Sensex, Nifty trade flat in late morning deals

Weak trade continued over the Dalal Street in late morning session, with Sensex and Nifty trading flat near their neutral lines. Negative cues from other Asian markets impacted sentiments over the street. Traders were cautious, amid reports that India's tax pie seems to have undergone a subtle change with a sharp drop in direct tax collections resulting from a disproportionate impact of the COVID-19 carnage on incomes. The share of indirect taxes, which mainly comprise of levy on goods and services as well as import duty, has risen while that of direct taxes - made up of corporate and personal income tax - has gone down in 2020.

On the global front, Asian markets were trading mostly in red, even after Singapore's manufacturing sector expanded for a sixth straight month amid further expansion in the electronics sector. The survey data from the SIPMM Institute showed that the purchasing manager's index for the manufacturing sector edged up to 50.5 from 50.4 in November. A reading above 50 suggests growth in the sector. In October, the score was 50.5. The PMI for the electronics sector also added a 0.1 point to reach 51.2 in December. The sector grew for the fifth month in a row and the reading was the highest since September 2018, when it was 51.4.

The BSE Sensex is currently trading at 48188.19, up by 11.39 points or 0.02% after trading in a range of 47903.38 and 48233.96. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.45%.

The top gaining sectoral indices on the BSE were IT up by 0.75%, TECK up by 0.61%, Telecom up by 0.44%, Healthcare up by 0.29% and Bankex up by 0.25%, while Metal down by 1.66%, Energy down by 0.99%, PSU down by 0.71%, Auto down by 0.55% and Oil & Gas down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.54%, HDFC up by 2.11%, TCS up by 1.34%, Indusind Bank up by 1.04% and Titan Co up by 0.72%. On the flip side, ONGC down by 2.06%, Bajaj Finance down by 1.95%, NTPC down by 1.72%, Mahindra & Mahindra down by 1.42% and Bajaj Finserv down by 1.05% were the top losers.

Meanwhile, ratings agency ICRA in its latest report has said that the domestic aviation industry's net losses may reduce to Rs 14,600 crore from an estimated a net loss of Rs 21,000 crore this fiscal (FY21) with around 57 per cent growth expected in revenue in FY22 on the back of a likely higher passenger traffic. However, the ratings agency has maintained its 'negative' credit outlook on the Indian aviation industry. It expects debt levels to remain high in 2020-21 and 2021-22, and the industry may require a capital infusion of Rs 35,000 crore-37,000 crore between 2020-21 and 2022-23.

It said ‘with an improvement in passenger traffic in 2021-22, ICRA expects the Indian aviation industry to report a year-on-year growth of around per cent 57 in revenues, with the industry's net loss reducing to Rs 146 billion (Rs 14,600 crore) from an estimated net loss of Rs 210 billion (21,000 crore) in 2020-21’. The rating agency said the financial year 2021-22 will witness a robust 78 per cent year-on-growth in domestic air passenger, owing to the low base of 2020-21, rising leisure travel and gradual opening up of corporate offices. There is likely to be around 164 per cent growth in international air passenger traffic, assuming non-availability of COVID-19 vaccine on a wide scale up to the second half of 2021.

If a vaccine is launched earlier with reasonable availability, ICRA said domestic air passenger traffic could witness a further upside in 2021-22, with an estimated growth of about 93 per cent. International air passenger traffic could witness an estimated growth of about 235 per cent. The recovery in domestic air passenger traffic is contingent upon five factors containment of the spread of COVID-19; willingness of consumers to undertake leisure travel; recovery in macroeconomic growth; central and various state government-mandated travel restrictions and quarantine norms; and recovery in business travel.

It stated continuous addition of fresh COVID-19 positive cases and concerns over non-availability of a vaccine on a wide scale until the second half of 2021 will continue to impact consumers' willingness to undertake leisure travel and even business travel. Besides, the recent reports of a new virus strain and consequent temporary suspension of flights from the UK to India by the Government of India are an additional concern, according to the ratings agency. The impact of the pandemic will be more profound and last longer on international travel compared to domestic travel.

The CNX Nifty is currently trading at 14126.55, down by 6.35 points or 0.04% after trading in a range of 14048.15 and 14136.00. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.70%, HDFC up by 2.38%, Wipro up by 1.74%, TCS up by 1.36% and HDFC Life Insurance up by 1.14%. On the flip side, Hindalco down by 2.54%, Tata Motors down by 2.06%, ONGC down by 2.06%, Bajaj Finance down by 2.02% and Indian Oil Corporation down by 1.86% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 105.01 points or 0.39% to 27,153.37, Hang Seng decreased 83.85 points or 0.31% to 27,388.96, Straits Times trembled 8.10 points or 0.28% to 2,850.80, KOSPI fell 4.59 points or 0.16% to 2,939.86 and Shanghai Composite declined 1.76 points or 0.05% to 3,501.20. On the flip side, Jakarta Composite soared 13.66 points or 0.22% to 6,118.56 and Taiwan Weighted strengthened 16.36 points or 0.11% to 14,918.39.