Markets slip further in morning session

Indian equity benchmarks slipped further in morning session, on account of escalating India China border tension along with intense selloff in global markets. Trading sentiments remain dampened as Fitch Ratings in its latest report has sharply lowered its forecast for India's gross domestic product (GDP) growth for the current fiscal year (FY21) to (-) 10.5 percent from (-) 5 percent estimated earlier. It pointed out that the continued spread of the virus and the imposition of sporadic shutdowns across the country depress sentiment and disrupts economic activity. Adding to the pessimism, the private report said that India is witnessing the weakest hiring sentiment in 15 years with just 3 percent companies planning to add staff in the next three months. Markets participants also took a note of Reserve Bank of India (RBI) board member Manish Sabharwal’s statement that India needs more banks for sustaining high growth and doubling the credit-to-GDP ratio to 100 per cent. He also said the country needs immediate reforms in banking, compliance, labour laws and education because hope is not a strategy.

On the global front, Asian markets were trading lower following the sharp losses on Wall Street. Investor sentiment was dampened following news that a coronavirus vaccine candidate being developed by AstraZeneca in partnership with the University of Oxford could be delayed. Back home, on the sectoral front, Aviation stocks remained in focus with a private report that government is all set to operationalize 26 new airports and award another 12 airports for development through the public-private partnership (PPP) mode this fiscal.

The BSE Sensex is currently trading at 38064.24, down by 301.11 points or 0.78% after trading in a range of 37980.69 and 38252.67. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.30%, while Small cap index was down by 1.78%.

The top losing sectoral indices on the BSE were PSU down by 2.13%, Bankex down by 2.00%, Metal down by 1.74%, Oil & Gas down by 1.62% and Realty down by 1.60%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Asian Paints up by 1.23%, Nestle up by 0.82%, Larsen & Toubro up by 0.38%, Ultratech Cement up by 0.36% and Reliance Industries up by 0.29%. On the flip side, ONGC down by 3.42%, SBI down by 3.28%, ICICI Bank down by 2.67%, Axis Bank down by 2.30% and Bajaj Finserv down by 2.26% were the top losers.

Meanwhile, Reserve Bank of India (RBI) board member Manish Sabharwal has said India needs more banks for sustaining high growth and doubling the credit-to-GDP ratio to 100 per cent. Sabharwal also said the country needs immediate reforms in banking, compliance, labour laws and education because hope is not a strategy.

Further, talking about economic recovery, he said various sectors are in different stages of improvement.  He said the FMCG sector is back to 100 per cent, whereas hotel, airlines and construction segments have a long way to go. He noted COVID-19 has created great business opportunities, but not everybody is in a position to raise funds.

He pointed out that bank credit, venture capital and private equity funding had slowed down since March but it is a great opportunity for those who are in a position to raise funds to acquire assets.  On the issue of stimulus package, he said it would be wrong to throw money from the helicopter, and the right thing would be to create a better environment for entrepreneurship through reforms. This is a time to build for the next quarter century and not for the next quarter.

The CNX Nifty is currently trading at 11227.20, down by 90.15 points or 0.80% after trading in a range of 11207.50 and 11281.75. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 1.38%, Asian Paints up by 1.23%, Nestle up by 0.97%, HDFC Life Insurance up by 0.80% and Larsen & Toubro up by 0.67%. On the flip side, SBI down by 3.65%, ONGC down by 3.43%, Tata Motors down by 2.95%, Bajaj Finserv down by 2.78% and ICICI Bank down by 2.71% were the top losers.

Asian markets were trading lower; Nikkei 225 slipped 281.67 points or 1.21% to 22,992.46, Taiwan Weighted dropped 92.25 points or 0.73% to 12,571.31, KOSPI fell 15.26 points or 0.64% to 2,386.65, Jakarta Composite lost 65.07 points or 1.24% to 5,179.00, Straits Times trembled 13.19 points or 0.53% to 2,491.57, Shanghai Composite declined 35.46 points or 1.07% to 3,280.96 and Hang Seng decreased 238.83 points or 0.97% to 24,385.51.