Bears tighten grip over Dalal Street

Indian equity benchmarks added more losses in late morning deals, as bears held a tight grip over the Dalal Street. Both Sensex and Nifty were trading lower with huge losses, on the back of negative cues from other Asian markets. Domestic sentiments were negative, as India Ratings and Research (Ind-Ra) in its latest report has stated that the recent spike in Covid-19 cases along with associated lockdowns, though localised, could disrupt foreign portfolio investments as well as domestic credit markets. It said India's second round of Covid outbreak is moving in a direction different from the global trend.  Besides, amid recent spike in coronavirus cases, Fitch Ratings has said the second wave of COVID-19 infections poses increased risks for India’s fragile economic recovery and its banks.

On the global front, Asian markets were trading mostly in red, after producer prices in Japan were up 1.0 percent on year in March, the Bank of Japan said on Monday - exceeding expectations for 0.5 percent following the upwardly revised 0.6 percent contraction in February (originally -0.7 percent). On a monthly basis, producer prices jumped 0.8 percent - again exceeding expectations for 0.4 percent and up from 0.6 percent in the previous month.

The BSE Sensex is currently trading at 48136.53, down by 1454.79 points or 2.93% after trading in a range of 48048.34 and 48956.65. There was 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 4.67%, while Small cap index was down by 4.08%.

The only gaining sectoral index on the BSE were Healthcare up by 0.74%, while Realty down by 6.64%, PSU down by 5.50%, Industrials down by 4.91%, Utilities down by 4.85% and Auto down by 4.81% were the top losing indices on BSE.

The only gainer on the Sensex was Dr. Reddy’s Lab up by 3.30%. On the flip side, Indusind Bank down by 8.22%, SBI down by 7.52%, Bajaj Finance down by 7.45%, Mahindra & Mahindra down by 5.09% and Axis Bank down by 4.87% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has stated that the recent spike in Covid-19 cases along with associated lockdowns, though localised, could disrupt foreign portfolio investments as well as domestic credit markets. It said India's second round of Covid outbreak is moving in a direction different from the global trend.

The report said ‘The cases seem to have abated in major countries and the massive vaccination drive is expected to anchor any meaningful surge. Therefore, the counter trends coupled with spurt in daily cases would be the cause for concern in the near term’. It said ‘While the mortality rates have remained benign, the infection rate is increasing at a much faster rate than earlier’. Notably, the agency expects that India's vaccination drive would minimise the impact, the duration would be a function of its pace.

However, the agency cited mounting Covid-19 cases in India as opposed to benign conditions in advance economies could have an adverse effect on the investors' risk appetite. It said ‘Also, a sharp economic recovery and reflationary trend have already been causing a rise in global yields. This also is a negative factor for risky assets such as equity’. It also said foreign portfolio investments (FPIs), especially into the equity, have been reasonably strong in recent months, any reversal from the trend however could destabilise the ongoing favourable conditions across the financial markets.

Similarly, for the domestic credit markets, the agency said that amid a cautious financial system, the condition was improving, allowing low rated issuers to access capital though at a significantly high cost. Some of these gains could reverse and risk aversion could increase. The agency believes conducive financing options is necessary, and volatile capital market condition impinges such proposition. The agency however also believes the enormous banking system liquidity and proactiveness from the Reserve Bank of India will alleviate the risk of a market failure.

The CNX Nifty is currently trading at 14394.10, down by 440.75 points or 2.97% after trading in a range of 14367.60 and 14652.50. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Cipla up by 5.52%, Dr. Reddy’s Lab up by 3.25%, Divis Lab up by 3.19%, Sun Pharma up by 0.15% and Britannia up by 0.06%. On the flip side, Tata Motors down by 8.86%, Indusind Bank down by 8.07%, SBI down by 7.48%, Bajaj Finance down by 7.36% and Adani Ports & SEZ down by 6.63% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 208.48 points or 0.70% to 29,559.58, Straits Times lost 13.03 points or 0.41% to 3,171.51, Hang Seng declined 281.56 points or 0.98% to 28,417.24, Jakarta Composite fell 72.18 points or 1.19% to 5,998.03 and Shanghai Composite was down by 27.98 points or 0.81% to 3,422.70. On the flip side, Taiwan Weighted rose 12.18 points or 0.07% to 16,866.28, and KOSPI added 3.38 points or 0.11% to 3,135.26.