Markets trade lower in early deals on weak global cues

Indian equity benchmarks made pessimistic start on Thursday following weakness in Asian peers. Markets are trading lower with losses of around one third of a percent each in early deals.  Selling in Bankex, Realty and Power stocks weighted down on the sentiments. Traders were concerned as the Organisation for Economic Co-operation and Development (OECD) in its Interim Economic Outlook report forecast a deeper contraction of 10.2% for India in the current fiscal, surpassing its June estimate of -7.3% in the event of a second wave of infections. Adding more pessimism, a report stated that total tax collection of the Centre, including advance tax collection for the second quarter, fell 22.5% to Rs 2,53,532.3 crore till September 15 of the current fiscal as compared to the year-ago period. However, broader indices were outperforming larger peers with marigbal gains as some support came in with report that the government is in the process of bringing out a strategy paper on boosting industrial growth which will be a road map for all businesses in the country.

Global cues remained lackluster with all the Asian markets trading lower amid worries about the economic recovery from the coronavirus pandemic despite a dovish monetary policy announcement by the US Federal Reserve, with the central bank leaving interest rates unchanged and signaling rates are likely to remain at near-zero levels for years to come. The economic projections provided by the central bank along with the announcement suggest most Fed officials expect interest rates to remain unchanged through at least 2023.

Back home, aviation stocks were in focus with DGCA data showing that passenger load factor crossed 60 per cent in August for the first time since the resumption of domestic flights in May this year. Industry-wise load factor or seat occupancy was 63.2 per cent in August. In scrip specific development, HCL Technologies gained as the company and Google Cloud announced the expansion of their strategic partnership to bring HCL’s Actian portfolio, starting with Actian Avalanche, to Google Cloud.

The BSE Sensex is currently trading at 39186.78, down by 116.07 points or 0.30% after trading in a range of 39022.34 and 39196.24. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.11%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were IT up by 0.64%, Healthcare up by 0.49%, TECK up by 0.44%, Energy up by 0.15%, Basic Materials up by 0.14%, while Bankex down by 0.82%, Realty down by 0.71%, Power down by 0.68%, Telecom down by 0.62%, Capital Goods down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 2.87%, Tech Mahindra up by 1.95%, Asian Paints up by 1.10%, Infosys up by 0.89% and ONGC up by 0.82%. On the flip side, Power Grid down by 1.16%, ICICI Bank down by 1.13%, Bajaj Auto down by 1.09%, HDFC Bank down by 1.05% and Kotak Mahindra Bank down by 0.86% were the top losers.

Meanwhile, RBI Governor Shaktikanta Das has said that economic recovery is not yet fully entrenched and that the central bank is battle ready to take appropriate measures to support growth. He stated that India's economy has suffered its worst slump on record in April-June quarter of current fiscal year (Q1FY21), with the GDP contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. Nevertheless, he noted that high frequency indicators of agricultural activity, the purchasing managers' index that is PMI for manufacturing and certain private estimates on unemployment point to some stabilisation of economic activity in the second quarter of the current year, while of course contractions in several other sectors are also simultaneously easing.

However, Das said that the economic recovery was not yet fully entrenched and also that the recovery is likely to be gradual. He said the recovery is, however, not yet fully entrenched and moreover, in some sectors, the uptick, which was noticed in June and July they appear to have levelled off. It also said by all indications the recovery is likely to be gradual as efforts towards the reopening of the economy are confronted with rising infections.

At the same time, RBI Governor assured the industry that the RBI stands battle ready and whatever measures are required will be taken to support liquidity, growth and control price rise. According to him, the immediate policy response to COVID-19 in the country has been to prioritise the stabilisation of the economy and support quick recovery policies for durable and sustainable high growth in the medium term post the coronavirus. Besides, he said financial market conditions in India have eased significantly across segments in response to the front-loaded cuts in the policy repo rate and large system-wide as well as targeted infusion of liquidity by the central bank. 

The CNX Nifty is currently trading at 11574.00, down by 30.55 points or 0.26% after trading in a range of 11520.50 and 11579.95. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were HCL Technologies up by 2.50%, Zee Entertainment up by 2.29%, Grasim Industries up by 1.99%, Tech Mahindra up by 1.43% and Dr. Reddy’s Lab up by 1.31%. On the flip side, Hindalco down by 2.34%, Power Grid down by 1.10%, ICICI Bank down by 1.07%, Bajaj Auto down by 1.07% and HDFC Bank down by 0.99% were the top losers.

All Asian markets were trading in red; Nikkei 225 slipped 140.03 points or 0.60% to 23,335.50, Straits Times lost 3.32 points or 0.13% to 2,501.83, Hang Seng dropped 397.96 points or 1.61% to 24,327.67, Taiwan Weighted fell 101.51 points or 0.78% to 12,875.25, KOSPI plunged 31.72 points or 1.30% to 2,404.20, Jakarta Composite lower 7.24 points or 0.14% to 5,051.24 and Shanghai Composite was down by 32.45 points or 0.99% to 3,251.47.