Indian bourses continue to trade in deep red

Indian bourses continued to trade in deep red in afternoon session, with the Sensex losing over 500 points and Nifty falling below the 10,650 level, amid weak Asian cues. The broader indices were also trading in negative, with loss in the range of over a percent each. Majority of the sectoral indices on BSE were in red territory, stocks from Bankex, Metal and Auto counters were the prominent losers. On the flip side, stocks from Telecom and TECK counters were the prominent gainers on the index. Sentiments got undermined as Consumer Price Index (CPI) data, which increased to 6.09% in June 2020, mainly on account of higher prices of food items. The CPI was 3.18% in June 2019. Meanwhile, Wholesale Price Index (WPI) - based inflation stood at (-) 1.81% in June due to decline in prices of fuel and power, even as food articles remained expensive. The rate of deflation in May was 3.21%.

On the global front, most of the Asian markets were trading lower, weighed on the peaking corona virus infections around the globe and renewed US-China tensions. Back on the Dalal Street, the market breadth on BSE was negative, out of 2567 stocks traded, 1806 stocks declined, while 641 stocks advanced on the BSE, while 120 stocks remain unchanged.

The BSE Sensex is currently trading at 36187.12, down by 506.57 points or 1.38% after trading in a range of 36060.51 and 36538.10. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 1.10%, while Small cap index was down by 1.12%.

The few gaining sectoral indices on the BSE were Telecom up by 1.31% and TECK was up by 0.02%, while Bankex down by 2.49%, Metal down by 2.33%, Auto down by 2.22%, Power down by 2.01%, PSU was down by 1.86% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.58%, Titan Company up by 0.86% and HCL Tech was up by 0.23%. On the flip side, Indusind Bank down by 4.63%, Axis Bank down by 3.99%, Bajaj Finserv down by 3.31%, Maruti Suzuki down by 3.00% and HDFC was down by 2.91% were the top losers.

Meanwhile, domestic rating agency ICRA in its latest report has said that Indian IT services sector’s revenue may contract up to 3 percent in the current financial year (FY21) versus earlier expectation of 6-8 percent, amid multiple challenges on the demand side. It also said that the profit margins for the sector will go down as the growth slows down.

The agency expects the pace of new contract award to fall by at least 7-9 percent in 2021, with manufacturing, travel, airlines, hospitality and retail to be the most adversely hit. It also said the first half of FY21 will also see impact in the form of price discounts and extended furlough requests by clients as they restructure their businesses. It noted that the only silver lining is the benefit IT companies stand to get through trends of core modernisation, usage of collaborative technologies and cloud migration as companies shift to digital business models to pursue work from home model.

As per the report, IT companies have achieved over 90 percent levels on the work from home front, acknowledging that the transition to work from home for the banking, financial services and insurance segment was impacted because of confidentiality issues. It added that there would be some issues which may come up due to the travel restrictions which are being imposed.

The CNX Nifty is currently trading at 10647.90, down by 154.80 points or 1.43% after trading in a range of 10616.65 and 10755.65. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 1.52%, Bharti Infratel up by 1.44%, Titan Company up by 0.98%, Dr. Reddys Lab up by 0.73% and Cipla was up by 0.25%. On the flip side, Indusind Bank down by 4.58%, Axis Bank down by 3.92%, Bajaj Finserv down by 3.45%, Zee Entertainment down by 3.31% and Hindalco was down by 3.28% were the top losers.

Most of the Asian markets were trading lower; Taiwan Weighted dropped 2.55 points or 0.02% to 12,209.01, Shanghai Composite declined 27.64 points or 0.8% to 3,415.65, KOSPI fell 2.45 points or 0.11% to 2,183.61, Nikkei 225 slipped 197.73 points or 0.87% to 22,587.01, Straits Times trembled 0.71 points or 0.03% to 2,630.37 and Hang Seng was down by 308.91 points or 1.2% to 25,463.21.

On the other hand; Jakarta Composite was up by 1.61 points or 0.03% to 5,066.06.