Indian benchmarks add losses to trade weak

Indian equities added losses to continue their weak trade in the late afternoon session following weak European markets. Bankex, Metal, Realty counters were on the priority list of the sellers. Sentiment on the street weakened with rising coronavirus cases in India. The country has recorded over 6,000 cases in a single day, taking its total coronavirus count to 118,226. As many as 3,548 people have died from the disease, according to Worldometer data. Cautiousness also crept, as India Ratings (Ind-Ra) expects most sectors to experience varying degrees of revenue contraction during FY21 due to demand and supply disruptions caused by the novel coronavirus, or COVID-19, pandemic. Sector wise, Auto stocks remained in focus with Union Minister Nitin Gadkari’s statement that the government is set to introduce a vehicle scrappage policy, under which recycling clusters may be established near ports, expressing confidence that India will emerge as the world's leading automobile manufacturing hub in five years.

On the global front, European markets were trading lower as bad economic news from Japan, and China’s worsening trade and diplomatic relations with Australia and the United States, are having a ripple effect with investors across the globe.

The BSE Sensex is currently trading at 30502.55, down by 430.35 points or 1.39% after trading in a range of 30474.88 and 31107.91. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.21%, while Small cap index was down by 0.51%.

The few gaining sectoral indices on the BSE were IT up by 1.55%, TECK up by 1.23% and Oil & Gas was up by 0.16%, while Bankex down by 3.40%, Metal down by 2.28%, Realty down by 2.04%, Consumer Durables down by 1.12% and Auto was down by 1.12% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.72%, Asian Paints up by 2.60%, TCS up by 1.30%, Tech Mahindra up by 0.87% and Mahindra & Mahindra up by 0.59%. On the flip side, Bajaj Finance down by 6.13%, HDFC down by 5.55%, Axis Bank down by 5.40%, ICICI Bank down by 5.39% and Indusind Bank down by 4.65% were the top losers.

Meanwhile, in the wake of COVID-19, the Reserve Bank of India (RBI) has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 40 basis points (bps) to 4.0 per cent from 4.40 per cent with immediate effect. Accordingly, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.25 per cent from 4.65 per cent, while the reverse repo rate under the LAF stands reduced to 3.35 per cent from 3.75 per cent.

The Monetary Policy Committee (MPC) also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the growth outlook, the RBI is expecting economic activity other than agriculture likely to remain depressed in Q1 2020-21 in view of the extended lockdown. It also said that even though the lockdown may be lifted by end-May with some restrictions, economic activity even in Q2 may remain subdued due to social distancing measures and the temporary shortage of labour.

RBI further noted that recovery in economic activity is expected to begin in Q3 and gain momentum in Q4 as supply lines are gradually restored to normalcy and demand gradually revives. As per the RBI, for the year as a whole, there is still heightened uncertainty about the duration of the pandemic and how long social distancing measures are likely to remain in place and consequently, downside risks to domestic growth remain significant. On the other hand, upside impulses could be unleashed if the pandemic is contained, and social distancing measures are phased out faster.

The CNX Nifty is currently trading at 8988.50, down by 117.75 points or 1.29% after trading in a range of 8968.55 and 9149.60. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.29%, Asian Paints up by 2.71%, Infosys up by 2.65%, Zee Entertainment up by 2.47% and Bharti Infratel up by 1.80%. On the flip side, Bajaj Finserv down by 7.68%, Bajaj Finance down by 5.89%, HDFC down by 5.40%, ICICI Bank down by 5.37% and Axis Bank down by 5.17% were the top losers.

European markets were trading lower, UK’s FTSE 100 decreased 108.07 points or 1.8% to 5,907.18, France’s CAC decreased 64.39 points or 1.45% to 4,381.06 and Germany’s DAX was down by 152.01 points or 1.37% to 10,913.92.