Benchmarks trade deeply in red in early deals on global sell-off

Indian equity benchmarks made gap-down opening on Wednesday tracking sell-off in the global markets. Domestic indices are trading deeply in red in early deals with cut of over half a percent each in early deals due to selling in Bankex, Auto and IT stocks. Sensex and Nifty are trading below their crucial levels of 59,300 and 17,650, respectively. Traders took note of commerce and industry minister Piyush Goyal’s statement that measures to reduce compliance burden by simplifying and decriminalising several laws can have a multiplier effect on ease of doing business. Market participants overlooked rating agency Standard & Poor’s (S&P) statement that high-frequency indicators suggest a strong rebound during the July-September quarter after a steep contraction in activity in the previous three months on the back of a severe Covid-19 wave. The agency retained India’s economic growth projection at 9.5 per cent for the current fiscal year. Besides, Finance Ministry officials and representatives of rating agency Moody's discussed economic growth prospects, during which India pitched for an upgrade in its sovereign rating outlook.

Most of the Asian markets are trading lower following the broadly negative cues overnight from Wall Street and other global markets, as technology stocks helped led the markets lower amid a continued advance by treasury yields came after the US Fed has signaled plans to begin scaling back its asset purchases in the near future and raise interest rates next year. The concerns over the debt-ceiling impasse in Washington, China's power crunch and the Evergrande situation added to investor worries over slowing global growth. Back home, some of the aviation industry stocks are trading under pressure as government extended the ban on scheduled international flights till October 31. In scrip specific development, Bharti Airtel traded higher as Crisil Rating upgraded the long term rating on the bank facilities and debt programme of the company to AA+ with a stable outlook.

The BSE Sensex is currently trading at 59255.54, down by 412.06 points or 0.69% after trading in a range of 59148.73 and 59374.98. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was up by 0.03%, while Small cap index down by 0.11%.

The top gaining sectoral indices on the BSE were Realty up by 0.94%, Utilities up by 0.77%, Power up by 0.67%, Healthcare up by 0.51%, Telecom up by 0.33%, while Bankex down by 1.15%, Auto down by 1.10%, IT down by 0.68%, Consumer discretionary down by 0.61%, TECK down by 0.52% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy's Lab up by 1.51%, Sun Pharma up by 1.04%, NTPC up by 0.99%, Power Grid up by 0.60% and Bharti Airtel up by 0.26%. On the flip side, ICICI Bank down by 1.87%, HDFC Bank down by 1.64%, Kotak Mahindra Bank down by 1.41%, HDFC down by 1.28% and Maruti Suzuki down by 1.25% were the top losers.

Meanwhile, rating agency Standard & Poor’s (S&P) in its latest outlook on Asia Pacific has said high-frequency indicators suggest a strong rebound during the July-September quarter after a steep contraction in activity in the previous three months on the back of a severe Covid-19 wave. However, it warned that domestic macro indicators remained weak, though recovering. The agency cautioned against the impact of faster-than-expected tapering, saying it could cause capital flow risks as monetary policy in India remains highly accommodative with real interest rates in negative territory.

It expected a hike in the policy rate by the Reserve Bank of India’s monetary policy committee by 25 basis points in the current fiscal year. The agency retained India’s economic growth projection at 9.5 per cent for the current fiscal year, but cut it for China by 0.3 percentage points to 8 per cent for 2021 on the Evergrande crisis and regulatory actions by the country to rein in private enterprises. It should be noted that India’s base was quite low last year at a 7.3 per cent fall in GDP, whereas China’s economy expanded by 2.3 per cent in 2020.

India’s economy grew by a record 20.1 per cent in the first quarter of the current fiscal year on the low base of a massive contraction of 24.4 per cent in the corresponding three months of the previous fiscal year. GDP was still 9.2 per cent lower than in the first quarter of 2019-20, which is in the pre-pandemic period. Besides, growth during April-June FY22 was 16.9 per cent lower than in the previous quarter, Q4 of FY21. It said households and MSMEs were most affected in the latest downturn and will slow the recovery while they repair their balance sheets.

The CNX Nifty is currently trading at 17639.35, down by 109.25 points or 0.62% after trading in a range of 17608.15 and 17670.20. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Coal India up by 2.41%, Divi's Lab up by 1.70%, Sun Pharma up by 1.61%, Dr. Reddy's Lab up by 1.39% and NTPC up by 1.17%. On the flip side, ICICI Bank down by 1.84%, Hero MotoCorp down by 1.59%, HDFC Bank down by 1.56%, Kotak Mahindra Bank down by 1.46% and Maruti Suzuki down by 1.42% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 812.05 points or 2.69% to 29,371.91, Straits Times fell 0.54 points or 0.02% to 3,077.15, Hang Seng lost 111.63 points or 0.46% to 24,388.76, Taiwan Weighted declined 318.60 points or 1.85% to 16,862.84, KOSPI plunged 60.48 points or 1.95% to 3,037.44 and Shanghai Composite was down by 64.62 points or 1.79% to 3,537.60, while Jakarta Composite added 10.18 points or 0.17% to 6,123.29.