Markets settle lower for fourth straight session on Friday

Indian equity benchmarks settled lower for fourth straight session on Friday led by losses in auto, metal and banking stocks. Weakness in global markets also weighed on investor sentiment. Markets made negative start and stayed in red for most part of the day, as traders were concerned with report that India registered 12,643 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 10,962,189. The country continues to be second-most-affected globally, and ranks 17th among worst-hit nations by active cases. Traders took a note of Finance Minister Nirmala Sitharaman’s statement that India’s inflation target band of 2-6 per cent is up for review as the five-year term for the Monetary Policy Committee’s (MPC’s) inflation-targeting framework draws to a close.

Key gauges extended their losses in late afternoon session, as trades got anxious with report that PE/VC investments in January 2021 reported a 35 per cent drop to $1.6 billion from $2.5 billion, a year ago. The number of deals reported also remained flat at 80. Sentiments remained down-beat amid union ministries of health and civil aviation released new guidelines for arriving international passengers due to the increased transmissibility of Brazil, South Africa, and UK variants of COVID-19. As per the new rules, all passengers traveling to India must get an RT-PCR test conducted within 72 hours of their flight departure time and the negative report has to be uploaded before boarding. Traders overlooked report that foreign portfolio investors (FPIs) have pumped in a whopping $33.8 billion into domestic equities and debt till February 15 this fiscal year -- the highest since FY15 when it was nearly $46 billion --taking their net outstanding investments to a record $592.5 billion.

On the global front, Asian markets ended mostly higher on Friday despite a report showing U.S. initial jobless claims rose more than expected stoked worries about the fragile economic recovery. Meanwhile, central bank data showed South Korea's producer prices increased 0.8 percent year-on-year in January, following a 0.2 percent rise in December. South Korea's daily new coronavirus cases fell back to below 600, but health authorities warned that a resurgence in virus cases may occur, given a series of cluster infections at workplaces and hospitals. European markets were trading higher, with earnings, macroeconomic data and rising bond yields in focus. The flash reading of the IHS Markit eurozone composite purchasing managers index rose to a two-month high of 48.1 in February from 47.8 in January. In the U.K. the flash composite PMI rose to 49.8 from 41.2 in January.

Back home, on the sectoral front, telecom sector stocks were in focus with data released by sector regulator Trai showing that telecom subscriber base in the country fell marginally to 1,173 million in December 2020 with Vodafone Idea and state-run telecom firms BSNL and MTNL losing the bulk of their customers. Bharti Airtel and Reliance Jio were the only gainers of new customers in December. Besides, aviation industry stocks were buzzing with the monthly traffic data released by the aviation regulator, DGCA showing that India's domestic air passenger traffic declined around 40 per cent to 7.7 million in January 2021 over the year-ago period as the pandemic continues to hit air travel demand.

Finally, the BSE Sensex fell 434.93 points or 0.85% to 50,889.76, while the CNX Nifty was down by 137.20 points or 0.91% to 14,981.75.

The BSE Sensex touched high and low of 51,432.99 and 50,624.33, respectively and there were 8 stocks advancing against 22 stocks declining on the index.   

The broader indices ended in red; the BSE Mid cap index fell 1.67%, while Small cap index was down by 0.76%.

The only gaining sectoral index on the BSE was Energy up by 0.26%, while Auto down by 2.59%, Metal down by 2.09%, Bankex down by 2.06%, PSU down by 1.98% and Healthcare down by 1.54% were the losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.97%, Hindustan Unilever up by 1.56%, Dr. Reddys Lab up by 1.46%, NTPC up by 0.87% and Reliance Industries up by 0.73%. On the flip side, ONGC down by 5.06%, SBI down by 3.77%, Axis Bank down by 3.59%, ICICI Bank down by 3.20% and Bajaj Auto down by 2.72% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said India’s inflation target band of 2 percent- 6 percent is up for review as the five-year term for the current monetary policy framework draws to a close. The band, on the basis of which monetary policy is decided by a six-member committee headed by the central bank governor, was established in 2016. She said ‘monetary policy committee’s term is coming to an end. Inflation targeting will also have to be reviewed. We shall do that.’

Since coming to power in 2014, Prime Minister Narendra Modi’s government has been able to tame inflation to the given range in the framework. Before the monetary policy framework came into existence India’s inflation was high and volatile driven by fuel and food prices. But during the coronavirus pandemic inflation rose significantly while the economy crashed, creating major challenges for the Modi government that was formulating policies to provide relief to its 1.4 billion population.

Inflation in Asia’s third largest economy returned toward the Reserve Bank of India’s (RBI) 2 percent-6 percent inflation target range in December after remaining stubbornly above the central bank’s comfort range for eight consecutive months.

The CNX Nifty traded in a range of 15,144.05 and 14,898.20 and there were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.56%, Dr. Reddys Lab up by 2.36%, Indusind Bank up by 2.27%, Hindustan Unilever up by 1.78% and GAIL India up by 1.43%. On the flip side, ONGC down by 5.06%, Tata Steel down by 4.06%, Hero MotoCorp down by 3.75%, Tata Motors down by 3.52% and SBI down by 3.52% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 8.46 points or 0.13% to 6,625.61, France’s CAC increased 34.18 points or 0.6% to 5,762.51 and Germany’s DAX increased 77.14 points or 0.56% to 13,964.07.

Asian markets ended mostly higher on Friday, even as renewed concerns about rising inflation dented hopes of a swift global recovery from the pandemic. However, weak close in Wall Street overnight after unexpected rise in weekly jobless claims added pressure on market sentiments. Japanese shares ended lower as firmer yen and rising bond yields weighing on investors' sentiment. Japan's consumer prices declined at a slower pace in January reflecting the end of the 'Go To' travel scheme of the government, the Ministry of Internal Affairs and Communications said. Consumer prices were down 0.6 percent, but slower than the 1.2 percent drop in December and -0.9 percent in November.