Sensex, Nifty remain lower in late morning session

Indian equity benchmarks remained lower in late morning session, with both Sensex and Nifty trading in red. Negative cues from other Asian markets impacted sentiments over the street. Traders were cautious, as private report has projected real GDP growth of 8.7 per cent in FY22, down from 11.1 per cent it had forecast earlier. However, it revised up the FY23 forecast from 4 per cent to 5.4 per cent. Adding more worries among market participants, a private report stated that hiring across sectors declined in May, though the tech industry job market rebounded from the pandemic-induced downturn as many technology companies have been on full expansion mode. There was a 2 percent decline in the overall number of new job posts in May on the SCIKEY Market Network, a job site, including in sectors like banking with a dip of 12 percent, retail 16 percent, and FMCG 12 percent, while there was a growth of 5 percent in the insurance sector.

On the global front, Asian markets were trading in red, after China kept its benchmark lending rates unchanged, as widely expected. The one-year loan prime rate was maintained at 3.85 percent and the five-year loan prime rate was retained at 4.65 percent. The one-year and five-year loan prime rates were last lowered in April 2020. The one-year loan prime rate was cut by 20 basis points and five-year rate by 10 basis points in April 2020.

The BSE Sensex is currently trading at 52124.30, down by 220.15 points or 0.42% after trading in a range of 51740.19 and 52197.42. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.32%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Realty up by 0.81%, FMCG up by 0.25%, Healthcare up by 0.15% and Telecom up by 0.02%, while Utilities down by 0.85%, Auto down by 0.84%, Bankex down by 0.78%, Oil & Gas down by 0.76% and Metal down by 0.72% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.55%, Hindustan Unilever up by 1.02%, Ultratech Cement up by 0.46%, Asian Paints up by 0.42% and Bajaj Auto up by 0.36%. On the flip side, ICICI Bank down by 1.55%, Mahindra & Mahindra down by 1.52%, Larsen & Toubro down by 1.52%, SBI down by 1.49% and Power Grid down by 1.33% were the top losers.

Meanwhile, with an aim to boost the economy which has been hit by the second wave of the coronavirus pandemic, Chief Economic Advisor (CEA) K V Subramanian has said that the government is open to coming out with more measures. However, he added that the demand for a fresh stimulus package has to be considered against the backdrop of a host of initiatives taken by Finance Minister Nirmala Sitharaman in her budget for 2021-22 presented in February.

He said ‘Like last year, we do remain very open to coming up with more measures as well...but I think it is really important to take into account the big differences between last year and this year when we talk about stimulus.’ Elaborating further, the CEA said that unlike the previous budget which was framed before the pandemic, the 2021 budget was presented amid the pandemic and had already incorporated significant fiscal expansion. The focus is particularly on infrastructure spending which leads to construction activity and subsequently creation of jobs in the informal sector and demand generation. It was witnessed during the January-March quarter of the last financial year.

The significant capital spending by the government led to a 15 per cent increase in the construction sector in the fourth quarter and the gross fixed capital formation to GDP surged to 34 per cent, the highest in the last six years. Emphasising that the final objective is to ensure that the economic recovery gathers pace, he said the government will do whatever is necessary to ensure that. With regard to food security for the poor, he said, the government has already extended the free food programme for 80 crore population till November. He said the extension of PM Garib Kalayan Yojana would cost about Rs 70,000 crore, and added that free vaccination for all is another important economic measure. On the effect of the second wave on growth, Subramanian said there will be some impact but it is not likely to be very large.

The CNX Nifty is currently trading at 15608.80, down by 74.55 points or 0.48% after trading in a range of 15505.65 and 15634.60. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 3.58%, NTPC up by 2.55%, Hindustan Unilever up by 0.95%, Ultratech Cement up by 0.52% and Asian Paints up by 0.50%. On the flip side, UPL down by 4.76%, Tata Motors down by 2.30%, Hindalco down by 1.89%, Wipro down by 1.77% and Larsen & Toubro down by 1.60% were the top losers.

All the Asian markets were trading in red; Hang Seng decreased 387.85 points or 1.35% to 28,413.42, Taiwan Weighted dropped 264.05 points or 1.52% to 17,054.49, KOSPI fell 31.19 points or 0.95% to 3,236.74, Straits Times trembled 36.22 points or 1.15% to 3,107.94, Shanghai Composite declined 7.93 points or 0.22% to 3,517.17, Jakarta Composite lost 43.32 points or 0.72% to 5,963.80 and Nikkei 225 slipped 1029.57 points or 3.55% to 27,934.51.