Benchmarks turn negative in early deals after optimistic start

Indian equity benchmarks made optimistic start on Friday but, soon markets lost their ground and slipped into red territory. Domestic indices are trading slightly lower in early deals, on account of selling in Realty, FMCG and Energy stocks. Investors were eyeing the Reserve Bank of India’s (RBI) monetary policy outcome later in the day. The newly-constituted Monetary Policy Committee (MPC) of the RBI began its three-day deliberations on Wednesday. There are expectations that RBI MPC will maintain status quo on the benchmark lending rates and accommodative stance in monetary policy. The monetary policy address will be given by RBI Governor Shaktikanta Das later in the day. Early optimism was came in with Assocham’s statement that India's economy has shown a remarkable resilience in the last few months, braving the impact of the coronavirus pandemic with lead indicators such as manufacturing PMI and exports returning to growth trajectory. Though, some cautiousness crept in with former Reserve Bank Governor C Rangarajan’s statement that the combined fiscal deficit of states and the centre during the current year may go up to 14 percent against the mandated level of six percent.

On the global front, most of the Asian markets were trading higher following the overnight gains on Wall Street amid continued optimism about a coronavirus stimulus bill. US President Donald Trump said administration officials and Democrats are ‘starting to have some very productive talks’. Meanwhile, the Ministry of Internal Affairs and Communications said that the average of household spending in Japan was down 6.9 percent on year in August, coming in at 276,360 yen. That was in line with expectations following the 7.6 percent annual decline in July. The markets in South Korea and Taiwan are closed for holidays. Back home, auto component industry stocks were in focus as ICRA said the performance of auto component makers is expected to remain subdued in the September quarter this fiscal over the year-ago period, but may witness significant improvement on a sequential basis. In scrip specific developments, Rashtriya Chemicals & Fertilizers edged up and Steel Strips Wheels rallied ahead of their quarterly earnings.

The BSE Sensex is currently trading at 40146.56, down by 36.11 points or 0.09% after trading in a range of 40066.54 and 40322.14. There were 13 stocks advancing against 15 stocks declining, while 2 stocks remain unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.01%, while Small cap index was down by 0.08%.

The top gaining sectoral indices on the BSE were Telecom up by 1.48%, Capital Goods up by 0.78%, Industrials up by 0.36%, Metal up by 0.29%, Auto up by 0.19%, while Realty down by 0.91%, FMCG down by 0.41%, Energy down by 0.38%, IT down by 0.34%, Utilities down by 0.29% were the losing top indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.53%, Bharti Airtel up by 1.97%, Larsen & Toubro up by 1.53%, Mahindra & Mahindra up by 1.25% and HCL Technologies up by 0.74%. On the flip side, Hindustan Unilever down by 1.43%, TCS down by 1.16%, Tech Mahindra down by 1.14%, Power Grid down by 0.98% and Nestle down by 0.82% were the top losers.

Meanwhile, the Finance Ministry has said that banks have sanctioned loans of about Rs 1,87,579 crore to 50.7 lakh business units under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the micro, small and medium enterprise (MSME) sector impacted by slowdown caused by the coronavirus pandemic. Of this, about 27 lakh MSME units received cumulative disbursement of Rs 1,36,140 crore till October 5.

The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May to mitigate the distress caused by lockdown due to COVID-19 by providing credit to different sectors, especially micro, small and medium enterprises (MSMEs). The latest numbers on ECLGS, as released by the finance ministry, comprise disbursements by all 12 public sector banks (PSBs), 24 private sector banks and 31 non-banking financial companies (NBFCs).

As of October 5, 2020, the total amount sanctioned under the 100% Emergency Credit Line Guarantee Scheme by PSBs, private banks & NBFCs to MSMEs & individuals stands at Rs 1,87,579 crore, of which Rs 1,36,140 crore has already been disbursed. The loan amounts sanctioned by PSBs increased to Rs 81,648.82 crore, of which Rs 68,814.43 crore has been disbursed as of October 5. At the same time, private sector banks have sanctioned Rs 86,576 crore of loans and disbursed Rs 59,740 crore, while NBFCs sanctioned Rs 3,032 crore with disbursement of Rs 2,227 crore. The ambit of the Scheme was expanded to include MSMEs with turnover of up to Rs 250 crore & individuals for business purposes. As of October 5, 2020, Rs 17,460 crore of loans to individuals have been sanctioned, of which Rs 5,939 crore has been disbursed. 

The CNX Nifty is currently trading at 11829.15, down by 5.45 points or 0.05% after trading in a range of 11805.20 and 11880.80. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.30%, Bharti Airtel up by 2.19%, Larsen & Toubro up by 1.76%, Hindalco up by 1.58% and Mahindra & Mahindra up by 1.10%. On the flip side, UPL down by 1.96%, Hindustan Unilever down by 1.59%, TCS down by 1.36%, Grasim Industries down by 1.14% and Tech Mahindra down by 1.13% were the top losers.

Asian markets were trading mostly in green; Straits Times inched up 0.15 points or 0.01% to 2,543.26, Hang Seng gained 22.91 points or 0.09% to 24,216.26, Jakarta Composite added 5.42 points or 0.11% to 5,044.56 and Shanghai Composite surged 60.78 points or 1.89% to 3,278.83, while Nikkei 225 was down by 87.79 points or 0.37% to 23,559.28.