Key indices end with losses on Friday

In a volatile session, Indian equity benchmarks snapped their three-day winning streak and ended with losses on Friday as the increase in new Covid-19 cases to unprecedented levels, raising the prospects of wider lockdown restrictions in the country, continued to batter investors' sentiment. The benchmarks opened lower amid largely negative cues from global markets. Some concern also came with ICRA Ratings’ report that an unabated increase in the COVID cases is likely to bring about fears of harsher lockdowns, which could impact the asset quality of retail loans especially for unsecured loans such as in the microfinance sector. It said this, in turn, would impact the fund-raising ability of the NBFCs and HFCs through securitisation of their assets. However, markets managed to trim all losses to trade in positive terrain in morning deals, taking support from Crisil Ratings’ report that after eight quarters of either decline or single-digit growth, corporate revenue grew in high double-digits of 15-17 per cent in the March quarter of FY21 to Rs 6.9 lakh crore, partly because of the low base and better realisation due to higher commodity prices, pushing up their operating profits by a much higher 28-30 per cent.

But, domestic equity markets once again entered into red terrain in late morning deals with continued selling pressure from metal, power and banking stocks. Traders overlooked Moody's Investors Service’s report that high-frequency alternative data indicates a strong rebound in economic activity even as infection rates rise and restrictive measures remain in place across many countries. New infections are spiking again across 13 of the G-20 countries. Nevertheless, the number of fatalities has decreased in recent weeks as vaccinations gather pace. Traders also paid no heed towards Ministry of Finance latest report stating that provisional Direct Tax collections for the Financial Year 2020-21 show growth of almost 5%, as net collections are at Rs 9.45 lakh crore. The net Direct Tax collections include Corporation Tax (CIT) at Rs 4.57 lakh crore and Personal Income Tax (PIT) including Security Transaction Tax (STT) at Rs 4.88 lakh crore.

On the global front, Asian markets ended mostly lower on Friday as Sino-U.S. tensions and concerns about rising inflation in China overshadowed investor optimism over the global economic recovery. During a debate on the global economy, Fed Chair Jerome Powell assured markets that the U.S. central bank will continue supporting the world's largest economy without stoking inflation. European markets were trading mostly in green, even as figures from Destatis revealed that German industrial output dropped 1.6 percent month-on-month in February, while economists had forecast an increase of 1.5 percent. Back home, on the sectoral front, aviation stocks were in focus as the International Air Transport Association (IATA) said the total demand for air travel in February measured in revenue passenger kilometres was down 74.7 per cent compared to February 2019.

Finally, the BSE Sensex fell 154.89 points or 0.31% to 49,591.32, while the CNX Nifty was down by 38.95 points or 0.26% to 14,834.85. 

The BSE Sensex touched high and low of 49,906.91 and 49,461.01, respectively. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.08%, while Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.32%, FMCG up by 0.90%, Consumer Durables up by 0.58%, IT up by 0.56%, TECK up by 0.42% while, Metal down by 1.11%, Power down by 1.10%, Bankex down by 0.82%, Finance down by 0.72% and Capital Goods down by 0.72% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.69%, Hindustan Unilever up by 2.51%, Tech Mahindra up by 2.37%, Dr. Reddys Lab up by 1.48% and Titan Company up by 1.14%. On the flip side, Bajaj Finance down by 3.12%, Ultratech Cement down by 2.16%, NTPC down by 1.95%, Axis Bank down by 1.94% and ICICI Bank down by 1.79% were the top losers.

Meanwhile, Crisil Ratings in its report has said that after eight quarters of either decline or single-digit growth, corporate revenue grew in high double-digits of 15-17 per cent in the March quarter of FY21 to Rs 6.9 lakh crore, partly because of the low base and better realisation due to higher commodity prices, pushing up their operating profits by a much higher 28-30 per cent. The growth is led by construction-linked sectors like steel and cement which are estimated to have posted 45-50 per cent and 17-18 per cent on-year revenue rise, respectively, buoyed by higher realisations and volume.

It said with a visible recovery in the second half of fiscal 2021, the overall revenue may be just 50 bps lower than that of fiscal 2020. It mentioned that the estimates of 15-17 per cent revenue growth to Rs 6.9 lakh crore in Q4 of FY21 are based on an analysis of 300 companies, which account for 55-60 per cent of the market capitalisation (excluding financial services and oil companies) of the NSE, adding operating profit jumped be 28-30 per cent in the quarter.

The robust revenue growth rides on a low base of the year-ago quarter, besides higher government capex and higher realisations amid a commodity upcycle, among others. According to Hetal Gandhi, a director at the Crisil Ratings a closer look at the revenue breakup indicates 50 per cent of the recovery is contributed by automobiles, IT services and construction.

The CNX Nifty traded in a range of 14,918.45 and 14,785.65. There were 22 stocks advancing against 26 stock declining, while 2 stocks remain unchanged on the index.       

The top gainers on Nifty were Cipla up by 5.34%, Sun Pharma up by 3.54%, Hindustan Unilever up by 2.55%, Tech Mahindra up by 2.14% and Tata Consumer Products up by 2.06%. On the flip side, Bajaj Finance down by 3.01%, UPL down by 2.40%, Tata Steel down by 2.16%, Ultratech Cement down by 2.08% and NTPC down by 2.00% were the top losers.

European markets were trading mostly in green; France’s CAC increased 17.34 points or 0.28% to 6,183.06 and Germany’s DAX increased 16.56 points or 0.11% to 15,219.24, while UK’s FTSE 100 decreased 9.79 points or 0.14% to 6,932.43.

Asian markets ended mostly lower on Friday, despite gains on Wall Street overnight with optimism over the global economic recovery. Chinese shares ended lower as rising Chinese inflation data stoked worries about further tightening of monetary policy. Data from the National Bureau of Statistics showed that Consumer prices in China were up 0.4 percent year-on-year in March. That exceeded expectations for an increase of 0.3 percent following the 0.2 percent contraction in the previous month. While, producer prices jumped an annual 4.4 percent in March - beating expectations for an increase of 3.5 percent and up sharply from the 1.7 percent gain a month earlier. Though, Japanese shares ended higher with expectations for a robust earnings season.