Indian equities continue weak trade in morning deals

Indian equity benchmarks continued to trade lower in morning session, on account of selling in frontline blue chip counters. The mood of the markets remained impacted with the World Bank’s report stating that it is likely to project a steeper contraction in India’s economy than the 3.2 per cent it had forecast for the current financial year, given the rising number of Covid-19 cases and the resultant regional lockdowns. It cautioned India against using its tariff policy to attract firms seeking a shift away from China. Some anxiety also came with Centre of Monitoring Indian Economy (CMIE) data showing that the unemployment rate in India recorded for August 18 was 8.20 percent (30-day moving average), against 7.64 percent at the start of the month on August 1. Moreover, a depreciating rupee, which slipped 15 paise to quote at 74.98 against the dollar in early trade, kept investors nervous.

On the global front, Asian markets were trading lower after the Federal Reserve warned the U.S. economy faced a highly uncertain path to recovery from the coronavirus-induced downturn. Back home, on the sectoral front, stocks related to diamond sector remained in focus as Gems and jewellery industry body GJEPC said that the government has called for constituting a special group, which will include both customs and banking officials, to resolve issues faced by the industry. Auto component industry’s stocks also remained in watch as industry body ACMA said the auto component industry, which accounts for around 2.3 per cent of the country's GDP, is looking for government support in terms of tax rationalisation as it aims to tide over the challenging business environment.

The BSE Sensex is currently trading at 38325.80, down by 288.99 points or 0.75% after trading in a range of 38212.66 and 38359.73. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.55%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Utilities up by 2.65%, Power up by 2.44%, Realty up by 1.30%, Metal up by 0.90% and PSU up by 0.63%, while Bankex down by 1.29%, Telecom down by 0.93%, Consumer Durables down by 0.64%, Energy down by 0.57% and Capital Goods down by 0.35% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 4.60%, Power Grid up by 1.01%, HCL Tech. up by 0.13%, Tata Steel up by 0.13% and TCS up by 0.07%. On the flip side, ICICI Bank down by 2.42%, Titan Company down by 2.10%, HDFC down by 1.61%, Kotak Mahindra Bank down by 1.35% and Larsen & Toubro down by 1.27% were the top losers.

Meanwhile, the World Bank in its report 'India Development Update' for July 2020, has said it is likely to project a steeper contraction in India’s economy than the 3.2 per cent it had forecast for the current financial year, given the rising number of Covid-19 cases and the resultant regional lockdowns. It cautioned India against using its tariff policy to attract firms seeking a shift away from China.

It also warned that credit risks could play out as firms and households find it more difficult to service interest and repayment obligations. It called for full privatisation of some public sector banks and private capital injection in others. It said despite India making progress in poverty reduction in recent years, the deadly virus has made half of the population vulnerable to be pushed to poverty.

The World Bank said ‘in our revised projections, which will be available in October 2020, we will likely project a steeper contraction in the economy.’ By then, it added, new information would have been incorporated, especially given the rising infections resulting in several state and district lockdowns. Further, the available high frequency indicators show that the economy is yet to revert to baseline.

The CNX Nifty is currently trading at 11347.95, down by 60.45 points or 0.53% after trading in a range of 11294.15 and 11351.35. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were NTPC up by 4.49%, Zee Entertainment up by 3.99%, Hindalco up by 2.49%, Power Grid up by 1.24% and GAIL India up by 1.18%. On the flip side, Titan Company down by 2.30%, ICICI Bank down by 2.30%, HDFC down by 1.44%, Kotak Mahindra Bank down by 1.30% and Bharti Infratel down by 1.29% were the top losers.

Asian markets were trading lower; Nikkei 225 slipped 254.12 points or 1.1% to 22,856.49, Hang Seng decreased 498.97 points or 1.98% to 24,679.94, KOSPI fell 75.36 points or 3.19% to 2,285.18, Straits Times trembled 47.03 points or 1.84% to 2,514.01, Shanghai Composite declined 36.65 points or 1.08% to 3,371.48 and Taiwan Weighted dropped 448.45 points or 3.51% to 12,330.19.