Markets trade flat with negative bias in morning deals

Indian equity benchmarks trimmed losses and were now trading flat with negative bias in morning deals tracking weakness across other Asian markets.  Some concern also came with India Ratings and Research’s (IndRa) report stating that India Inc resorted to salary cuts to protect their profits in the June quarter, as revenues came under pressure due to the second pandemic wave that affected nearly the entire country. The weak wage growth will prove to be a drag on the overall economic recovery in the medium term as it will affect household consumption. However, traders found some solace with private survey stating that India Inc's business sentiments are drawing closer to pre-pandemic levels, hinting at a more robust performance in the next quarter. A survey, with over 3,700 respondents across digital platforms, found that transparent taxation has been one of the most significant initiatives of the government followed by the production-linked incentives (PLI) scheme, equalisation levy and new labour codes. On the global front, Asian markets were trading mostly in red as investors fretted over a rise in coronavirus cases globally and looked ahead to the European Central Bank meeting for hints on tapering plans. 

The BSE Sensex is currently trading at 58224.60, down by 25.66 points or 0.04% after trading in a range of 58112.20 and 58270.49. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.13%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Power up by 0.72%, Telecom up by 0.70%, Utilities up by 0.64%, Oil & Gas up by 0.56% and FMCG up by 0.55%, while Realty down by 0.61%, IT down by 0.33%, Bankex down by 0.27%, Consumer Durables down by 0.23% and Healthcare down by 0.21% were the losing indices on BSE.

The top gainers on the Sensex were Nestle up by 1.72%, Bharti Airtel up by 0.73%, HDFC up by 0.63%, Larsen & Toubro up by 0.58% and Hindustan Unilever up by 0.48%. On the flip side, Axis Bank down by 1.29%, Ultratech Cement down by 0.89%, Tech Mahindra down by 0.73%, Bajaj Finance down by 0.62% and HDFC Bank down by 0.54% were the top losers.

Meanwhile, S&P Global Ratings in its latest report has said that India is expected to post strong economic growth in the coming quarters, even as inflation, led by food prices, is likely to remain elevated. It noted that the economy is expected to clock 9.5 percent growth in the current fiscal year (FY22), followed by 7 percent expansion in the next year, and added that high nominal GDP growth would be important for ensuring fiscal consolidation going forward.

According to the report, given India's weak fiscal settings and a high stock of debt around 90 percent of GDP, the nominal GDP growth is going to be very important to prevent any further erosion of fiscal settings in the country and to enable some degree of fiscal consolidation going forward. It said the fiscal deficit would remain elevated over the next two years but the debt/GDP ratio is expected to stabilize or flatten out.

It further said India's external position has strengthened in the context of the pandemic and India has been generating forex reserves at a record pace. It also said the second wave of the pandemic has been pretty costly to economic activity. Households have been affected and households are going to be repairing their balance sheets and withholding from spending which means activity will remain below trend once the recovery gets underway.

The CNX Nifty is currently trading at 17351.95, down by 1.55 points or 0.01% after trading in a range of 17307.00 and 17353.70. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were ONGC up by 3.03%, Tata Motors up by 2.25%, Nestle up by 1.92%, Indian Oil Corp. up by 1.29% and Britannia Industries up by 1.01%. On the flip side, SBI Life Insurance down by 3.98%, Shree Cement down by 1.11%, Axis Bank down by 1.07%, Wipro down by 0.88% and Ultratech Cement down by 0.88% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 422.26 points or 1.6% to 25,898.67, Nikkei 225 slipped 229.93 points or 0.76% to 29,951.28, KOSPI fell 46.41 points or 1.47% to 3,116.58 and Jakarta Composite lost 14.29 points or 0.24% to 6,011.73.

On the flip side, Taiwan Weighted dropped 0.17 points or 0% to 17,270.32, Shanghai Composite gained 3.40 points or 0.09% to 3,678.59 and Straits Times advanced 4.32 points or 0.14% to 3,073.26.