Domestic indices trade lower in early deals

Indian equity benchmarks made gap-down opening on Thursday tracking weakness in global peers. But, soon markets managed to trim most of their losses and are trading lower with marginal cut in early deals. Selling in Power, Bankex and Metal stocks kept markets under pressure whereas buying in Oil & Gas, Realty and Energy counters kept downside in check. Traders were concerned as India reported 62,224 new Covid-19 cases on Wednesday, taking the total to 29,633,105. The death count climbed to 3,79,573 with 2,542 fresh fatalities. Though, markets trim most of their losses taking support with preliminary data of the commerce ministry showing that India's exports rose by 46.43 per cent to $14.06 billion during June 1-14 on account of healthy growth in shipments in sectors such as engineering, gems and jewellery and petroleum products. Also, Ministry of Finance said the direct tax collections for FY22, as on June 15, 2021 show that net collections are at Rs 1.85 trillion as compared to Rs 92,762 crore over the corresponding period of the preceding year, representing an increase of 100.4% over the collections of the preceding year.

On the global front, Asian markets were trading mostly lower following the negative cues overnight from Wall Street as the Fed's latest economic projections now point the first post-pandemic interest rate hike in 2023, well ahead of the projected timeframe. Seven officials expect a rate hike as early as 2022. The markets also remain tense amid the continuing high number of infections in most markets.

Back home, fertilizer industry stocks were in focus as the Union Cabinet raised the subsidies for DAP and some other non-urea fertilisers by Rs 14,775 crore to keep the price of crop nutrients for farmers low despite the rising costs. The move will also help in providing relief to the farmers amid the pandemic. In scrip specific development, KEC International climbed on reports that it has bagged new orders worth Rs.937 crore across various business segments. CESC jumped on posting over 13 percent jump in its March quarter consolidated net profit.

The BSE Sensex is currently trading at 52336.00, down by 165.98 points or 0.32% after trading in a range of 52099.72 and 52350.81. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.44%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.36%, Realty up by 0.27%, Energy up by 0.26%, Consumer Durables up by 0.21%, Consumer discretionary up by 0.10%, while Power down by 1.31%, Bankex down by 0.62%, Metal down by 0.60%, Utilities down by 0.59%, Capital Goods down by 0.35% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 0.96%, Reliance Industries up by 0.49%, Ultratech Cement up by 0.40%, HCL Technologies up by 0.25% and Nestle up by 0.19%. On the flip side, HDFC down by 1.04%, Tech Mahindra down by 0.90%, Kotak Mahindra Bank down by 0.86%, HDFC Bank down by 0.82% and Bajaj Finance down by 0.69% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) in its ‘State of the Economy’ report June bulletin has said that it sees reasons to be cautiously optimistic as the second wave of the pandemic seems to have hit domestic demand, while other economic indicators show the economy is coming back on stream. It stated while the Indian economy continued to wrestle with the second wave of the pandemic ‘cautious optimism is returning’. ‘By (the) current assessment, the second wave’s toll is mainly in terms of the hit to domestic demand. On the brighter side, several aspects of aggregate supply conditions -- agriculture and contactless services are holding up, while industrial production and exports have surged amidst pandemic protocols,’ the RBI said in its report, the lead author of which is Michael Patra, deputy governor of the central bank. Citing statistical and mathematical models, the RBI said ‘greater improvement was expected by early July’.

Stressing that the speed and scale of vaccination would shape recovery, it said that the economy had the resilience and the fundamentals to bounce back from the pandemic and unshackle itself from pre-existing cyclical and structural hindrances. The central bank in its June policy lowered its gross domestic product (GDP) estimate to 9.5 per cent for 2021-22, from 10.5 per cent earlier. The forecast was done on the assumption that the impact of the second wave would remain confined to the first quarter of the year, and will be helped by the base effect of last year’s precipitous contraction.

Quantifying the impact of the first quarter, the RBI said the second half could shave off Rs 2 trillion of 2021-22 output. However, it said the second wave has reached smaller cities and villages, impacting rural dem­and. This time the government may not be in a position to spend as much as last year to revive demand. The central bank also defended the transfer of Rs 99,122 crore as dividend to the government. The nearly Rs 1 trillion transfer, according to the RBI, was just 0.44 per cent of GDP, and was generated through saving on balance sheet provisions and employees’ superannuation and other funds.

The CNX Nifty is currently trading at 15716.85, down by 50.70 points or 0.32% after trading in a range of 15644.70 and 15719.30. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 1.07%, Reliance Industries up by 0.60%, Eicher Motors up by 0.58%, Nestle up by 0.46% and Shree Cement up by 0.44%. On the flip side, Adani Ports & SEZ down by 2.87%, Tata Steel down by 1.79%, HDFC down by 1.05%, Hero MotoCorp down by 0.92% and Hindalco down by 0.87% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 329.03 points or 1.12% to 28,961.98, Taiwan Weighted declined 44.32 points or 0.26% to 17,263.54, KOSPI fell 13.14 points or 0.40% to 3,265.54 and Jakarta Composite lost 4.79 points or 0.08% to 6,073.78. On the other hand, Straits Times rose 6.42 points or 0.20% to 3,145.99, Hang Seng advanced 92.11 points or 0.32% to 28,528.95 and Shanghai Composite was up by 5.98 points or 0.17% to 3,524.31.