Markets trade deeply in red in early deals; Banking stocks play spoilsport

Indian equity benchmarks made gap-down opening on Friday, amid selling in all the sector indices. Markets are trading deeply in red, with cut of over a percent each, in early deals led by losses in Bankex, Power and Metal stocks. Sensex and Nifty slipped below their crucial 38,500 and 11,400 levels, respectively. Sentiments got hurt with ICRA’s report that corporate revenues declined by 31 per cent in the June quarter, but profit margins decreased by a lesser degree to 3.6 per cent in the April-June period. Rising coronavirus cases also dampened the market sentiments. India has recorded its highest-ever single-day spike in new coronavirus cases, of over 84,000. The total now stands at 3,933,124. Investors are eyeing the 15th Finance Commission meet, which is likely to meet today, to discuss the dwindling economic growth, tax collection, GST compensation to states, revenue deficit grant and fiscal consolidation. Traders largely overlooked Prime Minister Narendra Modi invited US companies to invest in India by taking advantage of its stable tax regime and attractive Foreign Direct Investment (FDI) policies.

Sell-off in the global markets also dragged down domestic indices. All the Asian markets were trading lower after Wall Street saw its biggest sell-off since June amid concerns about excessive valuations in the tech sector. Investors also turned cautious ahead of the release of the closely-watched US monthly jobs report for August due later in the day. The Labor Department report is expected to show that employment surged up by 1.4 million jobs in August.

Back home, banking stocks were trading under pressure amid report that the Supreme Court said those accounts that had not been declared non-performing assets (NPAs) as on August 31 should not be declared bad loans until the case was disposed of.  In scrip specific development, 5paisa Capital was trading higher as it plans to raise up to Rs 1,150 crore by issuing equity shares and other instruments.

The BSE Sensex is currently trading at 38459.90, down by 531.04 points or 1.36% after trading in a range of 38299.12 and 38480.60. There was 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.93%, while Small cap index was down by 1.02%.

The top losing sectoral indices on the BSE were Bankex down by 1.85%, Power down by 1.69%, Metal down by 1.56%, IT down by 1.56%, Realty down by 1.53%, while there was no gainer on BSE sectoral front.

The top gainer on the Sensex was Maruti Suzuki up by 0.09%. On the flip side, Kotak Mahindra Bank down by 2.63%, SBI down by 2.37%, Axis Bank down by 2.28%, ICICI Bank down by 2.25% and ITC down by 2.06% were the top losers.

Meanwhile, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel has said that apparel exports from India will expand by 40 percent in the current financial year (FY21) with major focus on new medical textiles. He said this will take the total apparel exports up from $15.4 billion last fiscal to about $22 billion in 2020-21. He noted that India's free-trade agreement (FTA) with the US would help promote shipments in that country. He added that FTA with USA, the UK and the EU along with CEPA (comprehensive economic partnership agreement) with Australia and Canada can help double apparel exports in three years.

Further, Sakthivel said there is a need to quickly engage in product diversification into man made fibre (MMF) to push the growth of the sector. MMF is the key to increasing India's textile exports to the global market. He said this would need extensive research and development (R&D) into the various fibre base, technologies, processing and sample development. For facilitating R&D into these activities, the council is setting up a dedicated centre at its head office in Gurugram. Further, he said the council would organise virtual trade fairs and exhibitions as lockdowns in many countries have impacted international trade, disrupted global value chains and restricted physical movement.

The chairman further said the objective is to reach out to audiences across segments, irrespective of geographical boundaries and develop personalised connect with buyers. He added that this is aimed at micro, small and medium enterprises who would otherwise not be able to access international buyers during these trying times. 

The CNX Nifty is currently trading at 11377.50, down by 149.95 points or 1.30% after trading in a range of 11332.85 and 11381.40. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.30%, Britannia Industries up by 1.41%, Maruti Suzuki up by 0.79%, Hero MotoCorp up by 0.77% and Cipla up by 0.46%. On the flip side, Adani Ports & SEZ down by 3.69%, Hindalco down by 2.40%, Zee Entertainment down by 2.38%, SBI down by 2.28% and Wipro down by 2.28% were the top losers.

Asian markets were trading in red; Nikkei 225 declined 290.42 points or 1.24% to 23,175.11, Straits Times slipped 41.00 points or 1.62% to 2,490.79, Hang Seng fell 465.77 points or 1.86% to 24,541.83, Taiwan Weighted plunged 160.77 points or 1.26% to 12,597.20, KOSPI dropped 36.94 points or 1.54% to 2,358.96, Jakarta Composite lost 66.13 points or 1.25% to 5,214.68 and Shanghai Composite was down by 46.84 points or 1.38% to 3,338.14.