 2.57%, ICICI Bank down by 2.17% and Maruti Suzuki down by 1.92% were the top losers.

Meanwhile, amid ongoing lockouts in parts of China following the outbreak of coronavirus, rating agency ICRA has revised its outlook on Indian pharmaceutical industry to negative from stable. The agency mentioned that the domestic drug industry is highly dependent on imports, with more than 60 per cent of its active pharmaceutical ingredients (API) requirement being shipped from overseas locations, especially China. In some specific active pharmaceutical ingredients (APIs), like cephalosporins, azithromycin and penicillin, the dependence is as high as 80 to 90 per cent.

It also said of the total imports of APIs and intermediates into India, China accounts for 65-70 per cent. It further asserted the situation is more alarming in case of intermediates of stages prior to APIs and key starting materials (KSMs) which are the building blocks for drugs, wherein, in some cases, China is the exclusive supplier. Domestic API manufacturers have an inventory of one-two months, which should adequately support their production till mid-March 2020.

Besides, it noted that the outbreak of the coronavirus in China and the consequent lockout in parts of China have resulted in a shutdown of production units in China. Though majority of the pharmaceutical manufacturing facilities in China are located far away from the coronavirus affected sites, there has been a disruption in the supply chain due to the lockouts.

The CNX Nifty is currently trading at 11943.25, down by 137.60 points or 1.14% after trading in a range of 11923.85 and 12012.55. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.48%, Tech Mahindra up by 1.28%, Sun Pharma Industries up by 1.25%, Ultratech Cement up by 0.40% and SBI up by 0.34%. On the flip side, Hindalco down by 4.50%, JSW Steel down by 3.76%, Vedanta down by 3.44%, Tata Steel down by 3.34% and ONGC down by 2.92% were the top losers.

All Asian markets are trading lower; Shanghai Composite declined 10.45 points or 0.34% to 3,029.22, Straits Times trembled 30.18 points or 0.95% to 3,150.85, KOSPI fell 69.75 points or 3.22% to 2,093.09, Jakarta Composite lost 70.09 points or 1.19% to 5,812.17, Taiwan Weighted dropped 142.93 points or 1.22% to 11,543.42 and Hang Seng was down by 422.16 points or 1.55% to 26,886.65.