Benchmarks continue to trade in negative zone

Indian bourses continued to trade in red terrain in afternoon session with Sensex and Nifty tumbling by 207 and 37 points respectively. Stocks from realty, banking and consumer durables counters were trading lower, while telecom, auto and capital goods counters were supporting the markets. Sentiments were dampened with Finance Minister Nirmala Sitharaman’s statement that there were visible signs of revival in the economy but the GDP growth may be in the negative zone or near zero in the current fiscal (FY21). She also said the economy saw a contraction in the April-June quarter, but demand has picked up in the festival season. Meanwhile, UNCTAD's latest Global Investment Trends Monitor states that in the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects. Also, global foreign direct investment (FDI) flows fell 49% in the first half of 2020 compared to 2019 due to the economic fallout from COVID-19.

On the global front, Asian market were trading mostly lower as the risk aversion with the coronavirus woes, waning global economy and lack of new US stimulus deal before the presidential election dulled equity investments. Back on street, the BSE Sensex is currently trading at 40314.47, down by 207.63 points or 0.51% after trading in a range of 40207.53 and 40664.35. There were 10 stocks advancing against 19 stocks declining, while 1 stock remains unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.13%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Telecom up by 4.13%, Auto up by 0.84%, Capital Goods up by 0.47%, Power up by 0.45% and Industrials was up by 0.45%, while Realty down by 1.09%, Bankex down by 0.89%, Consumer Durables down by 0.63%, Metal down by 0.47% and IT was down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.47%, Maruti Suzuki up by 1.78%, Mahindra & Mahindra up by 1.33%, Bajaj Finserv up by 0.61% and Tata Steel was up by 0.56%. On the flip side, HDFC down by 2.17%, Titan Company down by 1.63%, Kotak Mahindra Bank down by 1.60%, HCL Tech down by 1.59% and Indusind Bank was down by 1.24% were the top losers.

Meanwhile, Reserve Bank of India (RBI) in its study of the state budgets of 2020-21, has said that the additional outgo to battle the impact of coronavirus disease (covid-19) pandemic will significantly erode the fiscal consolidation achieved by the state governments in the past three years. It also said that Gross Fiscal Deficit (GFD) of the states would spiral during the current fiscal (FY21).

The report stated that states have budgeted their consolidated GFD at 2.8 percent of GDP in 2020-21, however, the COVID-19 pandemic may alter budget estimates significantly, eroding the gains of consolidation secured in the preceding three years - the average GFD for states that presented their budgets before the outbreak of COVID-19 is 2.4 percent of GSDP, while the average for budgets presented post-lockdown is 4.6 percent. Observing that the quality of spending and the credibility of state budgets will assume critical importance, it said the next few years are going to be challenging for the states. It added that they have played an important role in the frontline of the defence against the pandemic.

It said going forward, they need to remain empowered to provide growth impulses to the Indian economy and build resilience against future pandemics as well. It noted that sustaining the recovery from the pandemic will reshape state finances, entailing boosting investment in health care systems and other social safety nets in line with the states' demographic and co-morbidity profiles. They need to remain empowered with effective strategies to drive through these difficult times. Sub-national fiscal policy has to be judicious and calibrated.

The CNX Nifty is currently trading at 11851.90, down by 37.50 points or 0.32% after trading in a range of 11813.80 and 11929.40. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 5.35%, UPL up by 3.34%, Tata Motors up by 2.84%, Hero MotoCorp up by 2.41% and Maruti Suzuki was up by 2.20%. On the flip side, HDFC down by 2.27%, Kotak Mahindra Bank down by 1.73%, HCL Tech down by 1.58%, Titan Company down by 1.36% and Tech Mahindra was down by 1.26% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 67.29 points or 0.29% to 23,418.51, Straits Times trembled 7.72 points or 0.31% to 2,505.15, Jakarta Composite lost 15.82 points or 0.31% to 5,128.23, Hang Seng decreased 17.32 points or 0.07% to 24,769.87 and Taiwan Weighted was down by 81.26 points or 0.63% to 12,793.75.

On the other hand, KOSPI rose 14.42 points or 0.62% to 2,345.26 and Shanghai Composite was up by 17.21 points or 0.53% to 3,271.53.