Markets trim losses in morning session

Indian equity benchmarks trimmed some of their initial losses but continued to trade in red terrain in morning session tracking tepid cues from global equities. A sell-off in power, capital goods and Utilities stocks pushed the market down. Sentiments remained weak with 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. However, losses remain capped as some optimism remained among traders with Finance Minister Nirmala Sitharaman’s statement that India’s commitment to reform is being taken seriously by foreign investors, which is evident from the good inflow of FDI even during the time of COVID-19. Between April-July, the Foreign Direct Investment (FDI) into India stood at $20 billion. On the sectoral front, auto stocks were in focus as automobile dealers body FADA aims to bring major auto industry bodies together to effectively engage with government regarding various issues plaguing the sector. The move is important to get much needed attention from the government regarding various policy matters and long-standing demands.

Asian markets were trading mostly in red, as investors grapple with sky-high valuations against the backdrop of a global economy in the grip of a deep coronavirus-induced recession while oil prices dropped sharply. Investors also remained cautious on worries about rising U.S.-China tensions following reports that the U.S. government is considering adding China's largest chipmaker Semiconductor Manufacturing International Corp. to a trade blacklist.

The BSE Sensex is currently trading at 38244.80, down by 112.38 points or 0.29% after trading in a range of 38060.74 and 38454.58. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.61%, while Small cap index was down by 0.35%.

The only gaining sectoral index on the BSE was Consumer Durables up by 0.23%, while Power down by 1.30%, Capital Goods down by 1.04%, Utilities down by 0.80%, Basic Materials down by 0.73% and Healthcare down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.42%, Hindustan Unilever up by 0.96%, ICICI Bank up by 0.63%, HDFC up by 0.62% and SBI up by 0.44%. On the flip side, Mahindra & Mahindra down by 3.32%, Bajaj Finance down by 1.85%, Bharti Airtel down by 1.82%, Ultratech Cement down by 1.59% and ONGC down by 1.48% were the top losers.

Meanwhile, the finance ministry in its Monthly Economic Review for August has said the country is witnessing a V-shaped pattern of recovery as is seen in various high-frequency indicators. The indicators are auto sales, tractor sales, fertiliser sales, railway freight traffic, steel consumption and production, cement production, power consumption, e-way bills, GST revenue collection, daily toll collections on highways, retail financial transactions, manufacturing PMI, performance of core industries, capital inflows and exports.

It attributed the steep 23.9 per cent contraction of the economy in the June quarter to stringent lockdown that was put in place to curb spreading of coronavirus infections. Among the major economies, India witnessed the steepest decline in the GDP growth in the April-June quarter following the outbreak of the coronavirus pandemic. India enforced the most stringent lockdown as reflected in the Government Response Stringency Index developed by Oxford University. It mentioned US economy contracted by 9.1 per cent while UK and France witnessed a contraction of 21.7 per cent and 18.9 per cent, respectively. Spain, Italy and Germany saw their economies contract 22.1 per cent, 17.7 per cent and 11.3 per cent, respectively, in the June quarter.

The report said Euro area registered a contraction of 15 per cent while Japanese economy contracted 9.9 percent. Relative to these advanced nations, India's GDP contraction at 23.9 per cent is slightly higher.  On the positive side, the report said that stringent lockdown has enabled India to restrain the pandemic-induced death rate to be one of the lowest in the world. India's case fatality rate was at 1.78 per cent as on August 31 as compared to 3.04 per cent in the US, 12.35 per cent in the UK, 10.09 per cent in France, 1.89 per cent in Japan and 13.18 per cent in Italy.

The CNX Nifty is currently trading at 11295.85, down by 38.00 points or 0.34% after trading in a range of 11251.70 and 11373.30. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 4.26%, Axis Bank up by 1.41%, Hindustan Unilever up by 0.85%, ICICI Bank up by 0.75% and Tata Motors up by 0.74%. On the flip side, Mahindra & Mahindra down by 3.29%, UPL down by 2.75%, Bharti Airtel down by 1.88%, Bajaj Finance down by 1.80% and Cipla down by 1.63% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 83.95 points or 0.36% to 23,121.48, Taiwan Weighted dropped 18.37 points or 0.15% to 12,619.58, Jakarta Composite lost 6.90 points or 0.13% to 5,232.95 and Shanghai Composite declined 5.34 points or 0.16% to 3,350.03.

On the flip side, Straits Times advanced 2.97 points or 0.12% to 2,512.61, Hang Seng increased 13.34 points or 0.05% to 24,708.79 and KOSPI rose 17.68 points or 0.75% to 2,385.93.