Benchmarks continue to trade in negative zone

Indian bourses extended their losses in noon session as selling appeared in healthcare, power and energy stocks with Sensex and Nifty tumbling by 78 and 14 points respectively. Concerns over global growth due to the recent rise in delta variant coronavirus cases in different parts of the world which continue to persist weighed traders mood. Adding more pessimism, foreign institutional investors (FIIs) has sold shares worth Rs 2,376.79 crore, while domestic institutional investors (DIIs) net purchased shares worth Rs 1,551.27 crore in the Indian stock market. However, downfall remained capped amid Q1FY22 corporate earnings which have been strong so far and also commentary of most management has been encouraging. Meanwhile, government introduced a bill in the Lok Sabha to amend the insolvency law and provide for a pre-packaged resolution process for stressed MSMEs. The proposed amendments would enable the government to notify the threshold of a default not exceeding Rs 1 crore for initiation of pre-packaged resolution process. On the global front, Asian markets were trading mixed as investors looked ahead to a Federal Reserve report for an update on when US stimulus might start winding down.

The BSE Sensex is currently trading at 52773.49, down by 78.78 points or 0.15% after trading in a range of 52754.50 and 53024.70. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.09%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Metal up by 1.96%, Realty up by 0.94%, Basic Materials up by 0.84%, Consumer Durables up by 0.46% and PSU was up by 0.41%, while Healthcare down by 1.64%, Power down by 0.59%, Energy down by 0.48%, Utilities down by 0.43% and Oil & Gas was down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.20%, Bajaj Finserv up by 2.15%, Bajaj Finance up by 2.12%, SBI up by 2.04% and HDFC Bank was up by 0.89%. On the flip side, Dr. Reddy's Lab down by 7.15%, Axis Bank down by 2.18%, Sun Pharma down by 2.15%, Kotak Mahindra Bank down by 1.35% and HCL Tech was down by 0.95% were the top losers.

Meanwhile, rating agency ICRA in its latest report has said that Indian auto component industry is expected to post 20-23 per cent revenue growth in the current fiscal (FY22) aided by strong exports and recovery in the domestic market. It said the growth would however be on the low base of the last two fiscals and will look optically strong because of the exceptionally weak first half of the financial year 2020-21. It also said headwinds such as sharp increase in commodity prices, supply chain disruptions partly arising from semiconductor shortage and premium freight expenses are expected to weigh in industry margins in FY2022, partially offsetting benefits arising from improved operating leverage,

According to the report, commodity prices were expected to remain at a multi-year high in the first half of the financial year 2021-22 before softening in the second half of the financial year. It noted that an increase in air freighting, resulting in higher freight costs for the industry, also remains a challenge. Despite the strong revenue growth and consequent benefits from operating leverage expected, these headwinds are expected to weigh in on margins.

Rating agency further noted that its interaction with large auto component suppliers indicated a cautiously optimistic approach towards CAPEX plans for the financial year 2021-22, with investments expected to be largely funded by internal accruals. It said the incremental investments will be primarily towards capability development i.e. new product additions and committed platforms, unlike the investments towards capacity expansion witnessed in the past.

The CNX Nifty is currently trading at 15810.45, down by 14.00 points or 0.09% after trading in a range of 15804.40 and 15881.55. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.56%, Bajaj Finance up by 2.28%, Tata Steel up by 2.23%, Bajaj Finserv up by 2.17% and SBI Life Insurance was up by 2.07%. On the flip side, Dr. Reddy's Lab down by 7.06%, Axis Bank down by 2.21%, Cipla down by 2.20%, Sun Pharma down by 2.15% and Kotak Mahindra Bank was down by 1.30% were the top losers.

Asian markets were trading mixed; Shanghai Composite declined 42.92 points or 1.24% to 3,424.52, Hang Seng decreased 656.32 points or 2.51% to 25,536.00, Taiwan Weighted dropped 133.69 points or 0.77% to 17,269.87 and Jakarta Composite was down by 3.42 points or 0.06% to 6,102.97.

On the other hand, Straits Times advanced 8.25 points or 0.26% to 3,147.22, KOSPI rose 7.58 points or 0.24% to 3,232.53 and Nikkei 225 was up by 136.93 points or 0.49% to 27,970.22.