Markets trade lower with minor cut in early deals

Indian equity benchmarks made cautious start on Friday, and struggling for direction. Markets were trading lower in early deals, with minor cut amid weakness in Asian peers. Sentiments got hurt with ratings agency Crisil’s report that the Indian economy will contract by 9 per cent in 2020-21 as the coronavirus infections are yet to peak and the government is not providing adequate direct fiscal support. Rising coronavirus cases coupled with India and China tensions also weighted down on market sentiments. With a highest single-day spike of 96,760 coronavirus cases, India's tally has surged past the 4.5-million mark to 4,559,725. India and China have agreed on a five-point plan for resolving the prolonged border face-off in eastern Ladakh. Adding more pessimism, Care ratings said that reflecting the overall stress in the economy, the employment growth rate declined to 3.5 per cent in FY20 from 3.8 per cent in the previous fiscal year. However, downside remained capped with Commerce and Industry Minister Piyush Goyal’s statement that government given America a very good, very balanced offer for the agreement and indicated that the India-US limited trade deal is likely to be signed after elections.

On the global front, Asian markets were trading mixed following the weak cues overnight from Wall Street as tech stocks resumed their decline and US Senate Republicans failed to advance a new coronavirus stimulus bill. Besides, the Bank of Japan said that producer prices in Japan were up 0.2 percent on month in August, in line with forecasts and down from 0.8 percent in July. Back home, India has fallen 26 spots to the 105th position on the Global Economic Freedom Index 2020, while the country was at the 79th spot in last year’s rankings. In scrip specific development, Yes Bank gained as it fully repaid Reserve Bank of India (RBI) the entire Rs 50,000 crore of Special Liquidity Facility it had availed.

The BSE Sensex is currently trading at 38798.57, down by 41.75 points or 0.11% after trading in a range of 38738.22 and 38978.52. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.14%, while Small cap index was up by 0.21%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.54%, Realty up by 1.09%, FMCG up by 0.46%, Consumer Discretionary up by 0.34%, Healthcare up by 0.16%, while Utilities down by 0.29%, IT down by 0.28%, Oil & Gas down by 0.25%, TECK down by 0.24%, Industrials down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 3.26%, Maruti Suzuki up by 1.10%, Hindustan Unilever up by 0.76%, TCS up by 0.39% and HDFC Bank up by 0.30%. On the flip side, Indusind Bank down by 2.16%, Axis Bank down by 1.21%, HCL Technologies down by 1.18%, Bajaj Finance down by 1.03% and Nestle down by 1.00% were the top losers.

Meanwhile, Ratings agency Crisil in its latest report has sharply lowered its forecast for India's gross domestic product (GDP) growth for the current fiscal 2020-21 (FY21) to (-) 9 percent as against its earlier estimate of (-) 5 percent projected in May, as the coronavirus infections are yet to peak and the government is not providing adequate direct fiscal support. It noted that the 9 percent contraction will be the highest since the 1950s.

According to the report, a stretched fiscal position has constrained the government from spending more to support the economy. It noted that till date, the policy push to growth remains muted, except in pockets. It also stated that if the pandemic were to peak out in September-October, GDP growth could move into mild positive territory towards the end of this fiscal. It indicated that with over 42 lakh COVID-19 cases, India overtakes Brazil to become second worst-hit country. It added that the pandemic will leave a permanent scar even as many analysts have been pitching for a sharp rebound or a v-shaped recovery.

The report expects a permanent loss of 13 percent of real GDP over the medium term, pegging its value in nominal terms at Rs 30 lakh crore and added that this is much higher than a 3 percent permanent hit to GDP in Asia-Pacific economies estimated by its parent S&P. It said a catch-up with the pre-pandemic trend value of real GDP would require average real GDP growth to surge to 13 percent annually for the next three fiscals, which is a feat never accomplished by India before. It pegged the September quarter GDP to contract by 12 percent, attributing the same to higher economic activity seen in many indicators.

The CNX Nifty is currently trading at 11440.55, down by 8.70 points or 0.08% after trading in a range of 11423.90 and 11493.50. There were 19 stocks advancing against 30 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bharti Infratel up by 3.15%, Titan Co up by 2.74%, Britannia Industries up by 2.55%, Maruti Suzuki up by 1.24% and Grasim Industries up by 1.02%. On the flip side, Adani Ports & SEZ down by 1.96%, Indusind Bank down by 1.85%, Eicher Motors down by 1.40%, HCL Technologies down by 1.39% and Bajaj Finance down by 0.91% were the top losers.

Asian markets were trading mixed; Straits Times slipped 13.84 points or 0.56% to 2,478.25, Taiwan Weighted declined 52.14 points or 0.41% to 12,639.61, KOSPI fell 15.25 points or 0.64% to 2,381.23 and Shanghai Composite was down by 6.81 points or 0.21% to 3,228.01. On the other hand, Nikkei 225 rose 83.32 points or 0.36% to 23,318.79, Hang Seng gained 102.79 points or 0.42% to 24,416.33 and Jakarta Composite jumped 90.68 points or 1.85% to 4,982.14.