Domestic markets trade tad lower in early deals

Indian equity benchmarks made negative start on Friday tracking weak cues from global markets and ahead of Index of Industrial Production (IIP) data, which is scheduled to be announced post market hours today. Soon, markets trimmed some of their losses and are trading near neutral lines in early deals, with marginal cut. Selling in metal, consumer durables and banking stocks weighted down on the markets, while buying healthcare, energy and telecom stocks limited the losses. Rising coronavirus cases dampened the sentiments in the markets. India has recorded over 25,500 new coronavirus cases in a day, taking its total to 794,842. The country's Covid-19 death toll has reached 21,623. Some cautiousness also came in with a private report that India's GDP will contract by 3 percent in FY21 because of the coronavirus pandemic, assuming the economy is opened up fully from next month. Though, markets managed to trim some losses taking support with Principal Economic Adviser Sanjeev Sanyal’s statement that the government will undertake measures to boost demand and there is both monetary and fiscal headroom available. He stated that economic activity is steadily getting back on track. Sanyal indicated that the Reserve Bank of India (RBI) may cut interest rates further as a monetary policy tool to improve demand.

On the global front, Asian markets are trading lower as the resurgence of new coronavirus infections in the US and other parts of the world stoked concerns about the re-imposition of lockdown measures and dampened hopes of a global economic recovery. Investors also turned cautious ahead of the corporate earnings season beginning next week.

Back home, pharma stocks were in focus with Indian Pharmaceutical Alliance’s (IPA) statement that Indian pharma industry is committed to an uninterrupted supply of quality medicines to patients in India and globally. There will be lots of earnings reaction based on the performance of the companies. In scrip specific development, Tata Consultancy Services edged down after it reported a 13.8% fall in fiscal-first quarter profit from a year earlier, missing Street estimates. Tata Motors rose modestly after its JLR unit posted improved month-on-month retail sales for June.

The BSE Sensex is currently trading at 36686.57, down by 51.12 points or 0.14% after trading in a range of 36526.22 and 36719.76. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.18%, while Small cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.26%, Energy up by 0.93%, Telecom up by 0.42%, Capital Goods up by 0.23%, Oil & Gas up by 0.19%, while Metal down by 1.05%, Consumer Durables down by 0.87%, Bankex down by 0.58%, Power down by 0.44%, Utilities down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.63%, SBI up by 1.33%, Reliance Industries up by 1.17%, Bharti Airtel up by 0.94% and Bajaj Auto up by 0.57%. On the flip side, Tech Mahindra down by 2.16%, Indusind Bank down by 2.14%, Titan Company down by 1.78%, Axis Bank down by 1.38% and HDFC down by 1.18% were the top losers.

Meanwhile, Crisil Research in its latest report has said that automotive aftermarket spending is expected to decline by 11 percent in the current financial year (FY21) owing to nationwide lockdown to limit the spread of Coronavirus disease (COVID-19) pandemic. Based on the analysis of 75 mega districts in the country, which account for 43 percent of the segment's total revenue, it expects the annual running of vehicles (in kilometres) to decline, with three-wheelers likely to see the highest decline of 22 percent and passenger vehicles and tractors seeing the lowest decline of 4 percent during FY21.

According to the report, these districts together account for a significant chunk of automobile sales by original equipment manufactures (OEMs) and 46 percent of total number of automobiles in the country. It said aftermarket automotive spends are typically driven by annual running and replacement frequency. It noted that the economic crisis brought on by the extended lockdown is expected to whip up the woes of the auto component industry, including tyres, engine oil and lubricants, this fiscal.

The report further stated that utilisation in commercial vehicles had reached 25-30 percent by May-end and is likely to touch pre-Covid levels only by September, and reduced running along with the highly price-sensitive nature of customers in this segment will drive down aftermarket spends. In two-wheelers, a high proportion of aftermarket spend goes towards tyre and engine oil replacement, which will be sharply lower as both are directly linked with annual running. Besides, two-wheeler owners are likely to heavily downtrade or opt for cheaper options in the aftermarket, given the impact of the economic slowdown. Usage of two-wheelers should improve gradually as commuters increasingly prefer personal vehicle.

The CNX Nifty is currently trading at 10797.55, down by 15.90 points or 0.15% after trading in a range of 10757.80 and 10807.30. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.56%, SBI up by 1.36%, Hero MotoCorp up by 1.25%, UPL up by 1.23% and Dr. Reddy’s Lab up by 1.19%. On the flip side, Tech Mahindra down by 2.08%, Adani Ports & SEZ down by 2.07%, Bharti Infratel down by 2.03%, Indusind Bank down by 1.94% and JSW Steel down by 1.85% were the top losers.

Asian markets are trading in red; Nikkei 225 declined 50.35 points or 0.22% to 22,478.94, Hang Seng slipped 307.30 points or 1.17% to 25,902.86, Taiwan Weighted lost 65.19 points or 0.53% to 12,127.50, KOSPI fell 14.13 points or 0.65% to 2,153.77, Jakarta Composite dropped 4.66 points or 0.09% to 5,048.13 and Shanghai Composite was down by 36.38 points or 1.05% to 3,414.21.