Benchmarks continue lackluster trade slightly in red

Indian equity benchmarks continued their lackluster trade slightly in red in morning session, following negative trend in global equities as concerns over fresh spike in the number of COVID-19 cases and its impact on economic recovery weighed on investor sentiment. Traders also remained cautious 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. It also said the RBI will monetise the fiscal deficit through purchase of government bonds of up to $95 billion through open market operations, and its revaluation reserves of $127 billion may also be used to recapitalise state-run banks. Markets participants also remained on sidelines ahead of the industrial production data, slated to be announced later in the day. On the sectoral front, select Auto stocks were trading in red with Crisil Research’s report 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.

On the global front, Asian markets were trading in red, following the mostly negative cues from Wall Street as the relentless surge in coronavirus cases across the U.S. raised fears of another lockdown in several states and dimmed prospects for a quick economic recovery, while investors looked forward to earnings season.  Back home, the BSE Sensex is currently trading at 36700.66, down by 37.03 points or 0.10% after trading in a range of 36526.22 and 36748.89. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.27%, while Small cap index was up by 0.31%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.29%, Telecom up by 0.85%, Realty up by 0.70%, Energy up by 0.62% and Auto up by 0.59%, while Metal down by 0.92%, Consumer Durables down by 0.91%, Power down by 0.64%, Bankex down by 0.51% and IT down by 0.41% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.77%, Bharti Airtel up by 1.50%, Bajaj Finance up by 1.18%, SBI up by 1.08% and Hindustan Unilever up by 0.93%. On the flip side, Titan Company down by 1.94%, Tech Mahindra down by 1.91%, HDFC down by 1.19%, HDFC Bank down by 1.05% and NTPC down by 0.99% were the top losers.

Meanwhile, in order to boost demand, Principal Economic Adviser Sanjeev Sanyal has said the government will undertake measures. He said there is both monetary and fiscal headroom available. He stated that economic activity is steadily getting back on track. He underlined there is lots of monetary space as interest rates are still significantly positive unlike western Europe, where there is zero to negative rates. He indicated that the Reserve Bank of India (RBI) may cut interest rates further as a monetary policy tool to improve demand.

He mentioned ‘we have announced packages along the way and most of the packages so far have really been about cushioning the demand shock. We haven't, so far at least, been going to the rebuild of the demand phase. We will in the future. We do have monetary and fiscal space to do that.’ Besides, he said the government has announced various supply side reforms, including in agriculture and labour.

Pointing out that the post-COVID-19 world will be fundamentally different, he said it will have its own supply chains, geo-politics and changed consumers behaviour. He added ‘so, given all these, as a policymaker, I have to be very very careful not to simply press the accelerator on demand and try and reinflate the world we left behind. So, this is the context in which you will see our policy responses. We have included a lot of supply side measures, which is quite different from many other countries.’

The CNX Nifty is currently trading at 10799.40, down by 14.05 points or 0.13% after trading in a range of 10757.80 and 10819.40. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.94%, Britannia Inds up by 1.59%, Bharti Airtel up by 1.52%, Dr. Reddys Lab up by 1.31% and Maruti Suzuki up by 1.11%. On the flip side, Bharti Infratel down by 3.22%, Adani Ports &SEZ down by 2.10%, Tech Mahindra down by 2.08%, Titan Company down by 1.98% and JSW Steel down by 1.62% were the top losers.

Asian markets were trading in red; Nikkei 225 slipped 96.30 points or 0.43% to 22,432.99, Hang Seng decreased 307.30 points or 1.17% to 25,902.86, Taiwan Weighted dropped 75.75 points or 0.62% to 12,116.94, Shanghai Composite declined 36.38 points or 1.05% to 3,414.21, KOSPI fell 15.34 points or 0.71% to 2,152.56 and Jakarta Composite lost 3.75 points or 0.07% to 5,049.04.