Key indices trade marginally in red in morning deals

Indian equity benchmarks erased initial gains and are now trading marginally in red in morning deals, weighed by TECK, IT and Telecom stocks. Sentiments turned negative as India Ratings and Research (Ind-Ra) said its earlier estimate of gross domestic product (GDP) growth at 10.1 per cent for the current financial year (FY22) is unlikely to hold due to the speed and scale of Covid 2.0. It now expects GDP growth to come in at 9.6 per cent in FY22. This is however contingent upon India vaccinating its entire adult population by December 31. Some concern also came with S&P Global Ratings stating the Covid pandemic could worsen structural deficits and indebtedness of states, despite a likely rebound in the economy over the next 12-24 months. Meanwhile, the government has extended the second phase of FAME India scheme by two years till March 31, 2024, for faster adoption of electric mobility and development of its manufacturing ecosystem in the country.

On the global front, Asian markets were trading mixed as a spike in coronavirus cases across Asia over the weekend hurt investor sentiment while oil hovered around 2-1/2 year highs. Back home, on the sectoral front, there was some reaction in renewable energy sector stocks after Power Minister R K Singh said that as much as $70 billion (about Rs 5.2 lakh crore) has been invested in renewable energy across the country in the past seven years.

The BSE Sensex is currently trading at 52835.95, down by 89.09 points or 0.17% after trading in a range of 52825.11 and 53126.73. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.20%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Metal up by 0.75%, Basic Materials up by 0.69%, Healthcare up by 0.62%, Industrials up by 0.46% and PSU up by 0.38%, while TECK down by 0.50%, IT down by 0.46%, Telecom down by 0.46%, Power down by 0.33% and Consumer Durables down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.16%, Tata Steel up by 1.06%, Dr. Reddy's Lab up by 0.82%, Asian Paints up by 0.58% and Nestle up by 0.46%. On the flip side, Titan Company down by 1.34%, TCS down by 0.98%, SBI down by 0.70%, Bharti Airtel down by 0.56% and HCL Technologies down by 0.39% were the top losers.

Meanwhile, the National Council of Applied Economic Research (NCAER) is expecting India’s gross domestic product (GDP) to grow 11.5 percent in Q1 (first quarter) and 8.4-10.1 per cent for the whole year 2021–22. According to NCAER's estimates, the economic growth had contracted by 7.3 percent during 2020-21. It has also pitched for strong fiscal support to push economic growth. However, these high growth rates are also a reflection of strong base effect since 2021-22:Q1 follows the very steep decline in 2020-21:Q1. At the end of 2021-22 GDP, on constant prices, would still be about the same as Rs 146 trillion (Rs 146 lakh crore) as in 2019-20.

The report further said the second COVID-19 wave, four times greater in ferocity as compared to the first wave in terms of number of cases and deaths, has further disrupted the growth process, which had already been severely damaged by the first wave. High-frequency indicators show a sharp decline in economic activity during April and May 2021, the peak of the second COVID-19 wave, though there are some indicators of recovery in June as unlocking proceeds.

To restore the growth process after this situation for two consecutive years, NCAER said the process now needs a strong positive push, and adding that fortunately, export growth is projected to remain buoyant with recovery in the global economy. It said this, combined with a strong expansionary macroeconomic policy thrust, could help revive normal growth.

The CNX Nifty is currently trading at 15832.00, down by 28.35 points or 0.18% after trading in a range of 15830.25 and 15915.65. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.78%, Divi's Lab up by 1.71%, Grasim Industries up by 1.68%, Adani Ports &SEZ up by 1.63% and Tata Steel up by 0.99%. On the flip side, HDFC Life Insurance down by 3.01%, Titan Company down by 1.33%, TCS down by 1.04%, SBI down by 0.86% and Coal India down by 0.67% were the top losers.

Asian markets were trading mixed; Hang Seng increased 405.76 points or 1.4% to 29,288.22, Taiwan Weighted strengthened 54.38 points or 0.31% to 17,557.37, Straits Times advanced 9.31 points or 0.3% to 3,130.91 and Shanghai Composite gained 1.04 points or 0.03% to 3,608.60. On the flip side, KOSPI fell 6.07 points or 0.18% to 3,296.77, Nikkei 225 slipped 42.72 points or 0.15% to 29,023.46 and Jakarta Composite lost 50.21 points or 0.83% to 5,972.19.