Markets trade lower in early deals; Nifty slips below 12,700 mark

Indian equity benchmarks made negative start on Wednesday for the first time in nine sessions, as the record breaking rally looks to take a pause amid lackluster cues from global markets. Domestic indices are trading lower with around half a percent cut in early deals, due to selling in Bankex, PSU and Energy stocks. Investors are eyeing the macro economic data -- industrial production and inflation data -- scheduled to be announced later in the day. Traders were concerned with the RBI’s statement that the GDP is likely to contract by 8.6 percent for the July-September period, which means India will enter into a recession for the first time in history in the first half of this fiscal with two successive quarters of negative growth due to the COVID-19 pandemic. Though, broader indices -- BSE Mid cap and Small cap indices were outperforming larger peers taking some support with report that marching on the mission of making in India, the Prime Minister Narendra Modi-led Union Cabinet announced Rs 2 lakh crore of production linked incentives for 10 major manufacturing sectors.

Weakness in the Asian peers also dampened the sentiments in domestic markets. All the Asian markets were trading lower as a rebound by tech stocks and optimism about a potential coronavirus vaccine were offset by worries about the continued surge in coronavirus cases in the US and Europe. Some states across the US have announced new economic restrictions in response to the coronavirus spread. Back home, aviation stocks were in focus with Civil Aviation Minister Hardeep Singh Puri’s statement that the cap on the number of domestic flights that Indian airlines are permitted to operate was increased from 60 per cent to 70 per cent of their pre-COVID levels. In scrip specific development, Aurobindo Pharma jumped after it reported a 26 percent year-on-year growth in Q2 consolidated profit. On other hand, SpiceJet lost after it reported a consolidated loss of Rs. 105.61 crore for the September quarter.

The BSE Sensex is currently trading at 43384.98, down by 208.69 points or 0.48% after trading in a range of 43290.63 and 43543.96. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.42%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.87%, IT up by 0.80%, TECK up by 0.76%, Telecom up by 0.75%, Industrials up by 0.72%, while Bankex down by 1.53%, PSU down by 0.59%, Energy down by 0.38%, Realty down by 0.20%, Oil & Gas down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.16%, Infosys up by 1.12%, ITC up by 1.03%, Hindustan Unilever up by 0.92% and Bharti Airtel up by 0.82%. On the flip side, HDFC down by 2.26%, Kotak Mahindra Bank down by 2.14%, Indusind Bank down by 2.01%, HDFC Bank down by 1.73% and SBI down by 1.60% were the top losers.

Meanwhile, ratings agency Crisil in its latest report has said that domestic tractor sales volume should recover faster than expected with the industry estimated to grow 10-12 percent in the current financial year (FY21) against earlier projection of 1 percent de-growth. It pointed out that the expected rise in tractor sales would be backed higher farm income despite the COVID-19 pandemic, and the demand growth is expected to be particularly strong in the southern and western parts of India given higher kharif sowing and a copious monsoon, both of which are crucial for these regions.

The ratings agency has indicated that in April-September, tractor industry volume was up 12 percent year-on-year, with the southern and western regions witnessing almost 45 percent and 13 percent demand, respectively. It also said a higher volume and improved product mix will drive expansion in operating margin of tractor makers, which may see a 100-200 basis points increase, thereby supporting their credit profiles. It also said a good monsoon and higher crop production generally support farm incomes and provide a fillip to tractor demand and added that in the just-past rabi season, crop production surged a significant seven per cent year-on-year.

According to the report, this is reflected in the strong pick-up in tractor sales volume in the second quarter of this fiscal despite a sharp de-growth in the first quarter due to pandemic-related containment measures. It stated that tractor volumes may continue to grow for the rest of this fiscal given good crop prospects over the medium term and timely government interventions as good rains in June have facilitated early sowing and boosted kharif acreage. Further, it said a well-distributed and nine per cent above-normal monsoon season have meant reservoir levels surging to their highest in five years. That is a good augury for the upcoming crop seasons.

The CNX Nifty is currently trading at 12692.85, down by 56.30 points or 0.44% after trading in a range of 12683.30 and 12741.15. There were 27 stocks advancing against 22 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Hindalco up by 2.23%, Mahindra & Mahindra up by 1.71%, Shree Cement up by 1.24%, Infosys up by 1.15% and GAIL India up by 1.08%. On the flip side, Coal India down by 2.74%, HDFC down by 2.25%, Kotak Mahindra Bank down by 2.10%, Indusind Bank down by 1.94% and HDFC Bank down by 1.71% were the top losers.

All the Asian markets were trading in red; Nikkei 225 fell 2.74 points or 0.01% to 25,346.86, Straits Times lost 12.00 points or 0.44% to 2,701.28, Hang Seng declined 104.46 points or 0.40% to 26,122.52, Taiwan Weighted weakened 23.66 points or 0.18% to 13,238.53, KOSPI slipped 8.40 points or 0.34% to 2,477.47, Jakarta Composite dropped 42.76 points or 0.78% to 5,466.75 and Shanghai Composite was down by 6.78 points or 0.20% to 3,335.42.