Bears hold tight grip over Dalal Street

Indian equity benchmarks remained under pressure, with both Sensex and Nifty trading in deep red, as bears held a tight grip over the Dalal Street. Domestic sentiments remained negative, despite positive cues from other Asian markets. Traders got worried, after India's manufacturing sector activities lost further growth momentum and fell to a seven-month low in March as demand was constrained by the escalation of the COVID-19 pandemic. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in February to a seven-month low of 55.4 in March. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.

On the global front, Asian markets were trading mostly in green, after Japan's services activity contracted at a slower than initially estimated pace in March. The final data from IHS Markit showed that the au Jibun Bank Japan Services Purchasing Managers' Index rose to 48.3 in March from 46.3 in February. This was well above the flash score of 46.5 but below the neutral 50.0 mark, suggesting contraction in the sector. The latest reading was the highest since January 2020, as some companies lifted output at the end of the first quarter.

The BSE Sensex is currently trading at 48779.56, down by 1250.27 points or 2.50% after trading in a range of 48580.80 and 50028.67. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.03%, while Small cap index was down by 1.93%.

The only gaining sectoral indices on the BSE were IT up by 0.80% and TECK up by 0.42%, while Realty down by 4.08%, Bankex down by 3.74%, PSU down by 3.22%, Auto down by 3.00% and Oil & Gas down by 2.92% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Tech up by 1.24%, TCS up by 1.10% and Infosys up by 0.95%. On the flip side, Indusind Bank down by 6.41%, Bajaj Finance down by 5.69%, Bajaj Finserv down by 5.47%, SBI down by 4.63% and HDFC down by 4.07% were the top losers.

Meanwhile, ratings agency Crisil in its latest report has said that banking system's credit growth will almost double to 10 percent in 2021-22 on the back of economic recovery and policy interventions. It said the quantum of gross non-performing assets (NPAs) will rise up to 10.5-11 percent by the end of 2021-22, which is about a percentage point lower than what was initially expected. It also noted that the GDP growth is expected to stand at 11 percent for the newly begun fiscal year, after a 7.7 percent contraction in the covid-19 pandemic-impacted 2020-21.

According to the report, the second and third waves of covid-19 infections are a risk to economic recovery but it may not result in widespread lockdowns and a faster vaccination drive will also help. From banks' credit growth perspective, it said the expansion will accelerate by 4-5 percentage points to 9-10 percent in 2021-22. The faster credit growth will be led by retail loans, which are expected to grow in mid-teens, while corporate loans, which de-grew during 2020-21, are also likely to show a 5-6 per cent jump.

The agency further said corporate loans, which account for nearly half of the overall bank credit, were subdued in 2020-21 because of low capital expenditure (capex) and also impact on demand which curtailed the need for working capital. With the revival in the economy, stimulus measures by the government and the RBI and the Budget's focus on infrastructure, the same is expected to see an uptick.

The CNX Nifty is currently trading at 14516.55, down by 350.80 points or 2.36% after trading in a range of 14459.50 and 14849.85. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Britannia up by 1.84%, Wipro up by 1.32%, HCL Tech up by 1.23%, TCS up by 1.04% and Infosys up by 0.92%. On the flip side, Indusind Bank down by 6.42%, Bajaj Finance down by 5.83%, Bajaj Finserv down by 5.61%, SBI down by 4.79% and HDFC down by 4.31% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 242.41 points or 0.81% to 30,096.41, Straits Times advanced 27.22 points or 0.86% to 3,208.90 and KOSPI rose 2.66 points or 0.09% to 3,115.46. On the flip side, Jakarta Composite lost 27.70 points or 0.46% to 5,983.7.