Key gauges end with massive losses on weak global cues

Indian equity benchmarks finished lower for the second consecutive session on Friday, dragged by Metal, Financial and Power stocks amid a sell-off in global equities. Markets made pessimistic start and stayed in red terrain for whole day, as traders remained cautious 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. 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. The market participants failed to take support with Union Minister of Commerce and Industry Piyush Goyal’s statement that exports as well as imports are showing positive trends. He said that the exports are approaching the last year’s levels, after making a sharp dip in April this year due to pandemic. 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 global front, Asian markets ended lower on Friday, 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 U.S. 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. European markets were trading higher, despite lingering concerns about global economic growth. Back home, on the sectoral front, 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 off. Stocks related to jewellery industry declined 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.

Finally, the BSE Sensex fell 633.76 points or 1.63% to 38,357.18, while the CNX Nifty was down by 193.60 points or 1.68% to 11,333.85.

The BSE Sensex touched high and low of 38,729.66 and 38,249.77, respectively and there were 1 stock advancing against 29 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.74%, while Small cap index was down by 1.07%.

The top losing sectoral indices on the BSE were Metal down by 2.99%, Power down by 2.59%, Telecom down by 2.57%, PSU down by 2.20% and Realty down by 2.19%, while there were no gainers on BSE sectoral front.

The lone gainer on the Sensex was Maruti Suzuki up by 1.70%. On the flip side, Axis Bank down by 4.07%, Tata Steel down by 3.78%, SBI down by 3.05%, NTPC down by 3.02% and Bharti Airtel down by 2.80% 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 traded in a range of 11,452.05 and 11,303.65 and there was 1 stock advancing against 49 stocks declining on the index.

The lone gainer on Nifty was Maruti Suzuki up by 1.76%. On the flip side, Tata Steel down by 3.99%, Axis Bank down by 3.83%, Adani Ports &SEZ down by 3.55%, JSW Steel down by 3.37% and NTPC down by 3.07% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 37.17 points or 0.64% to 5,888.03, France’s CAC increased 44.89 points or 0.9% to 5,054.41 and Germany’s DAX increased 15.74 points or 0.12% to 13,073.51.

Asian markets ended mostly lower on Friday tracking biggest sell-off in Wall Street overnight since June following a steep decline in technology shares. Excessive valuations in the tech sector with looming US presidential election in November is heightening volatility, while US President Trump’s vaccine chief sees a very, very low chance of a vaccine by Election Day too weighed on market sentiment. Investors will be focusing on to the release of the closely-watched US monthly jobs report for August due later in the day, with expectations to show that employment surged up by 1.4 million jobs. Japanese shares ended down due to profit booking after strong gains in previous sessions.