Benchmarks trade lower in early deals

Indian equity benchmarks made cautious start on Monday amid mixed cues from Asian peers. Markets were struggling to find direction but slipped below neutral lines in early deals and are trading lower with cut of over half a percent each. The India-China border tensions coupled with selling in Power, FMCG and Capital Goods stocks dragged the domestic indices down. Rising coronavirus cases in the country also weighted down the sentiments. India, which is the worst-hit nation after the US, recorded its highest single-day spike of 91,723 coronavirus cases on Monday. The total number of coronavirus cases in the country now stand at 4,202,562. Traders took note of Industry body FICCI’s statement that the recent rise in smuggling in the northeastern region can be attributed to economic distress insinuated by Covid-19 pandemic. Market participants largely overlooked the finance ministry’s statement that the country is witnessing a V-shaped economic recovery. 

On the global front, Asian markets were trading mixed with some of the markets recovering after a weak start following the negative lead from Wall Street on Friday amid a continued sell-off in tech shares. Nevertheless, investors remained cautious on worries about rising US-China tensions following reports that the US government is considering adding China's largest chipmaker Semiconductor Manufacturing International Corp. or SMIC to a trade blacklist. Investors also turned cautious ahead of the release of a slew of local economic data this week.

Back home, auto stocks were in focus with the Society of Indian Automobile Manufacturers (SIAM) report that the commercial vehicle industry, which is facing challenging times, is expected to take at least 1-2 years to get back to the 2018-19 sales volume level when the industry crossed the one million sales mark. In scrip specific development, Vodafone Idea gained after it decided to raise up to Rs 25,000 crore by way of share sale and debt from new investors even as its UK parent has planned to stay aloof. Further, the company is likely to make a strategic announcement today. On the other hand, Jubilant Life Sciences lost after it reported a 52.42 per cent decline in its consolidated net profit to Rs 88.01 crore for the quarter ended June 30, 2020.

The BSE Sensex is currently trading at 38153.05, down by 204.13 points or 0.53% after trading in a range of 38142.14 and 38454.58. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.81%, while Small cap index was down by 0.58%.

The sole gaining sectoral index on the BSE was Metal up by 0.12%, while Power down by 1.11%, FMCG down by 0.71%, Capital Goods down by 0.71%, Realty down by 0.66%, Basic Materials down by 0.63% were the top losing indices on BSE.

The few gainers on the Sensex were Maruti Suzuki up by 0.61%, Tata Steel up by 0.53%, Axis Bank up by 0.48% and Asian Paints up by 0.06%. On the flip side, Mahindra & Mahindra down by 2.55%, HCL Technologies down by 1.43%, Kotak Mahindra Bank down by 1.33%, Bajaj Auto down by 1.32% and Bajaj Finance down by 1.16% were the top losers.

Meanwhile, former Union finance minister P Chidambaram has suggested the government to borrow more to help stimulate demand and revive the country's Gross Domestic Product (GDP) growth. He also suggested some measures to raise money which include relaxing FRBM norms, accelerating disinvestment and borrowing money from global banks.

Chidambaram sought transferring cash to the poorest 50 percent of families, offering them foodgrains and increasing spending on infrastructure. Besides, he has called upon it to provide Goods and Services Tax (GST) compensation to states, as promised to them at the time of GST implementation. He further said the government needs to start massive public works in order to boost economic activity and should pay wages in terms of food grains.

To enhance the lending capacity of banks, he said the government must re-capitalise them. He also said that the government must relax the Fiscal Responsibility and Budget Management (FRBM) norms to borrow more this year. He noted that the divestment plan should also be expedited and added that the government must utilise the offer from international organisations like International Monetary Fund, World Bank and Asian Development Bank.

The CNX Nifty is currently trading at 11262.95, down by 70.90 points or 0.63% after trading in a range of 11262.50 and 11373.30. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 4.51%, Tata Motors up by 0.71%, Maruti Suzuki up by 0.53%, Axis Bank up by 0.47% and Hindalco up by 0.37%. On the flip side, UPL down by 2.61%, Mahindra & Mahindra down by 2.32%, Bajaj Auto down by 1.43%, HCL Technologies down by 1.41% and Bharti Airtel down by 1.37% were the top losers.

Asian markets were trading mixed; Straits Times rose 5.22 points or 0.21% to 2,514.86, Hang Seng added 11.86 points or 0.05% to 24,707.31, Taiwan Weighted gained 33.24 points or 0.26% to 12,671.19 and KOSPI surged 17.20 points or 0.73% to 2,385.45. On the other hand, Nikkei 225 declined 49.87 points or 0.21% to 23,155.56, Jakarta Composite lost 4.22 points or 0.08% to 5,235.63 and Shanghai Composite was down by 5.34 points or 0.16% to 3,350.03.