Markets remain volatile during late morning session

Indian equity benchmarks remained volatile during late morning session, with both Sensex and Nifty trading in red, despite positive cues from other Asian markets. Domestic sentiments were negative, amid reports that the aftermath of the COVID-19 pandemic's second wave has left young Indian professionals and working women increasingly vulnerable to the economic uncertainty. Besides, Care Ratings in its latest report has said that notwithstanding the Rs 10,000-crore liquidity infusion through the G-Sap route by the RBI last week and fewer states tapping the bond markets, their cost of borrowing has been heading north, as the coupon hit the highest level since mid-March at 7 percent. At 7 percent, the weighted average yield of state debt has risen by a whopping 44 bps since the first auction of the fiscal on April 8.

On the global front, Asian markets were trading in green, after the manufacturing sector in Japan continued to expand in June, albeit at a slower pace, the latest survey from Jibun Bank revealed on Wednesday with a manufacturing PMI score of 51.5. That's down from 53.0 in May, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

The BSE Sensex is currently trading at 52512.14, down by 76.57 points or 0.15% after trading in a range of 52434.70 and 52912.35. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Auto up by 1.10%, Consumer Durables up by 0.61%, Consumer discretionary up by 0.53%, Metal up by 0.32% and PSU up by 0.30%, while Oil & Gas down by 0.84%, Energy down by 0.53%, TECK down by 0.48%, IT down by 0.43% and Telecom down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.55%, Bajaj Finance up by 1.17%, Mahindra & Mahindra up by 0.95%, SBI up by 0.76% and Bajaj Auto up by 0.63%. On the flip side, Kotak Mahindra Bank down by 1.09%, HCL Tech. down by 0.68%, TCS down by 0.67%, Hindustan Unilever down by 0.57% and HDFC down by 0.54% were the top losers.

Meanwhile, ratings agency Crisil has said that higher occupancy due to surge in COVID-19 cases would help private hospitals post 15-17% revenue growth this fiscal year (FY22), a shade higher than what they attained in 2020-21. The growth will aid recovery of operating margin by 100-200 basis points to 13-14%, but still fall short of the 2020-21 mark due to higher proportion of COVID-19 treatments, which are less profitable.

Crisil Ratings Senior Director Manish Gupta said ‘While the second wave lashed again in April, the first quarter this fiscal will be sharply better on-year, with occupancy of 75%, almost double on-year. This will be largely on account of a surge in COVID-19 treatments more than offsetting the deferral of elective surgeries and outpatient footfalls’. He added that as the second wave recedes in the second quarter, Crisil expects pent-up demand for non COVID treatments to rebound and support occupancy. He also said ‘Overall, higher occupancy of 65-70% this fiscal versus 58% in the last, would drive rebound in revenue growth’.

Recovery in revenue and margins will nevertheless spur hospitals to resurrect capex, which had almost halved year-on-year last fiscal. The performance of hospitals was severely impacted in the first quarter of last fiscal year due to postponement of elective surgeries and preventive healthcare which together account for 60% of revenue, in addition to travel restrictions and curbs on COVID-19 treatment by private hospitals. The sector clawed back in the second quarter and had recovered completely by the third as elective surgeries and preventive healthcare treatment increased and COVID treatments, too, were permitted for most private hospitals. This helped limit the overall revenue decline to 12 per cent for the full year.

The CNX Nifty is currently trading at 15752.70, down by 20.05 points or 0.13% after trading in a range of 15726.60 and 15862.95. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 2.32%, Hero MotoCorp up by 2.23%, Hindalco up by 1.48%, Mahindra & Mahindra up by 1.04% and Bajaj Finance up by 1.02%. On the flip side, Wipro down by 2.07%, Adani Ports & SEZ down by 1.33%, Kotak Mahindra Bank down by 0.92%, Shree Cement down by 0.73% and Tech Mahindra down by 0.71% were the top losers.

Asian markets were trading in green; Hang Seng increased 198.59 points or 0.7% to 28,508.35, Taiwan Weighted strengthened 161.15 points or 0.94% to 17,236.70, KOSPI rose 9.23 points or 0.28% to 3,273.11, Nikkei 225 surged 26.03 points or 0.09% to 28,910.16, Straits Times advanced 6.31 points or 0.2% to 3,115.51, Jakarta Composite soared 12.24 points or 0.2% to 6,100.08 and Shanghai Composite gained 2.37 points or 0.07% to 3,559.78.