Local indices trade with minor cut in morning deals

Indian equity benchmarks erased all of their initial gains and were trading marginally in red in morning deals, amid concerns over India-China border tensions and weak cues from Asian peers. Traders turned cautious with Moody's Investors Service stating that India will be among the large emerging market sovereigns to have highest debt burden by 2021. It stated that the coronavirus pandemic-induced deterioration in growth and fiscal dynamics will leave most large emerging market sovereigns with higher debt burdens over the next few years. Traders also took a note of Commerce and Industry Minister Piyush Goyal’s statement that the difficult-to-meet quality standard norms of the US and Europe act as non-trade barriers and impede free flow of goods and services. Meanwhile, the government has capped export incentives under the scheme, MEIS, at Rs 2 crore per exporter on outbound shipments made during the period from September 1 to December 31, 2020.

On the global front, Asian markets were trading mostly in red, as traders were turning their attention to the release of US jobs data later in the week. Back home, on the sectoral front, select Telecom sector stocks were trading in red as ICRA said the relatively shorter timeframe granted to telcos for payment of AGR dues will exert additional pressure on the cash flows, necessitates sizeable ARPU hike, and may have longstanding impact on industry structure.

The BSE Sensex is currently trading at 38873.85, down by 26.95 points or 0.07% after trading in a range of 38818.17 and 39036.76. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.32%, while Small cap index was up by 1.00%.

The top gaining sectoral indices on the BSE were Telecom up by 1.08%, Energy up by 0.85%, Healthcare up by 0.80%, Basic Materials up by 0.79% and Metal up by 0.77%, while Bankex down by 0.80%, Utilities down by 0.73%, Consumer Durables down by 0.66%, PSU down by 0.37% and Auto down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.29%, Tech Mahindra up by 1.50%, ONGC up by 1.39%, Tata Steel up by 1.17% and Reliance Industries up by 0.80%. On the flip side, Power Grid down by 2.30%, SBI down by 1.93%, HDFC down by 1.52%, Titan Co down by 1.48% and Axis Bank down by 1.36% were the top losers.

Meanwhile, Moody's Investors Service has said India will be among the large emerging market sovereigns to have highest debt burden by 2021. It stated that the coronavirus pandemic-induced deterioration in growth and fiscal dynamics will leave most large emerging market sovereigns with higher debt burdens over the next few years. Further, it said in India, increased stress within the financial system, among banks and non-bank financial companies, raises contingent liability risks to the sovereign.

It stated despite steps toward the resolution of high non-performing loans, the banking system continues to suffer from weak asset quality, and low loan-loss coverage and capital adequacy. This is especially the case for state-owned banks, which account for around 70 per cent of total banking system assets. It added lingering fragilities in the sector are likely to be compounded by a prolonged period of subdued economic activity compared to pre-coronavirus levels.

Besides, It said ‘we expect government debt in the large emerging market sovereigns to rise by almost 10 percentage points of GDP on average by the end of 2021 from 2019 levels, driven primarily by wider primary deficits, although some are likely to see higher interest payments contributing to higher debt. It mentioned debt burdens in Brazil, India and South Africa will rise to among the highest across the large emerging market sovereigns by 2021.

The CNX Nifty is currently trading at 11461.00, down by 9.25 points or 0.08% after trading in a range of 11449.30 and 11520.45. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 4.46%, Bharti Infratel up by 3.55%, Coal India up by 2.85%, Ultratech Cement up by 2.15% and Tech Mahindra up by 1.46%. On the flip side, Power Grid down by 2.52%, SBI down by 2.22%, Hero MotoCorp down by 1.94%, Grasim Industries down by 1.91% and HDFC down by 1.79% were the top losers.

Asian markets were trading mostly in red; KOSPI fell 2.96 points or 0.13% to 2,346.59, Straits Times trembled 9.69 points or 0.38% to 2,528.86, Shanghai Composite declined 13.23 points or 0.39% to 3,397.38, Taiwan Weighted dropped 18.08 points or 0.14% to 12,685.20 and Hang Seng decreased 139.32 points or 0.55% to 25,045.53.

On the flip side, Nikkei 225 surged 73.24 points or 0.32% to 23,211.31 and Jakarta Composite soared 0.72 points or 0.01% to 5,311.40.