Markets witness bloodbath in early deals; Sensex loses over 750 points

Indian equity benchmarks witnessed bloodbath with gap-down opening on Friday tracking a mammoth plunge on the Wall Street coupled with rising coronavirus cases in India. Markets are trading deeply in red with cut of around 2% each in early deals. All the sector indices are trading in red. Traders were concerned as India has taken over the UK as the fourth-most-affected nation by number of coronavirus cases, with over 10,000 cases in a day. The country's count of people infected by the highly contagious virus now stands at 298,283, according to data compiled by Worldometer. India's death toll has also seen a sharp spike, with 390 fatalities being registered in a single day taking the total to 8,500. Traders failed to take any sense of relief with Niti Aayog vice-chairman Rajiv Kumar’s statement that India's economy will recover after the containment of the COVID-19 pandemic and the country will maintain its sound net external position. Besides, market participants keeping a keen eye on industrial production data for April and CPI inflation for May which are due later in the day. Investors are looking ahead to the 40th meeting of the GST Council, headed by Finance Minister Nirmala Sitharaman and comprising state counterparts, to be held later in the day. The GST Council is likely to discuss the impact of COVID-19 on tax revenues and may decide on the framework for compensation payout to states.

On the global front, all the Asian markets are trading lower amid concerns that a second wave of coronavirus in the United States could derail economic recovery. About half a dozen American states including Texas and Arizona are grappling with a rising number of coronavirus patients filling hospital beds, reflecting increased testing and loosening of the social distancing restrictions. Europe is also expected to see a surge of Covid-19 infections in the coming two weeks caused by mass protests in the continent to protest the killing of George Floyd.

Back home, telecom and banking stocks were in focus as the Supreme Court termed as totally impermissible the demand by Department of Telecom (DoT) for dues of Rs 4 lakh crore in Adjusted Gross Revenue (AGR) from the public sector undertakings (PSUs) and said DoT must consider withdrawing it. In scrip specific developments, State Bank of India (SBI) was trading lower. The bank is planning to sell 2.1 crore shares, or 2.10% stake, in SBI Life Insurance through an offer for sale (OFS). Sundram Fasteners declined after its quarterly net profit fell 56 percent from last year.

The BSE Sensex is currently trading at 32782.97, down by 755.40 points or 2.25% after trading in a range of 32348.10 and 32832.99. There were 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 2.15%, while Small cap index was down by 2.44%.

The losing sectoral indices on the BSE were Bankex down by 3.30%, Capital Goods down by 2.89%, Industrials down by 2.84%, Auto down by 2.78%, PSU down by 2.71%, while there was no gainer on the BSE.

The sole gainer on the Sensex was Sun Pharma up by 0.74%. On the flip side, Indusind Bank down by 5.61%, ONGC down by 4.95%, Kotak Mahindra Bank down by 4.15%, Axis Bank down by 3.27% and NTPC down by 3.16% were the top losers.

Meanwhile, after Moody's downgraded India’s rating and S&P retained it at the lowest investment grade, Chief Economic Advisor Krishnamurthy Subramanian (CEA) has said country’s fundamentals demand a much better rating.  India's ability and willingness to repay debt is gold standard, he said making a case for ratings upgrade.

He took comfort in rating agencies acknowledging India's reforms, saying these are critical elements for higher growth next year. On economic growth this year, Subramanian said it will depend on when recovery happens. It is uncertain if the recovery will happen in the second half of this year or next year. Further, he said the finance ministry was working on a large range of growth estimates for this year and a recovery in the second half or next year is also part of baseline expectation.

He mentioned the finance ministry has evaluated pros and cons of options such as deficit monetisation. He added ‘we keep all options under consideration and will be evaluating them.’ On privatisation policy, he said that banking will form part of the strategic sector and the government is working on to identify strategic and non-strategic sectors.

The CNX Nifty is currently trading at 9712.05, down by 189.95 points or 1.92% after trading in a range of 9544.35 and 9714.30. There were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were Sun Pharma up by 0.92%, Bharti Infratel up by 0.64% and Bharti Airtel up by 0.61%. On the flip side, Indusind Bank down by 5.44%, Tata Motors down by 4.76%, ONGC down by 4.55%, Zee Entertainment down by 4.26% and Kotak Mahindra Bank down by 3.67% were the top losers.

All the Asian markets are trading in red; Nikkei 225 slipped 149.38 points or 0.66% to 22,323.53, Straits Times plunged 44.78 points or 1.66% to 2,659.43, Hang Seng fell 290.72 points or 1.19% to 24,189.43, Taiwan Weighted declined 153.76 points or 1.33% to 11,382.01, KOSPI weakened 48.68 points or 2.24% to 2,128.10, Jakarta Composite declined 43.17 points or 0.89% to 4,811.58 and Shanghai Composite was down by 11.17 points or 0.38% to 2,909.73.