Markets fall for second straight session on Wednesday

Falling for the second straight session, Indian equity benchmarks ended over half a percent lower each on Wednesday mainly dragged by the healthcare, IT, finance and banking. The benchmarks made gap-down opening, as traders were concerned as India registered 11,795 fresh Covid-19 cases of the coronavirus disease (Covid-19). Active cases in India stand at 137,866, while the caseload tally has risen to 10,937,106. The country continues to be second-most-affected globally, and ranks 17th among worst-hit nations by active cases. Some cautiousness also came as Maharashtra chief minister Uddhav Thackeray warned that if Covid-related norms are not followed, the state government will be forced to reimpose a lockdown.

Markets managed to cut most of their losses in late morning session, taking support from ICRA Ratings’ report that after two consecutive quarters of contraction, India's Gross domestic product (GDP) is set to revert to the growth territory in the October-December 2020 period (Q3FY21) compared to the year-ago period. It also said private consumption and government spending will help the economy post a turnaround during the December quarter and the GDP will grow 0.7 percent.  But, key indices failed to hold recovery and fell sharply in late afternoon deals, as sentiments remained down-beat with Rating agency Crisil expects stressed assets of non-banking financial companies (NBFCs) to touch Rs 1.5-1.8 lakh crore or 6-7.5% of the assets under management (AUM) by the end of the current financial year.  However, reported gross non-performing assets would be limited due to the one-time Covid-19 restructuring window and the micro, small and medium enterprises (MSMEs) recast scheme offered by the Reserve Bank of India (RBI). Unlike previous crises, the pandemic has impacted almost all NBFC asset segments.

On the global front, Asian markets ended mostly lower on Wednesday following the lackluster cues from Wall Street. Optimism about more fiscal stimulus and the global economic recovery was offset by worries about rising U.S. bond yields and its impact on riskier assets. A government report showed Japan posted a merchandise trade deficit of 323.9 billion yen in January- beating forecasts for a shortfall of 600 billion yen. Separately, the Cabinet Office said the total value of core machine orders in Japan gained a seasonally adjusted 5.2 percent month-on-month in December - beating expectations for a decline of 6.2 percent. European markets were trading lower after data showed British inflation rose a little more than expected in January, adding to concerns over rising bond yields. Data from the Office for National Statistics showed U.K. consumer price inflation rose slightly to 0.7 percent from 0.6 percent in December. The rate was forecast to remain stable at 0.6 percent.

Finally, the BSE Sensex fell 400.34 points or 0.77% to 51,703.83, while the CNX Nifty was down by 104.55 points or 0.68% to 15,208.90.

The BSE Sensex touched high and low of 52,078.15 and 51,586.34, respectively and there were 8 stocks advancing against 22 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.04%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were PSU up by 1.54%, Power up by 1.26%, Telecom up by 0.95%, Energy up by 0.84%, Industrials up by 0.83% while, Healthcare down by 0.91%, IT down by 0.89%, Finance down by 0.88%, Bankex down by 0.70% and Realty down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.39%, Power Grid Corporation up by 2.04%, NTPC up by 1.33%, Reliance Industries up by 1.12% and Bajaj Auto up by 0.94%. On the flip side, Nestle down by 2.80%, Bajaj Finserv down by 2.61%, Asian Paints down by 2.48%, HDFC Bank down by 2.48% and Indusind Bank down by 2.46% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that after two consecutive quarters of contraction, India's Gross domestic product (GDP) is set to revert to the growth territory in the October-December 2020 period (Q3FY21) compared to the year-ago period. It also said private consumption and government spending will help the economy post a turnaround during the December quarter and the GDP will grow 0.7 percent. It can be noted that the economic growth has been on a downward spiral for over three years till it went into a contraction mode.

The rating agency has stated that the forecasted growth in Q3 FY21 while undoubtedly mild and uneven is nevertheless welcome as it signifies that the economy has exited the COVID-19 pandemic-induced recession after two tumultuous quarters. It said the revival in central government spending supported the Indian economy's exit from the recession in Q3 FY21 and pointed out that after a decline of 14.2 percent in Q2FY21, the government of India's (GoI's) non-interest revenue expenditure rose by 22.9 percent in Q3 FY21.

According to the report, almost all the non-agricultural lead indicators tracked by the agency recorded a continued, albeit uneven, improvement in volume terms in the December quarter on continued unlocking of the economy, uptick in consumption during the festive season, and central government spending. It also said that most of the tracked indicators rebounded to a growth on a year on year basis in the December quarter although this was on the low base of Q3 FY20, and that aviation was among the outlier which continued to contract.

The CNX Nifty traded in a range of 15,314.30 and 15,170.75 and there were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 3.54%, BPCL up by 2.90%, SBI up by 2.75%, Adani Ports & SEZ up by 2.74%, Power Grid Corporation up by 2.13%. On the flip side, Nestle down by 3.00%, Asian Paints down by 2.62%, Maruti Suzuki down by 2.55%, Bajaj Finserv down by 2.54% and HDFC Bank down by 2.49% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 16.74 points or 0.25% to 6,732.12, France’s CAC decreased 1.42 points or 0.02% to 5,785.11 and Germany’s DAX decreased 89.94 points or 0.64% to 13,974.66.

Asian markets ended mostly lower on Wednesday as worries about surging US bond yields on inflation bets kept the market sentiments weaker, though growing investor optimism over the global recovery restricted the fall. US House Democrats has continued to move forward with President Joe Biden's proposed $1.9 trillion relief package. Japanese shares declined amid profit booking after a recent rally. Japan’s exports rose 6.4% in January as compared with a year earlier, Ministry of Finance data showed. Meanwhile, Chinese markets remained closed for the Lunar New Year holidays.