Indices add more losses in late morning deals

Indian equity benchmarks added more losses in late morning session, with both Sensex and Nifty trading in deep red. Negative cues from other Asian markets impacted domestic sentiments. Traders got cautious, amid reports that even though the cost of funds for the Centre has been trending down following the deft yield management by the Reserve Bank, for the hapless states, whose finances are crippled by the continuing lockdowns, it has been heading north and so far this fiscal as the average interest rate on their market borrowings has jumped 30 bps to 6.86 per cent. Besides, Centre for Monitoring Indian Economy (CMIE) chief executive Mahesh Vyas has said that over 10 million Indians have lost their jobs because of the second wave of COVID-19, and around 97 per cent of households' incomes have declined since the beginning of the pandemic last year.

On the global front, Asian markets were trading mostly in red, even after the manufacturing sector in Indonesia continued to expand in May, and at a faster pace, the latest survey from Markit Economics revealed on Wednesday with a record-high manufacturing PMI score of 55.3. That's up from 54.6 and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.  The two biggest components of the headline index, output and new orders, were the main contributors to the record improvement of the manufacturing sector in May. Firms saw a stronger increase in overall demand, supported by a second month of international new order growth, which led to rising manufacturing production in May.

The BSE Sensex is currently trading at 51556.20, down by 378.68 points or 0.73% after trading in a range of 51529.51 and 51863.94. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.07%, while Small cap index was up by 0.97%.

The top gaining sectoral indices on the BSE were Realty up by 1.29%, Power up by 1.23%, Utilities up by 1.22%, Healthcare up by 0.85% and Metal up by 0.84%, while IT down by 1.07%, TECK down by 1.00%, Bankex down by 0.59% and FMCG down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 0.69%, Maruti Suzuki up by 0.60%, Power Grid up by 0.42%, NTPC up by 0.41% and Indusind Bank up by 0.39%. On the flip side, ITC down by 2.07%, Tech Mahindra down by 1.93%, HDFC down by 1.27%, Infosys down by 1.25% and ONGC down by 1.23% were the top losers.

Meanwhile, Centre for Monitoring Indian Economy (CMIE) chief executive Mahesh Vyas has said that over 10 million Indians have lost their jobs because of the second wave of COVID-19, and around 97 per cent of households' incomes have declined since the beginning of the pandemic last year. He noted that ‘as the economy opens up, part of the problem will be solved but not entirely’. He said the unemployment rate measured by the think-tank is expected to come at 12 per cent at the end of May as against 8 per cent in April, and added that this signifies that about 10 million or 1 crore Indians have lost jobs in this period.

He explained that people who lose jobs find it hard to get employment, specifying that while the informal sector jobs come back quickly, the formal sector and better quality job opportunities take up to a year to come back. Unemployment rate had touched a record high of 23.5 per cent in May 2020 because of the national lockdown. Vyas further said an unemployment rate of 3-4 per cent should be considered as ‘normal’ for the Indian economy, hinting that the unemployment number will have to decline for longer before the situation improves.

He said CMIE has completed a nation-wide survey of 1.75 lakh households in April which throws up worrying trends on income generation during the last one year -- which has witnessed two waves of the pandemic. Only 3 per cent of those polled said they have witnessed an increase in incomes, while 55 per cent said their incomes have declined. An additional 42 per cent of the people said their incomes remained the same as that in the year-ago period. He pointed out ‘If we adjust for inflation, we find that 97 per cent of the households in the country have witnessed a decline in incomes during the pandemic’. The labour participation rate, or the percentage of the working age population which is in the market, has come down to 40 per cent as of now from the pre-pandemic levels of 42.5 per cent.

The CNX Nifty is currently trading at 15490.85, down by 84.00 points or 0.54% after trading in a range of 15484.85 and 15564.05. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 2.22%, SBI Life Insurance up by 1.61%, Tata Steel up by 1.51%, Shree Cement up by 0.97% and Coal India up by 0.95%. On the flip side, ITC down by 2.09%, Tech Mahindra down by 1.88%, HDFC down by 1.30%, Infosys down by 1.28% and Titan Co down by 1.25% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 147.90 points or 0.5% to 29,320.10, Straits Times trembled 27.06 points or 0.85% to 3,160.17, Taiwan Weighted dropped 25.90 points or 0.15% to 17,136.48 and Shanghai Composite declined 23.47 points or 0.65% to 3,601.24. On the flip side, KOSPI rose 0.28 points or 0.01% to 3,222.15, Jakarta Composite soared 62.44 points or 1.05% to 6,009.90 and Nikkei 225 surged 120.96 points or 0.42% to 28,935.30.