Sensex, Nifty remain near neutral lines

Weak trade continued over the Dalal Street in late morning deals, with both Sensex and Nifty remaining near their neutral lines. After altering between green and red terrain, indices were now trading tad below their neutral lines. Negative cues from other Asian markets impacted domestic sentiments on the street. Traders remained worried, as the International Monetary Fund (IMF) has said the impact of COVID-19 pandemic is significant on India's development and the immediate priority is a coordinated policy response.

On the global front, Asian markets were trading mostly in red, even after Malaysia's industrial production returned to growth in July for the first time since February as restrictions to curb the spread of coronavirus were relaxed. The data from the Department of Statistics showed that industrial production grew 1.2 percent on a yearly basis in July, following a 0.4 percent drop in June. The annual growth was driven by a 2.9 percent rise in manufacturing output. Meanwhile, mining and electricity output declined 3 percent and 5.1 percent, respectively.

The BSE Sensex is currently trading at 38794.04, down by 46.28 points or 0.12% after trading in a range of 38738.22 and 38978.52. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.20%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were IT up by 1.46%, Realty up by 1.35%, TECK up by 1.14%, Consumer Durables up by 0.68% and Auto up by 0.39%, while Oil & Gas down by 0.64%, Utilities down by 0.54%, Telecom down by 0.51%, PSU down by 0.48% and Bankex down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.08%, TCS up by 1.90%, HCL Tech up by 1.49%, Titan Co up by 0.93% and Infosys up by 0.92%. On the flip side, Indusind Bank down by 2.13%, Power Grid down by 1.69%, Asian Paints down by 1.54%, HDFC Bank down by 1.07% and ONGC down by 1.02% were the top losers.

Meanwhile, in view of the COVID-19 pandemic, the International Monetary Fund (IMF) has said that there is a need for another stimulus in India, especially expenditures on health, food and income support for vulnerable households, and support for businesses. Gerry Rice, Director of Communications Department at the International Monetary Fund (IMF), said that the Washington-based global financial institution supports the Indian government's responses to the pandemic including fiscal stimulus with a focus on low income workers and households.

He said ‘We support the monetary easing and liquidity and regulatory measures for the financial sector and borrowers that have taken place’. On the massive contraction that the Indian economy has experienced in the latest quarter due to the coronavirus pandemic, he said ‘We believe further fiscal stimulus is warranted, especially expenditures on health, food and income support for vulnerable households, and support for businesses’. He added that in the short term, a detailed well communicated and credible medium-term fiscal consolidation plan is also important, alongside an increase in fiscal transparency.

Noting that the impact of the coronavirus pandemic is significant in India on development, and on poverty, Rice said that given the unprecedented shock, the immediate priority needs to be a coordinated policy response to fight the virus. After the US, India has the second largest number of people who have been infected by coronavirus with more than 4.2 million positive cases. The US has the largest number with 6.4 million cases and 193,250 deaths. Over 70,000 Indians have died due to coronavirus, as it has had an unprecedented impact on the India economy.

He said in its last World Economic Outlook Update, the IMF projected India’s growth at minus 4.5 per cent and six per cent for fiscal years 2020-21 and 2021-22 respectively. He also said that ‘the near-term growth outlook continues to be clouded by the global and domestic slowdown and uncertainties from the pandemic with significant downside risks. Of course, this is true, not just for India but for most countries, and added that the IMF would be revising India's growth projections during the next World Economic Outlook release on the sidelines of the annual meeting of the IMF in October.

The CNX Nifty is currently trading at 11439.90, down by 9.35 points or 0.08% after trading in a range of 11423.90 and 11493.50. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Wipro up by 3.06%, Bharti Infratel up by 2.28%, Tech Mahindra up by 2.16%, TCS up by 1.98% and Hero MotoCorp up by 1.57%. On the flip side, Indusind Bank down by 2.22%, Indian Oil Corporation down by 1.74%, Power Grid down by 1.58%, Zee Entertainment down by 1.28% and ONGC down by 1.22% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted dropped 66.94 points or 0.53% to 12,624.81, Straits Times trembled 14.96 points or 0.6% to 2,477.13, KOSPI fell 14.01 points or 0.58% to 2,382.47 and Shanghai Composite declined 6.81 points or 0.21% to 3,228.01. On the flip side, Jakarta Composite soared 62.97 points or 1.29% to 4,954.43, Hang Seng increased 102.79 points or 0.42% to 24,416.33 and Nikkei 225 surged 128.76 points or 0.55% to 23,364.23.