Benchmarks trade lower on global sell-off; GDP data eyed

Indian equity benchmarks made gap-down opening on Friday, after three straight sessions of gains, tracking feeble trend in the global markets amid continued sell-off in bond markets. Markets are trading lower with cut of around one and half a percent each in early deals due to selling in banking, realty and IT stocks. Investors remained concerned ahead of the Q3 gross domestic product (GDP) data, to be released later in the day, which will shed light on whether the economy continued to be in recession in the third quarter of FY21 or it ended with the second quarter only. Traders took note of report that a nationwide bandh call has been given by the Confederation of All India Traders (CAIT) to protest against rising fuel prices, the E-Way Bill, and the complex structure of the Goods and Services Tax (GST). Marketplaces across India are to remain shut on February 26, 2021 as over 40,000 trader associations have responded to the cause.

Global cues remained weak with all the Asian markets were trading lower following the negative cues overnight from Wall Street as investor concerns about soaring bond yields are renewed, which could lead to the Federal Reserve having to raise interest rates sooner to keep inflation contained. Back home, most of the pharma stocks were trading higher as Union Minister for Chemicals & Fertilisers D V Sadananda Gowda said the government is continuously working to reduce regulatory compliance burden on the pharma industry in a bid to improve ease of doing business in the country. In scrip specific development, Dilip Buildcon rallied after it emerged as lowest bidder for two new HAM projects worth about Rs 2,241 crore.

The BSE Sensex is currently trading at 50242.90, down by 796.41 points or 1.56% after trading in a range of 49950.75 and 50400.31. There were 7 stocks advancing against 22 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.55%, while Small cap index was down by 0.32%.

The few gaining sectoral indices on the BSE were Telecom up by 0.34%, Power up by 0.09%, FMCG up by 0.03%, while Bankex down by 2.72%, Realty down by 1.28%, IT down by 0.96%, Capital Goods down by 0.92%, Industrials down by 0.84% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.43%, Bharti Airtel up by 0.98%, Nestle up by 0.92%, Hindustan Unilever up by 0.74% and Dr. Reddy’s Lab up by 0.34%. On the flip side, Indusind Bank down by 3.69%, ICICI Bank down by 3.22%, Axis Bank down by 3.20%, HDFC down by 2.68% and HDFC Bank down by 2.62% were the top losers.

Meanwhile, global rating agency Moody’s in its latest report has said that India's Budget is tilted towards supporting growth and the fiscal deficit target of 6.8 percent for 2021-22 is realistic. With regard to India's finances, it said weak fiscal position will remain a key credit challenge in 2021. It noted that the government's fiscal deficit for 2020-21 and 2021-22 should be lower than projected, supported by stronger revenue generation in ongoing March quarter and higher nominal GDP growth in the next fiscal year.

According to the report, wide fiscal deficits combined with lower real and nominal GDP growth over the medium term will constrain the government's ability to reduce its debt burden. It also said the prospects for fiscal consolidation remain weak particularly given the government's mixed track record of implementing revenue-raising measures. It said although the government has not provided an explicit medium-term fiscal consolidation road map, the budget targets a fiscal deficit of 4.5 per cent of GDP by fiscal 2025-26, which amounts to an average annual deficit reduction of about 0.5 per cent of GDP over four years.

It further said given India's very high debt burden, this gradual pace of consolidation will prevent any material strengthening in the government's fiscal position over the medium term, unless nominal GDP growth picks up sustainably to reach much higher rates than historically recorded. 

The CNX Nifty is currently trading at 14872.85, down by 224.50 points or 1.49% after trading in a range of 14777.55 and 14919.45. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 1.48%, Coal India up by 1.15%, Nestle up by 0.62%, Bharti Airtel up by 0.61% and NTPC up by 0.56%. On the flip side, Indusind Bank down by 4.02%, ICICI Bank down by 3.26%, Axis Bank down by 3.19%, HDFC down by 2.85% and HDFC Bank down by 2.61% were the top losers.

All the Asian markets were trading in red; Nikkei 225 slipped 827.34 points or 2.74% to 29,340.93, Straits Times declined 28.99 points or 0.97% to 2,944.55, Hang Seng lost 727.89 points or 2.42% to 29,346.28, Taiwan Weighted dropped 396.45 points or 2.41% to 16,055.73, KOSPI weakened 91.74 points or 2.96% to 3,007.95, Jakarta Composite fell 50.52 points or 0.80% to 6,239.13, and Shanghai Composite was down by 65.96 points or 1.84% to 3,519.09.