Benchmarks trade deeply in red in early deals

Indian equity benchmarks made cautious start on Tuesday amid sell-off in the global markets. Soon, domestic markets extend their losses and are trading deeply in red in early deals. Selling in all the sector indices, led by Realty, Industrials and Consumer Durables, weighted down on the markets. Broader indices were underperforming larger peers with cut of around 3% each. Some cautiousness crept in with CARE Ratings’ a multi-sector survey showed that business activity is unlikely to touch pre-COVID-19 levels before March 2021, and there is a need for the government to step in and give a push to the economy as it has not done enough till now. Market participants failed to take any sense of relief with Commerce Minister Piyush Goyal’s statement that the current crisis should be used as an opportunity to make the transition to clean energy smoother, faster, more resilient and affordable. Meanwhile, India on Monday witnessed a significant drop in the number of new Covid-19 cases. According to Worldometer, India registered 74,493 cases in the past 24 hours, taking its corona tally to 5,560,105.

On the global front, Asian markets were trading lower following the weak cues overnight from Wall Street amid worries about the delay in the passage of a US stimulus package and on speculation about further lockdown measures in Europe due to a surge in coronavirus cases. The Japanese market is closed for a holiday. Back home, agriculture related stocks were in focus as the government hiked the MSP for buying six rabi crops, including wheat, by up to 6%, as it sought to send a strong message to farmers on continuation of MSP-based procurement system. In scrip specific developments, Bharti Airtel and Vodafone Idea tumbled on reports that telecom operators have to pay 10% of their pending AGR dues by March 31.

The BSE Sensex is currently trading at 37767.97, down by 266.17 points or 0.70% after trading in a range of 37701.27 and 38209.97. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 2.62%, while Small cap index was down by 3.67%.

The top losing sectoral indices on the BSE were Realty down by 4.22%, Industrials down by 2.82%, Consumer Durables down by 2.61%, Consumer discretionary down by 2.56%, Basic Materials down by 2.42%, while there was no gainer on BSE sectoral front.

The few gainers on the Sensex were HCL Technologies up by 1.15%, Tech Mahindra up by 1.00%, TCS up by 0.83% and ICICI Bank up by 0.66%. On the flip side, Bajaj Finance down by 2.74%, Tata Steel down by 2.68%, ONGC down by 2.60%, Maruti Suzuki down by 2.53% and Bajaj Finserv down by 2.23% were the top losers.

Meanwhile, ratings agency ICRA in its latest report has said that domestic penetration of electric vehicles (EV) will remain low in the medium-term in segments like passenger vehicles (PVs) and commercial vehicles (CVs) due to high prices and absence of strong direct and indirect financial stimulus from the government for encouraging adoption of EVs. It also said unless there is standardization of battery specifications, including charger specifications, across the original equipment manufacturers (OEMs), a meaningful success in battery-swapping adoption is unlikely.

According to the report, at present, FAME II incentive for electric PVs is restricted to the commercial taxi segment only which also highlights the government’s awareness that the attractiveness of EVs for personal car buyers will remain distant in the near to medium term. It further said the modality of vehicle financing in a battery-swappable model, where core battery is owned/leased by a third party and financiers only have control over residual vehicle, is another challenge.

This apart, the report said EV vendor systems need substantial investments to keep costs under check and reduce dependence on imported electronic systems. It believes that battery swapping will face strong resistance from automobile OEMs due to a possible impact on their product differentiation capabilities as well as pricing flexibility. Its acceptance therefore will be limited to certain less complex automotive sub-segments like the three-wheelers. Further, given the importance of battery hardware and software in the overall performance of an EV, it said battery swapping will face strong resistance in technologically complex products like cars or two-wheelers.

The CNX Nifty is currently trading at 11148.90, down by 101.65 points or 0.90% after trading in a range of 11133.15 and 11302.20. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were HCL Technologies up by 1.17%, Tech Mahindra up by 0.97%, TCS up by 0.73%, ICICI Bank up by 0.71% and Britannia Industries up by 0.23%. On the flip side, Zee Entertainment down by 5.22%, Adani Ports & SEZ down by 4.38%, GAIL India down by 4.20%, BPCL down by 3.55% and Tata Steel down by 3.07% were the top losers.

Asian markets were trading in red; Straits Times plunged 16.48 points or 0.66% to 2,469.23, Hang Seng slipped 62.95 points or 0.26% to 23,887.74, Taiwan Weighted lost 93.23 points or 0.73% to 12,701.89, KOSPI declined 43.04 points or 1.80% to 2,346.35, Jakarta Composite fell 30.07 points or 0.60% to 4,969.29 and Shanghai Composite was down by 4.06 points or 0.12% to 3,312.88.