Benchmarks trim some gains in late noon session

The Indian benchmarks trimmed some of their initial gains in late afternoon session but remain in green territory. Investors’ maintained cautious approach with a private report that the combined fiscal deficit of the Centre and states will top 12 percent of the GDP because of the recent economy boosting measures, and higher borrowings by States to meet COVID-19 exigencies. However markets remained in green, as traders took support with Minister for MSMEs and road transport and highways Nitin Gadkari’s statement that the recent steps announced by the government to boost liquidity and credit flows would also bolster the purchasing power of the people via employment creation and help accelerate the wheels of the economy. Sector wise, construction equipment industry remained in focus, as Rating agency ICRA in its latest report has said that the construction equipment industry, which was already going through a slowdown due to headwinds on several fronts before coronavirus (Covid-19) outbreak, is likely to witness a 15-20 percent fall in revenues in calendar year (CY) 2020, impacted by the extended the ongoing nationwide lockdown.

On the global front, European markets were trading mostly in green as hopes rise for a coronavirus vaccine. Back home, traders took note of Expenditure secretary TV Somanathan’s statement that this is a challenging year for the central government due to the serious revenue impact of the coronavirus crisis, but added that the Centre had no plan of carrying out poorly calibrated expenditure cuts.

The BSE Sensex is currently trading at 30418.10, up by 389.12 points or 1.30% after trading in a range of 30187.77 and 30739.96. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.05%, while Small cap index was up by 0.31%.

The top gaining sectoral indices on the BSE were Telecom up by 8.50%, Power up by 2.40%, Utilities up by 2.26%, TECK up by 2.11% and Auto was up by 1.96%, while Realty down by 0.56% was the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 9.49%, ONGC up by 6.10%, Ultratech Cement up by 4.41%, ITC up by 3.56% and Mahindra & Mahindra up by 3.31%. On the flip side, Indusind Bank down by 1.29%, Hindustan Unilever down by 1.14%, SBI down by 0.71%, Nestle down by 0.09% and Reliance Industries down by 0.05% were the top losers.

Meanwhile, few days after the government’s stimulus package, the rating agency Moody's Investors Service in its latest report has said the measures announced for financial institutions as part of Rs 20 lakh crore-economic package will help ease their asset risk, but will not fully offset the negative impact from the COVID-19 outbreak.

On MSME package, Moody's noted that the sector was already under stress before coronavirus outbreak and further slowdown in economic growth will lead to more liquidity woes. With regard to measures for NBFCs, it said the support is far lower than the immediate liquidity requirements of those companies and the sector will continue to pose risks to the banks.

Further, the rating agency said that amongst the measures, the most significant is the government guaranteed, automatic and uncollateralised loans to MSMEs. It underlined that such loans will help improve MSMEs’ near-term liquidity and ease asset risks for the banks and NBFCs who are the key lenders to the sector.

However, the report said the MSME sector was already under financial strain before the outbreak of the coronavirus because of the gradual slowdown in India's economic growth over the past 18 months. As a consequence, it has limited capacity to weather another economic shock.

The CNX Nifty is currently trading at 8942.25, up by 119.00 points or 1.35% after trading in a range of 8866.80 and 9030.35. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 9.44%, ONGC up by 5.83%, Adani Ports up by 5.76%, Ultratech Cement up by 4.37% and Bharti Infratel up by 4.37%. On the flip side, UPL down by 6.11%, Vedanta down by 1.46%, Indusind Bank down by 1.25%, Hindustan Unilever down by 0.94% and SBI down by 0.71% were the top losers.

European markets were trading mostly in green, UK’s FTSE 100 increased 2.52 points or 0.04% to 6,051.11, Germany’s DAX increased 7.26 points or 0.07% to 11,066.13. On the flip side, France’s CAC decreased 24.58 points or 0.55% to 4,473.76.