Post Session: Quick Review

Indian equity benchmarks failed to continue gaining rally on Wednesday, with Sensex and Nifty ending lower. The start of the day was on a cautious note, as the World Bank in its Global Economic Prospects report has stated that India's economy is estimated to contract by 9.6 per cent in the fiscal year 2020-21 (FY21), reflecting a sharp drop in household spending and private investment. Report said that the informal sector, which accounts for four-fifths of employment, has been subject to severe income losses during the COVID-19 pandemic. In India, the pandemic hit the economy at a time when growth was already decelerating. The street took a note of a Reserve Bank paper stating that an increase in credit may not always find its way towards investments as business entities may use credit lines to finance their current liabilities.

In the second half of the day, key indices added more losses to end in red terrain, after India's services sector activity expanded at a slower pace in December as rates of growth in sales eased to a three-month low and staff hiring came to a halt amid weak business optimism. The seasonally adjusted India Services Business Activity Index fell from 53.7 in November to 52.3 in December. The index was above the critical 50 mark that separates growth from contraction for the third month in a row during December, but pointed to the slowest pace of expansion in the three-month sequence. Traders overlooked the Finance Ministry’s report that approval of the long-awaited COVID-19 vaccine provides strength to the optimism on both health and economic fronts, despite continuing surge in global cases and the potential challenge of a mutant strain.

On the global front, European markets were trading marginally higher, as the coronavirus pandemic and U.S. political developments remain a key focus for investors. Asian markets ended mostly lower on Wednesday, after the services sector in China continued to expand in December, albeit at a slower pace, the latest survey from Caixin showed on Wednesday with a services PMI score of 56.3. That's down from 57.8 in November, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. Individually, the softer rise in overall activity coincided with a slower expansion of total new work at the end of 2020. Although rising solidly overall, the latest increase in new business was the least marked since September.

The BSE Sensex ended at 48174.06, down by 263.72 points or 0.54% after trading in a range of 47864.14 and 48616.66. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was up by 0.39%, while Small cap index was down by 0.14%. (Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 2.19%, Metal up by 2.14%, Telecom up by 1.79%, Basic Materials up by 1.58% and Power up by 1.51%, while Energy down by 2.00%, FMCG down by 1.24%, IT down by 1.00%, TECK down by 0.63% and Healthcare down by 0.41% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid up by 4.34%, Bharti Airtel up by 2.28%, ONGC up by 2.11%, Ultratech Cement up by 1.95% and ICICI Bank up by 1.80%. On the flip side, ITC down by 2.86%, Reliance Industries down by 2.64%, Bajaj Finance down by 1.82%, Axis Bank down by 1.48% and HCL Tech. down by 1.36% were the top losers. (Provisional)

Meanwhile, the growth of India’s service sector slowed in the month of December, although it remained well above the 50-level that separates growth from contraction, with output and new business rising for the third straight month in December. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 52.3 in December from 53.7 in November. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - eased to 54.9 in December from 56.3 in November.

The report further noted that global COVID-19 restrictions, particularly travel bans, reportedly restricted international demand for Indian services at the end of 2020. New export business decreased sharply, but at the slowest pace since March. Besides, job shedding was resumed in December, with some firms mentioning that liquidity problems, labour shortages and subdued demand caused the latest fall in employment. The decline in payroll numbers was the ninth in ten months, but marginal overall.

On the price front, input costs increased to the greatest extent since February, on the back of higher prices for a number of items, including cleaning products and fuel, but a renewed fall in selling prices as some firms sought to beat competition and secure new work. Although companies maintained an upbeat view that output will increase in 2021, the overall level of positive sentiment fell from November.

The CNX Nifty ended at 14146.25, down by 53.25 points or 0.38% after trading in a range of 14039.90 and 14244.15. There were 28 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 4.34%, Shree Cement up by 3.89%, GAIL India up by 3.63%, Hindalco up by 3.50% and Grasim Industries up by 2.42%. On the flip side, ITC down by 2.86%, Reliance Industries down by 2.64%, Bajaj Finance down by 1.73%, Axis Bank down by 1.54% and Hindustan Unilever down by 1.36% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 39.93 points or 0.6% to 6,652.18, France’s CAC increased 0.13 points to 5,564.73 and Germany’s DAX was up by 5.76 points or 0.04% to 13,656.98.

Asian markets ended mostly lower on Wednesday amid lingering Sino-US tensions. US President Donald Trump's administration has signed an executive order banning transactions with eight Chinese owned apps, saying they considered to be a threat to US national security. Further, Democratic candidate Raphael Warnock won Georgia’s Senate runoffs on Wednesday. The general thinking is that a US Democratic sweep could make it easier for President-elect Joe Biden to higher corporate tax rates, tougher regulation on businesses and other potentially profit-crimping changes from Washington; while it would also be easier for Biden to pass big fiscal spending. Japanese shares declined with investors concerned over the economic impact from the month-long state of emergency planned by the government to fight a surge in corona virus cases. Though, Chinese shares ended higher after a private sector survey showed China's services sector activity continued to expand in December, albeit at a slower pace.