Bears hold tight grip over Dalal Street

Bears were holding tight grip over the Dalal Street in early afternoon deals, with both Sensex and Nifty extending their losses to trade in deep red. In line with the larger peers, the broader indices were too trading sharply lower in afternoon session. Negative cues from other Asian markets impacted trade over the street. Domestic sentiments remained negative, amid a private report that the Indian economy is the worst-hit among major economies, American brokerage Goldman Sachs said sharply cutting its 2020-21 GDP forecast to a contraction of 14.8 per cent. It had earlier estimated that the economy of the country, which is now home to the second-largest number of COVID-19 infections, to contract by 11.8 per cent.

On the global front, Asian markets were trading lower, even after China's inflation eased in August on slowing pork price growth and factory gate prices continued to decline, but the pace of drop slowed from the last year. Consumer price inflation slowed to 2.4 percent in August from 2.7 percent in July. The rate came in line with expectations. On a monthly basis, consumer prices gained 0.4 percent.

The BSE Sensex is currently trading at 37950.42, down by 414.93 points or 1.08% after trading in a range of 37940.15 and 38252.67. There were 5 stocks advancing against 24 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.49%, while Small cap index was down by 2.11%.

The top losing sectoral indices on the BSE were PSU down by 3.18%, Bankex down by 2.56%, Realty down by 2.44%, Oil & Gas down by 2.13% and Industrials down by 2.01%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Nestle up by 0.67%, Reliance Industries up by 0.52%, Asian Paints up by 0.40%, Sun Pharma up by 0.28% and Ultratech Cement up by 0.01%. On the flip side, SBI down by 4.66%, ONGC down by 4.56%, Bajaj Finserv down by 3.88%, ICICI Bank down by 3.54% and Axis Bank down by 3.49% were the top losers.

Meanwhile, Moody's Investors Service in its latest report has said that India's auto sector is likely to face challenges this year, with the country's economy predicted to contract in 2020 amid the pandemic. It added that auto unit sales will decline at least 30% in 2020, following a decline of over 40% in the seven months through July. It said ‘the lower annual decline reflects our expectation of a pickup in economic activity during the remainder of 2020, which also includes the festive period - October through December’.

The agency said a second wave of infections and extension of lockdowns cast a shadow of risk on these forecasts. Also, tighter lending criteria could limit liquidity available for consumers and auto dealers. As per the report, looking ahead, unit sales will likely grow around 20 per cent in 2021, though clearly on a lower base. Moreover, it will take at least another four years for India's unit sales to recover to pre-pandemic levels.

On the other hand, the global automotive industry's outlook has been changed to stable from negative. It said the stable outlook for the global automotive industry reflects rising sales through 2021, with continued, but slow, increases through 2023. Nevertheless, auto shipments won't recover to pre-pandemic levels until the middle of the decade. It noted that the coronavirus-driven downturn in unit sales is significantly worse than the 2009 decline.

The CNX Nifty is currently trading at 11196.30, down by 121.05 points or 1.07% after trading in a range of 11185.15 and 11281.75. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 1.01%, Nestle up by 0.76%, Dr. Reddy’s Lab up by 0.70%, Reliance Industries up by 0.63% and Sun Pharma up by 0.56%. On the flip side, SBI down by 4.78%, ONGC down by 4.50%, Tata Motors down by 4.29%, Bajaj Finserv down by 3.96% and Indian Oil Corporation down by 3.93% 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.