Domestic markets trade under pressure amid concerns over economic growth

Indian equity benchmarks made gap-down opening on Tuesday tracking sell-off in the global peers. Markets are trading lower with cut of around 0.70% each in early deals amid concerns that the second wave of the coronavirus pandemic could bring down India's GDP growth. Domestic rating agency Crisil warned India's economic growth may slip to 8.2 per cent in FY22 if the second wave peaks in end of June, maintaining its baseline estimate of 11 per cent uptick in activity. Adding more pessimism, State Bank of India’s (SBI)’s economic research arm warned that a huge buildup of carry positions could negatively impact the exchange rate and lead to inflation. Though, downside remained capped as India continues to witness decline in the number of daily Covid-19 cases. The country recorded 329,517 infections, taking its tally to almost 23 million, Wordometer showed. On a positive note, more than 19 million patients have recovered.

On the global front, Asian markets were trading sharply lower, following the broadly negative cues overnight from Wall Street as the outlook for inflation weighed on the markets amid an increase in commodities prices. Traders remain concerned that a faster price growth could lead the Federal Reserve tightening monetary policy sooner than expected. Traders also continue to be cautious amid the surge in daily coronavirus cases in the region, mainly in India and Japan.

Back home, banking  stocks were in focus as the Reserve Bank came out with modified guidelines that allow sound private sector banks to undertake government business, whether at the Centre or in states. According to the modified norms, scheduled private sector banks, which are not under the Prompt Corrective Action (PCA) framework of the RBI, can undertake government business after executing an agreement with the central bank. In scrip specific development, InterGlobe Aviation advanced after its board approved a proposal to raise funds up to Rs. 3,000 crore through a Qualified Institutions Placement.

The BSE Sensex is currently trading at 49149.27, down by 353.14 points or 0.71% after trading in a range of 48988.18 and 49151.18. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.12%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were Utilities up by 1.37%, Oil & Gas up by 1.16%, Power up by 0.89%, Energy up by 0.84%, Healthcare up by 0.59%, while Metal down by 1.57%, Bankex down by 1.07%, IT down by 0.72%, Auto down by 0.72%, TECK down by 0.64% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.74%, NTPC up by 1.39%, Power Grid up by 0.75%, Reliance Industries up by 0.39% and Ultratech Cement up by 0.30%. On the flip side, HDFC down by 2.19%, Kotak Mahindra Bank down by 1.91%, Bajaj Finance down by 1.43%, Indusind Bank down by 1.22% and TCS down by 1.21% were the top losers.

Meanwhile, domestic rating agency Crisil has warned India's economic growth may slip to 8.2 per cent in FY22 if the second wave peaks in end of June, maintaining its baseline estimate of 11 per cent uptick in activity. The agency made it clear that the risks to its 11 per cent growth forecast are ‘firmly tilted downwards’, and presented two likely scenarios. If the second wave peaks in May-end, the GDP expansion will come at 9.8 per cent, and can go down to 8.2 per cent in current fiscal if the peaking happens in June-end.

As per official estimates, the economy contracted by 7.6 per cent in FY21, because of the national lockdown. There have been a slew of downward revisions in growth estimates after the emergence of the second wave, which has overwhelmed the healthcare apparatus and also led to localised lockdowns across the country. It acknowledged the lockdowns are less restrictive right now, but the expanse of area under such measures is increasing with the ingress of the virus into the rural areas where healthcare infrastructure is weak.

It said the ongoing fiscal will be a story of two halves growth in the first one till September will be supported by a base effect despite the spread of the pandemic, while growth will be better spread in the second half stretching from October-March 2022. Besides, the agency said two ‘gigantic challenges’ confront the country, including the spread of the second wave and vaccination. On the former, it said while the second wave have been bigger spreaders globally, but added that the death rates are falling in India with the rise in infections. However, India ranks lowest among fully vaccinated populations, it said, recommending that rendering jabs to half of the population by festivities in October would be good.

The CNX Nifty is currently trading at 14842.60, down by 99.75 points or 0.67% after trading in a range of 14771.40 and 14847.40. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Coal India up by 4.25%, Indian Oil Corp. up by 3.33%, Sun Pharma up by 3.03%, Adani Ports & SEZ up by 2.15% and NTPC up by 1.53%. On the flip side, Hindalco down by 2.42%, JSW Steel down by 2.19%, HDFC down by 2.03%, Kotak Mahindra Bank down by 1.73% and Tata Steel down by 1.44% were the top losers.

Asian markets were trading in red; Nikkei 225 plunged 885.89 points or 3.00% to 28,632.45, Straits Times fell 22.69 points or 0.71% to 3,159.72, Hang Seng declined 613.45 points or 2.15% to 27,982.21, Taiwan Weighted slipped 501.53 points or 2.91% to 16,734.08, KOSPI dropped 45.87 points or 1.41% to 3,203.43, Jakarta Composite skid 58.01 points or 0.97% to 5,917.78 and Shanghai Composite was down by 9.10 points or 0.27% to 3,418.89.