Markets trade with cut of over half a percent in early deals

Indian equity benchmarks started Wednesday's session in red, with indices hitting three-week lows, tracking global markets as fears over coronavirus dampened investors’ sentiment. Markets were trading with cut of over half a percent each in early deals amid heavy foreign fund outflow. Foreign institutional investors (FPIs) sold equities worth Rs 2,315.07 crore on Tuesday, data available with stock exchanges showed. Some cautiousness came with Care Ratings report that it has projected Gross Domestic Product (GDP) growth of 4.5% for Q3-FY20, which is lower than 6.6% GDP growth recorded in the corresponding period a year ago. For the FY20, it has estimated GDP growth to be at 5% with a downward bias. Traders were also concerned with payroll data of the Employees’ State Insurance Corporation (ESIC) showing that around 12.67 lakh jobs were created in December 2019 lower against 14.59 lakh in the previous month. Though market participants failed to get any sense of relief with Crisil’s report that increased demand for retail loans, strong growth in lending by private banks and pick-up in economic activity may improve credit growth to 8-9 per cent in the next financial year.

Following the weak cues overnight from Wall Street, most of the Asian markets were trading lower amid continued fears that the coronavirus outbreak could escalate into a pandemic. The number of confirmed new coronavirus cases in South Korea topped 1,100 on Wednesday. Adding to the fears, the US Centers for Disease Control and Prevention warned that Americans should begin to prepare for community spread of the coronavirus in the US. Meanwhile, Japan will provide January figures for supermarket sales today.

Back home, India and the US have finalised defence deals worth $3 billion, and signed three MoUs, including one in the energy sector, as Prime Minister Narendra Modi asserted that the two countries have decided to take Indo-US ties to comprehensive global partnership level. In stock specific developments, Yes Bank fell as ratings agency CARE Ratings placed its bonds worth more than Rs 21,000 crore on credit watch with negative implications. However, Bandhan Bank gained as the Reserve Bank of India (RBI) allowed the Bank to expand its branch network after considering the efforts made by the private lender to comply with the licensing conditions.

The BSE Sensex is currently trading at 40002.63, down by 278.57 points or 0.69% after trading in a range of 39888.17 and 40194.89. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.76%, while Small cap index was down by 0.37%.

The top losing sectoral indices on the BSE were Telecom down by 1.51%, Metal down by 1.16%, Auto down by 1.14%, Realty down by 1.05% and Capital Goods was down by 0.99%, while there is no gainers on the BSE sectoral front.

The top gainers on the Sensex were Power Grid Corporation up by 0.81%, Hindustan Unilever up by 0.79%, Asian Paints up by 0.68% and Nestle up by 0.54%. On the flip side, Sun Pharma Industries down by 1.89%, Bharti Airtel down by 1.58%, Tata Steel down by 1.50%, Reliance Industries down by 1.33% and Larsen & Toubro down by 1.32% were the top losers.

Meanwhile, Care Ratings in its latest report has projected India’s Gross Domestic Product (GDP) growth at 4.5% for the third quarter (Q3) of current fiscal year (FY20), which is lower than 6.6% GDP growth recorded in the corresponding period a year ago. It also projected Gross Value Added (GVA) growth at 4.3% for Q3FY20. For the FY20, it has estimated GDP growth to be at 5% with a downward bias. Low base effect in Q4FY19 will aid growth in Q4FY20. However, sustained low economic activity coupled the possible adverse impact of the outbreak of corona-virus could limit the overall GDP growth for FY20.

The rating agency said that the deceleration in the economy so far has been broad-based with higher government expenditure supporting economic growth. On the expenditure side, lacklustre growth in investment activity and contraction in exports have weighed on GDP growth. At the sectoral level slow growth in case of manufacturing, mining and construction activity have dragged overall GVA. Though, it added that the increased government spending is expected to boost the economic growth.

On the sectoral front, it has projected GVA growth in agriculture and allied activities to be at 3.3% for Q3FY20. Mining and quarrying is projected to contract by 2% in Q3FY20 primarily owing to negative growth seen in core sector growth of coal, crude-oil and natural gas. It also projected contraction of 3% in electricity segment in Q3FY20 on account of significant de-growth of 6% seen in IIP-electricity during the same period. Construction activity is projected to grow at 2.5% in Q3FY20 compared with 9.7% in corresponding period year ago.

The CNX Nifty is currently trading at 11712.50, down by 85.40 points or 0.72% after trading in a range of 11679.55 and 11743.45. There were 8 stocks advancing against 41 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Power Grid Corporation up by 0.83%, Hindustan Unilever up by 0.78%, Asian Paints up by 0.64%, Dr. Reddy’s Lab up by 0.58% and Nestle up by 0.44%. On the flip side, Tata Motors down by 2.13%, Cipla down by 2.11%, Sun Pharma Industries down by 1.94%, Hindalco down by 1.89% and Eicher Motors down by 1.89% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 290.82 points or 1.29% to 22,314.59, Hang Seng decreased 132.46 points or 0.49% to 26,760.77, Taiwan Weighted dropped 62.93 points or 0.55% to 11,477.30, Jakarta Composite lost 53.10 points or 0.92% to 5,734.04, Straits Times trembled 29.67 points or 0.94% to 3,128.57 and KOSPI fell 23.12 points or 1.1% to 2,080.49. On the flip side, Shanghai Composite was up by 9.16 points or 0.3% to 3,022.21.