Indian benchmarks erase gains; end flat with negative bias

In spite of trading positive for most part of the day, the Indian equity benchmarks gave up their gains and ended flat with a negative bias, on the back of concerns over rising COVID-19 cases and its impact on economic recovery. Key indices kicked off session on higher note, tracking firm cues from global peers. Traders also took encouragement with Union minister Mahendra Nath Pandey’s statement that the government has approved the third phase of skill development scheme, Pradhan Mantri Kaushal Vikas Yojana (PMKVY), with an increased focus on digital technology and industry 4.0. Traders also were taking support with report that India has been holding up better in hiring than other economies as the COVID-19 pandemic has caused disruptions across the globe with reports of layoffs, furlough and organisations freezing their hiring intentions across sector. 

Indian bourses continued to show positive trend in afternoon session, taking support from report that India has finally developed its first indigenous COVID-19 vaccine named COAXING. A Hyderabad-based company called Bharat Biotech has achieved this success in collaboration with the Indian Council of Medical Research (ICMR) and National Institute of Virology, Pune. The recently developed coronavirus vaccine has got the approval for human trials by the Drug Controller General of India (DCGI). However, markets failed to maintain their gaining momentum in late afternoon session and ended with minor cut, as traders turned cautious with India Ratings and Research (Ind-Ra) in its latest report stated that the gross state domestic product (GSDP) of all states in India is likely to contract in the range of 1.4 to 14.3 percent in the current financial year (FY21) due to the impact of Covid-19-induced lockdown on economic activities.

On the global front, Asian markets ended higher on Tuesday, while European markets were trading mostly in green, as economic optimism prevailed despite a spike in global coronavirus cases. An official survey revealed the manufacturing sector in China continued to expand in June, and at a slightly faster rate with a manufacturing PMI score of 50.9. That beat expectations for 50.4 and was up from 50.6 in May. Back home, select auto sector stocks ended in red after Engineering Exports Promotion Council (EEPC) India in its latest report has said that the auto exports plunged 73% in May 2020 to $230.3 million (about Rs 1,736 crore) as compared to the year-ago period with shipments to key markets like the US and Mexico registering a sharp decline owing to supply-chain issues due to lockdown. Besides, stocks related to ports and shipping industry were also in focus with rating agency ICRA stating that the Indian port sector has been adversely impacted due to the COVID-19 pandemic and the subsequent lockdown, and it is likely to witness 5-8 per cent contraction in cargo volumes. 

Finally, the BSE Sensex lost 45.72 points or 0.13% to 34,915.80, while the CNX Nifty was down by 10.30 points or 0.10% to 10,302.10.

The BSE Sensex touched high and low of 35,233.91 and 34,812.80, respectively and there were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.14%, while Small cap index was down by 0.75%.

The top gaining sectoral indices on the BSE were Auto up by 1.05%, Basic Materials up by 0.44%, Consumer Discretionary up by 0.19%, Bankex up by 0.18% and FMCG up by 0.18%, while Oil & Gas down by 1.51%, Energy down by 1.30%, Telecom down by 1.26%, Healthcare down by 1.21% and Power down by 0.80% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.77%, Nestle up by 2.63%, ICICI Bank up by 2.42%, Ultratech Cement up by 2.11% and Tata Steel up by 1.68%. On the flip side, Power Grid down by 1.88%, Sun Pharma down by 1.84%, Bharti Airtel down by 1.34%, ITC down by 1.32% and ONGC down by 1.21% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that the gross state domestic product (GSDP) of all states in India is likely to contract in the range of 1.4 to 14.3 percent in the current financial year (FY21) due to the impact of Covid-19-induced lockdown on economic activities. It also said the states that will witness a double-digit contraction in GSDP growth in FY21 are Assam, Goa, Gujarat and Sikkim. It noted that the top five major states where the impact of lockdown was the most pronounced are Karnataka, Jharkhand, Tamil Nadu, Kerala and Odisha. Similarly, the five major states where impact of lockdown was the least pronounced are Madhya Pradesh, Punjab, Bihar, Andhra Pradesh and Uttar Pradesh.

The report stated that despite the nation-wide lockdown enforced on March 25, 2020, several economic activities defined as essentials remained operational. It said the impact of the lockdown on sectors namely agriculture, industry and services were differently. It also said that since agricultural activities were less impacted, the states having a higher share of agriculture are expected to have suffered less compared to the one where the share of agriculture is low. 

According to the report, some sub-sectors especially in the services such as banking and financial services, IT and IT-enabled services were less impacted, because they were able to readjust their operations remotely owing to the high penetration of digital platform in their business operations. It added that the states in which the share of these services is high are expected to have suffered less during the lockdown compared to the one where share of these services is low. 

The CNX Nifty traded in a range of 10,401.05 and 10,267.35 and there were 20 stocks advancing against 29 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Shree Cement up by 3.12%, Maruti Suzuki up by 2.66%, ICICI Bank up by 2.59%, Nestle up by 2.54% and Britannia Industries up by 2.41%. On the flip side, BPCL down by 2.50%, Power Grid down by 1.94%, Sun Pharma down by 1.89%, GAIL down by 1.88% and Indian Oil Corporation down by 1.77% were the top losers.

European markets were trading mostly in green; France’s CAC increased 10.29 points or 0.21% to 4,955.75 and Germany’s DAX rose 53.23 points or 0.44% to 12,285.35, while UK’s FTSE 100 decreased 23.19 points or 0.37% to 6,202.58.

Asian markets ended higher on Tuesday after strong gains on Wall Street overnight on optimism over economic activity recovery, despite the reports of surging corona virus pandemic cases worldwide. Market sentiment improved further on strong data from the US housing market and Chinese factories. Data showing that China's manufacturing sector expanded more than expected in June, and at a slightly faster rate with a manufacturing PMI score of 50.9. That beat expectations for 50.4 and was up from 50.6 in May. The non-manufacturing index came in with a score of 54.4, beating expectations for 54.1 and up from 53.6 in the previous month. Data showed that the amount of future home sales in the US in May increased by 44.3% month-on-month against expected growth of 18.9%. Investors shrugged off disappointing economic data released from Japan earlier in the day, including rising unemployment and weak factory activity for May.