Local indices add losses in morning deals

Indian equity benchmarks added losses to trade near day’s low in morning deals on account of selling in frontline blue chip stocks. The sentiments remained lackluster with the Reserve Bank of India (RBI) official stating that the country’s GDP is likely to contract by 8.6 percent for second quarter of current financial year (Q2FY21), 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. Some concerns also came with rating agency ICRA’s report that the aggregate debt of 12 major states is estimated to worsen significantly, and their capital spending might decline sharply because of lower-than-expected goods and services tax (GST) revenue and shortfall in Centre’s devolution. It added that this could lead to a 1-2 per cent contraction in Q4FY21. The street paid no heed towards the report that the Union Cabinet has approved a Production-Linked Incentive (PLI) scheme for ten key sectors, including telecom, automobiles and pharmaceuticals, taking the total outlay for such incentives to nearly Rs 2 lakh crore over a five-year period.

On the global front, Asian markets were trading lower as a week-long rally sputters, with sentiment split between vaccine hopes and Joe Biden's election win on one side and fears over a surge in virus cases that threatens any economic recovery. Back home, the BSE Sensex is currently trading at 43269.44, down by 324.23 points or 0.74% after trading in a range of 43254.59 and 43543.96. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.34%, while Small cap index was up by 0.84%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.06%, Capital Goods up by 0.67%, Industrials up by 0.58%, Realty up by 0.47% and Power up by 0.43%, while Bankex down by 1.57%, PSU down by 1.09%, Oil & Gas down by 0.71%, Energy down by 0.65% and Metal down by 0.52% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.94%, Nestle up by 0.78%, Hindustan Unilever up by 0.69%, Mahindra & Mahindra up by 0.31% and Bharti Airtel up by 0.29%. On the flip side, HDFC down by 2.28%, ICICI Bank down by 1.85%, SBI down by 1.79%, ONGC down by 1.73% and Axis Bank down by 1.70% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) official has said that the country’s GDP is likely to contract by 8.6 percent for second quarter of current financial year (Q2FY21), 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.

The pandemic-induced lockdowns had led to a steep contraction of 23.9 percent in the GDP for the April-June quarter as compared to the same period a year ago. The RBI has estimated that the economy will contract by 9.5 percent for the full fiscal year. India has entered a technical recession in the first half of 2020-21 for the first time in its history with Q2 2020-21 likely to record the second successive quarter of GDP contraction, as per the article titled 'Economic Activity Index', authored by Pankaj Kumar of the Monetary Policy Department.

It, however, added that the contraction is ebbing with gradual normalisation in activities and expected to be short-lived. It said the index is constructed from 27 monthly indicators using a dynamic factor model and suggests that the economy rebounded sharply from May/June 2020 with the reopening of the economy, with industry normalising faster than contact-intensive service sectors.

The CNX Nifty is currently trading at 12668.10, down by 81.05 points or 0.64% after trading in a range of 12660.10 and 12741.15. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.22%, Cipla up by 2.02%, Hindalco up by 1.69%, Divis Lab up by 0.89% and Nestle up by 0.79%. On the flip side, Coal India down by 3.02%, HDFC down by 2.29%, ONGC down by 1.94%, ICICI Bank down by 1.92% and SBI down by 1.84% were the top losers.

Asian markets were trading lower; Nikkei 225 slipped 1.39 points or 0.01% to 25,348.21, Taiwan Weighted dropped 58.25 points or 0.44% to 13,203.94, Jakarta Composite lost 32.37 points or 0.59% to 5,477.14, KOSPI fell 17.65 points or 0.71% to 2,468.22, Shanghai Composite declined 6.78 points or 0.2% to 3,335.42, Straits Times trembled 9.91 points or 0.37% to 2,703.37 and Hang Seng decreased 120.36 points or 0.46% to 26,106.62.