Benchmarks continue weak trade; Banking, Power drag

Indian equity benchmarks continued their weak trade in the morning session on account of selling in frontline blue chip counters tailing weak global counterparts. Investor sentiment was dampened with domestic rating agency ICRA’s report that corporate revenues declined by 31 per cent in the first quarter of current financial year (Q1FY21), but profit margins decreased by a lesser degree to 3.6 per cent in the April-June period. A fast rise in Covid-19 cases is also keeping investors worried. Meanwhile, Finance Minister Nirmala Sitharaman has asked banks and NBFCs to roll out loan restructuring scheme for COVID-19 related stress by September 15 and provide adequate support to the borrowers following the lifting of moratorium on repayment of debts. On the sectoral front, stocks related to jewellery industry remained in focus with the Gem and Jewellery Export Promotion Council’s (GJEPC) statement that gems and jewellery exports are projected to decline by 25-30 per cent in the current fiscal as there was a complete washout of the first quarter due to lockdown to curb spreading of the COVID-19.

On the global front, Asian markets were trading in red as investors turned cautious as they looked ahead to the release of the U.S. jobs data for August later in the day. Back home, the BSE Sensex is currently trading at 38543.82, down by 447.12 points or 1.15% after trading in a range of 38299.12 and 38575.40. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.51%, while Small cap index was down by 0.53%.

The only gaining sectoral index on the BSE was Healthcare up by 0.43%, while Bankex down by 1.72%, Power down by 1.57%, Realty down by 1.36%, PSU down by 1.22% and Capital Goods down by 1.22% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.57%, Sun Pharma up by 0.54% and Asian Paints up by 0.22%. On the flip side, Kotak Mahindra Bank down by 1.94%, Power Grid down by 1.85%, SBI down by 1.83%, ICICI Bank down by 1.83% and HDFC down by 1.74% were the top losers.

Meanwhile, domestic rating agency ICRA in its latest report has said that corporate revenues declined by 31 per cent in the first quarter of current financial year (Q1FY21), but profit margins decreased by a lesser degree to 3.6 per cent in the April-June period. It analysed that financial results of 489 companies to arrive at the conclusion. It can be noted that the GDP of the country contracted by 23.9 per cent during the quarter, which had witnessed total lockdown of the country for the first two months to contain the spread of the coronavirus infections.

It said corporate revenues had been falling for three quarters prior to the last one due to the weak macroeconomic climate but had never declined by as high as the 31.1 per cent for QFY21 as compared to the year-ago period. Its vice president Shamsher Dewan said that restrictions on manufacturing, industrial, construction and consumption activities for the major part of Q1 FY21 due to imposition of nationwide lockdown primarily hurt the financial performance of the Indian corporate sector.

He said the contraction in revenues was sharpest in consumer-oriented sectors where revenues contracted to nearly half of the year-ago levels, given customer wariness for large-ticket buys because of the uncertain economic environment and erosion of purchasing power. He added sectors like airlines, hotels, retail, automotive, consumer durables which represent discretionary spending were significantly impacted, while FMCG and consumer goods were relatively less impacted.

The CNX Nifty is currently trading at 11395.15, down by 132.30 points or 1.15% after trading in a range of 11332.85 and 11410.15. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.34%, Maruti Suzuki up by 1.39%, Britannia Inds up by 0.99%, Cipla up by 0.79% and Dr. Reddys Lab up by 0.61%. On the flip side, Kotak Mahindra Bank down by 2.18%, UPL down by 2.04%, SBI down by 1.99%, Power Grid down by 1.96% and HDFC down by 1.95% were the top losers.

Asian markets were trading in red; Hang Seng decreased 456.42 points or 1.83% to 24,551.18, Jakarta Composite lost 70.86 points or 1.34% to 5,209.95, Straits Times trembled 35.92 points or 1.42% to 2,495.87, Shanghai Composite declined 46.84 points or 1.38% to 3,338.14, KOSPI fell 27.29 points or 1.14% to 2,368.61, Taiwan Weighted dropped 127.56 points or 1% to 12,630.41 and Nikkei 225 slipped 293.10 points or 1.25% to 23,172.43.