Markets trade flat; PSU, Metal major losers

Indian equity benchmarks traded flat in morning session, with frontline gauges trading below their crucial 38,000 (Sensex) and 11,250 (Nifty) levels. The sentiments remained in lackluster mood as private report stated that the steady rise in caseloads and the spillover effects of the strict lockdown measures will continue to undermine economic growth in the country. It said even if the growth takes the form of a V-shape, the level of Gross Domestic Product (GDP) will matter. Some concern also came with Nobel Laureate Abhijit Banerjee’s statement that India is among the worst performing economies in the world and the government's economic stimulus was inadequate to tackle the problem. On the sectoral front, stocks related to Chemical sector remained in focus as Chemicals & Fertilizers Minister D V Sadananda Gowda said it is a good time to invest in India's chemical sector that has huge growth potential. He also said the Indian Chemical and Petrochemical industry has huge potential to play a significant role by 2025 and the sector can alone contribute $300 billion to the GDP as compared to $160 billion at present.

On the global front, Asian markets were trading mostly in green, as the latest survey from the National Bureau of Statistics showed that the manufacturing sector in China continued to expand in September, and at a faster rate, with a manufacturing purchasing managers index score of 51.5. That beat expectations for 51.2 and is up from 51.0 in August. It also moves further above the boom-or-bust line of 50 that separates expansion from contraction. Optimism about a U.S. coronavirus relief package also lifted the markets. House Democrats have released a scaled back $2.2 trillion proposal to extend support to the U.S. economy.

The BSE Sensex is currently trading at 37957.09, down by 16.13 points or 0.04% after trading in a range of 37828.11 and 38080.08. There were 13 stocks advancing against 17 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 0.08%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.53%, FMCG up by 0.62%, Consumer Discretionary up by 0.22%, Energy up by 0.17% and Telecom up by 0.12%, while PSU down by 1.50%, Metal down by 1.18%, Oil & Gas down by 1.11%, Bankex down by 1.02% and Utilities down by 0.92% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.69%, Asian Paints up by 1.05%, Hindustan Unilever up by 1.03%, Bharti Airtel up by 0.65% and Reliance Industries up by 0.58%. On the flip side, Axis Bank down by 1.66%, ICICI Bank down by 1.61%, Indusind Bank down by 1.49%, Power Grid down by 1.47% and NTPC down by 1.47% were the top losers.

Meanwhile, with an aim to help state governments tide over the financial problems triggered by the COVID-19 pandemic, the Reserve Bank of India (RBI) has extended by six months the additional flexibility provided to states to raise funds through market borrowing and overdraft. The RBI in April provided additional flexibility to states and Union Territories (UTs) to raise funds to deal with the COVID-19 crisis. The flexibility was available till September 30, 2020.

RBI said it has been decided to extend the measures announced on April 17, 2020 and April 7, 2020 with regard to increase in WMA Limits of states/UTs and overdraft (OD) regulations, respectively, for a further period of 6 months till March 31, 2021. With a view to provide greater comfort to state governments in undertaking Covid-19 containment and mitigation measures, and to enable them to plan their market borrowings, RBI in April had increased Ways and Means Advances (WMA) limit of states and UTs by 60 per cent over and above the level as on March 31, 2020.

WMA is temporary advances given by RBI to government to tide over any mismatch in receipts and payments. Similarly, to help state governments tide over their cash flow mismatches, RBI had relaxed the OD regulations with effect from April 7, 2020. The RBI decided to increase the number of days for which a state/ UT can be in overdraft continuously to 21 working days from 14. Also, the number of days for which a state/ UT can be in overdraft in a quarter was increased to 50 working days from 36.

The CNX Nifty is currently trading at 11228.10, up by 5.70 points or 0.05% after trading in a range of 11184.55 and 11249.50. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 3.99%, Cipla up by 3.88%, UPL up by 2.25%, Sun Pharma up by 1.65% and Asian Paints up by 1.22%. On the flip side, BPCL down by 4.10%, Coal India down by 1.91%, ICICI Bank down by 1.54%, Axis Bank down by 1.45% and NTPC down by 1.41% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 273.94 points or 1.18% to 23,549.47, Taiwan Weighted strengthened 49.16 points or 0.39% to 12,516.89, KOSPI rose 19.81 points or 0.86% to 2,327.89, Shanghai Composite gained 14.50 points or 0.45% to 3,238.86 and Straits Times advanced 5.40 points or 0.22% to 2,477.01.

On the global front, Jakarta Composite lost 28.53 points or 0.58% to 4,850.57 and Nikkei 225 slipped 258.68 points or 1.1% to 23,280.42.