Post Session: Quick Review

Indian equity benchmarks ended with sharp losses on Monday. Indices made a cautious start, after India reported 14,264 new Covid-19 cases with Maharashtra as the worst hit, following which the government there banned political, religious and social gatherings and imposed a new lockdown in some areas. Meanwhile, Maharashtra Chief Minister Uddhav Thackeray said that a strict lockdown could be implemented in the state and Mumbai if people don't follow discipline. Thackeray said that imposing a lockdown is necessary to cut the chain of the COVID-19 infection and added that districts have been told to impose restrictions as required from February 22.

Markets remained lower for the almost whole day, as traders were cautious, amid reports that ahead of its 'Bharat Bandh' call on February 26, traders' body CAIT wrote to Prime Minister Narendra Modi raising issues related to the GST regime, and alleging violation of e-commerce rules by major e-tailers. In its letter to the prime minister, the Confederation of All India Traders (CAIT) called for setting up of a ‘special working group’ at the central level comprising senior officials, CAIT representatives and independent tax experts to review the GST structure and make recommendations to the government.

In the second half of the session, key indices added more losses, as bears held tight grip over the Dalal Street. Traders overlooked report stated that the GST revenue shortfall faced by states is likely to reduce by about Rs 40,000 crore in the current fiscal on improved collections over the past four months. Investors also paid no heed towards Finance Minister Nirmala Sitharaman’s statement that the Union Budget 2021-22 is about the role of government as a facilitator and the private sector as a key driver of economic growth, without which the country would be losing a big opportunity.

On the global front, European markets were trading lower amid cautious trade in global markets. Asian markets ended mixed on Monday, after Japan's private sector downturn continued in February despite the recovery in manufacturing activity. The flash survey data from IHS Markit showed that the au Jibun Bank composite output index rose to 47.6 in February from 47.1 in the prior month. However, a score below 50 indicates contraction in the sector. The headline manufacturing Purchasing Managers' Index rose to 50.6 in February from 49.8 in January. Meanwhile, the services PMI declined to 45.8 from 46.1 in January.

The BSE Sensex ended at 49744.32, down by 1145.44 points or 2.25% after trading in a range of 49617.37 and 50986.03. There were 3 stocks advancing against 27 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.34%, while Small cap index was down by 1.01%. (Provisional)

The only gaining sectoral indices on the BSE were Metal up by 2.24% and Basic Materials up by 0.29%, while Energy down by 2.92%, Realty down by 2.88%, IT down by 2.58%, TECK down by 2.53% and Auto down by 2.30% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ONGC up by 1.14%, HDFC Bank up by 0.64% and Kotak Mahindra Bank up by 0.23%. On the flip side, Dr. Reddys Lab down by 4.77%, Mahindra & Mahindra down by 4.51%, Tech Mahindra down by 4.42%, Indusind Bank down by 4.25% and ITC down by 4.10% were the top losers. (Provisional)

Meanwhile, in order to meet the GST compensation shortfall, the Ministry of Finance, Department of Expenditure has released the 17th weekly instalment of Rs 5,000 crore to the States. Out of this, an amount of Rs 4,730.41 crore has been released to 23 States and an amount of Rs 269.59 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

The amount released this week was the 17th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.5924%. So far, an amount of Rs 1,00,000 crore has been borrowed by the Central Government through the special borrowing window at an average interest rate of 4.8307%.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50% of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources. All the States have given their preference for Option-I.

The CNX Nifty ended at 14675.70, down by 306.05 points or 2.04% after trading in a range of 14635.05 and 15010.10. There were 10 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports & SEZ up by 3.11%, JSW Steel up by 2.64%, Hindalco up by 2.63%, Tata Steel up by 2.07% and ONGC up by 1.14%. On the flip side, Mahindra & Mahindra down by 4.79%, Dr. Reddys Lab down by 4.53%, Tech Mahindra down by 4.35%, ITC down by 4.12% and Indusind Bank down by 4.03% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 decreased 64.92 points or 0.98% to 6,559.10, France’s CAC decreased 63.55 points or 1.1% to 5,710.00 and Germany’s DAX was down by 187.41 points or 1.34% to 13,805.82.

Asian markets ended mixed on Monday as investors were awaiting progress on corona virus stimulus after new Treasury Secretary Janet Yellen urged lawmakers to approve President Joe Biden's $1.9 trillion relief package, saying the proposal could help the US get back to full employment within a year. Japanese shares ended higher with optimism over economic recovery from the corona virus pandemic. Meanwhile, Chinese shares ended sharply lower on concerns over high valuations and possible policy tightening. Chinese central bank leaving its benchmark lending rate for corporate and household loans flat for the 10th straight month, matching market expectations.