Bears hold grip over Dalal Street

Bears were holding grip over the Dalal Street in late morning session, with Sensex and Nifty trading in deep red. In line with the larger peers, the broader indices were too remain under pressure. Negative cues from other Asian markets kept key indices lower in late morning deals. Domestic sentiments remained negative, as COVID-19 and the oil price shock of 2020 are taking a heavy toll on global banks, S&P Global Ratings said adding that it will be difficult for them to return to pre-crisis levels in the next three years. To estimate the shape of recovery for banks, S&P analysed 20 of the largest banking systems globally in its report. 

On the global front, Asian markets were trading lower, after Thailand's central bank left its key rate unchanged at a record low on Wednesday as the previous monetary policy easing continued to support the economic recovery. The Monetary Policy Committee of Bank of Thailand unanimously voted to retain the interest rate at 0.50 percent. The bank had reduced the rate by 25 basis points in May. The MPC reiterated that it stands ready to use additional appropriate monetary policy tools if necessary.

The BSE Sensex is currently trading at 36942.40, down by 726.02 points or 1.93% after trading in a range of 36942.30 and 37304.26. There was 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.10%, while Small cap index was down by 2.14%.

The top losing sectoral indices on the BSE were Auto down by 2.92%, IT down by 2.77%, Realty down by 2.76%, TECK down by 2.57% and Metal down by 2.54%, while there were no gaining sectoral indices on the BSE.

The only gainer on the Sensex was Hindustan Unilever up by 0.56%. On the flip side, Bajaj Finance down by 4.71%, Indusind Bank down by 4.54%, Mahindra & Mahindra down by 4.43%, TCS down by 4.02% and Tata Steel down by 3.88% were the top losers.

Meanwhile, the Federation of Indian Chambers of Commerce & Industry (FICCI) President Sangita Reddy has said that the economy can be revived only by boosting consumer sentiments, which are weak and need measures like discount vouchers from the government to spur the pending. She added that the government needs to literally pump up the economy with some more spending at a time when around 20 million jobs have been lost and there is a fear of ‘uncertainty’ amid the coronavirus pandemic.

Reddy said ‘what we need to do significantly is to ramp up demand stimulus. Factories are saying we have gone up to 60-70 per cent production, credit lines are better, little bit of export orders are coming back into play’. However, she said that ‘the consumer sentiment is weak and without (strong) consumer sentiment, you will not have the economy coming back’. She noted that the government needs to come out with more direct cash transfer as far as possible, especially with the festive season around the corner.

She said FICCI has given recommendation to the government to say why do not you give consumption vouchers. She said ‘So, if there is a significant discount, 30-50 per cent discount, which is backed by government spending, this would be one more methodology to ramp up the demand’. Calling for no more sporadic lockdowns to curb the pandemic, she said the government also needs to ensure that while pushing for the normalcy, the lifting of lockdown is perfect and economy on all fronts, including aviation, come back. At the same time, the government should also continue with the macro-economic reforms.

The CNX Nifty is currently trading at 10917.80, down by 214.05 points or 1.92% after trading in a range of 10916.05 and 11015.30. There were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.29%, Hindustan Unilever up by 0.56% and Dr. Reddy’s Lab up by 0.34%. On the flip side, Bajaj Finance down by 4.90%, Tata Motors down by 4.68%, Mahindra & Mahindra down by 4.67%, Indusind Bank down by 4.61% and TCS down by 4.14% were the top losers.

Asian markets were trading lower; Nikkei 225 slipped 276.40 points or 1.18% to 23,070.09, Taiwan Weighted dropped 282.72 points or 2.25% to 12,301.16, Jakarta Composite lost 77.26 points or 1.57% to 4,840.70, Hang Seng decreased 422.97 points or 1.78% to 23,319.54, Straits Times trembled 26.90 points or 1.08% to 2,454.24, Shanghai Composite declined 47.93 points or 1.46% to 3,231.78 and KOSPI fell 58.77 points or 2.52% to 2,274.47.