Markets trade lower in early deals; Nifty below 14,500 mark

Indian equity benchmarks made slightly negative start on Thursday amid lackluster trade in global peers. Soon, markets extended their losses and were trading lower with cut of over half a percent each in early deals. Heavy selling in IT, TECK and Metal stocks weighted down the markets. There was some cautiousness as in the last 24 hours, India registered 17,015 fresh Covid-19 cases, taking the tally to 10,512,8311. The five most affected states by total cases are Maharashtra (1974488), Karnataka (928806), Andhra Pradesh (885234), Tamil Nadu (827614), and Kerala (819765). traders failed to take any sense of relief with a private report that economic activity continued with its pace of normalisation and the festivities helped narrow the deficits as compared to the year-ago period in December. It also revised up wits FY21 GDP forecast to a contraction of 6.7 per cent, as against the official estimate of a 7.7 per cent contraction in the pandemic-impacted fiscal year. Meanwhile, the Income Tax Department said it has issued refunds worth over Rs 1.73 lakh crore to more than 1.57 crore taxpayers in the ongoing fiscal till January 11. Of this, personal income tax refunds are worth Rs 57,139 crore, while corporate tax refunds are worth Rs 1.15 lakh crore.

On the global front, most of the Asian markets were trading higher with modest gains following the mostly positive cues overnight from Wall Street amid expectations of additional US stimulus from the incoming Biden administration. Investors shrugged off news that the US House has impeached President Donald Trump for a second time. Back home, textiles industry stocks were in focus with ICRA’s report that the textile industry's performance will recover to pre-Covid levels in the next fiscal on account of boost in demands from domestic as well as export markets. The agency assigned outlook for the sector as stable for FY2022. In scrip specific development, SAIL lost after the government decided to sell up to 20.65 crore shares or 5 percent of total equity of the company through an Offer for Sale.

The BSE Sensex is currently trading at 49244.69, down by 247.63 points or 0.50% after trading in a range of 49231.17 and 49487.86. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.06%, while Small cap index was down by 0.35%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.68%, Oil & Gas up by 0.60%, Energy up by 0.47%, FMCG up by 0.44%, PSU up by 0.26%, while IT down by 2.46%, TECK down by 2.18%, Metal down by 1.30%, Basic Materials down by 0.81%, Consumer discretionary down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.61%, ITC up by 1.70%, Larsen & Toubro up by 0.69%, Mahindra & Mahindra up by 0.60% and Reliance Industries up by 0.59%. On the flip side, HCL Technologies down by 3.96%, Infosys down by 3.45%, Tech Mahindra down by 2.78%, Asian Paints down by 2.04% and Ultratech Cement down by 1.04% were the top losers.

Meanwhile, rating agency ICRA has said there is a need to increase capital outlay in the road sector by at least 15 per cent besides expediting asset monetisation programme. It also said that hybrid annuity mode of highways building presents huge refinancing opportunities and 70 such projects involving Rs 35,800 crore of debt are expected to become operational in the next two years. It added that FY2022 remains a crucial year for two reasons: a) Importance of government spending to revive economy and b) Significant catch up to do in the ongoing Bharatmala and allied programmes. As a result, the capital outlay is required to be increased by at least 15 per cent.

Shubham Jain, Senior Vice President, Corporate Ratings, ICRA, said increase in capital outlay needs to be supported by increase in budgetary allocation to the sector at least by 20 per cent to around Rs 0.98 lakh crore to make up for shortfall in the last three years and slow progress on asset monetisation. He said ‘Investors also expect funding road map for the ambitious NIP (National Infrastructure Pipeline). Given the limited fiscal headroom, the government could consider relaxation of fiscal deficit targets to meet the huge funding requirements for productive asset creation, failing which both the Bharatmala and the NIP could get jeopardized’.

The NIP involves outlay of around Rs 20.3 lakh crore in road sector over next five years. However, the budgetary allocations in the past have not kept pace with these plans. Consequently, the dependence on debt funding remained elevated. The total debt for the NHAI has increased by more than three times to Rs 2.49 lakh crore as on March 31, 2020 from Rs 75,385 crore as on March 31, 2017. The borrowings are expected to surpass Rs 3.5 lakh crore by FY2023 to fund the Bharatmala Pariyojana programme (subset of NIP). Liquidity boosting measures for highways sector have helped in reducing the cash conversion cycle, while also getting the performance guarantees and associated margin monies released for the executed portion of the projects.

The CNX Nifty is currently trading at 14473.60, down by 91.25 points or 0.63% after trading in a range of 14471.50 and 14562.80. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 2.43%, ITC up by 1.63%, UPL up by 1.27%, Britannia Industries up by 1.24% and GAIL India up by 0.99%. On the flip side, Wipro down by 4.25%, HCL Technologies down by 4.20%, Infosys down by 3.89%, Tech Mahindra down by 3.14% and Asian Paints down by 1.94% were the top losers.

Asian markets were trading mostly in green; Nikkei surged 509.89 points or 1.79% to 28,966.48, Straits Times rose 12.54 points or 0.42% to 2,990.05, Hang Seng gained 139.65 points or 0.49% to 28,375.25, KOSPI advanced 1.73 points or 0.05% to 3,150.02 and Jakarta Composite added 11.10 points or 0.17% to 6,446.31. On the other hand, Taiwan Weighted fell 37.36 points or 0.24% to 15,732.62 and Shanghai Composite was down by 10.37 points or 0.29% to 3,588.28.