Lackluster trade continues on Dalal Street

Indian equity benchmarks continued their lackluster trade in afternoon session, amid negative signals from other Asian markets. Weak broader indices along with heavy sell off at Auto, Metal and Industrials counters, dragged the markets lower. Sentiments were dampened as a private report said that even though the overall outlook for corporates have improved on the back of faster than expected recovery, and the same is likely to gain further traction in H2 but the rising commodity prices and logistics cost pose headwinds to their profitability. Traders paid no heed towards US Consul General Judith Ravin’s statement that 2021 data indicates a strong rebound in India-US bilateral trade. The growth in economic ties between the two countries has been extraordinary, with trade exploding from approximately $20 billion in 2001 to just over $145 billion in 2019. On the global front, Asian markets were trading mostly lower as traders weighed risks to the global economic recovery from the prospect of faster monetary-policy tightening to tackle inflation.

Back home, in scrip specific development, One97 Communications, the parent company of Paytm, disappointed IPO investors as the unicorn's stock got listed today at Rs 1,950 at a discount of 9.3 per cent over its price of Rs 2,150. The stock continued to plunge further. On the other hand, Rs 1,014 crore IPO of Go Fashions (India) received a strong response from the investors. The issue, which kicked off for subscription on Wednesday, sailed through on the first day of the bidding process.

The BSE Sensex is currently trading at 59438.16, down by 570.17 points or 0.95% after trading in a range of 59423.45 and 60177.52. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 1.80%, while Small cap index was down by 1.65%.

The top losing sectoral indices on the BSE were Auto down by 2.71%, Metal down by 2.30%, Industrials down by 1.99%, Capital Goods down by 1.96% and Utilities was down by 1.95%, while there were no gaining sectoral indices on the BSE.

The only gainers on the Sensex were Power Grid up by 0.52%, Asian Paints up by 0.41%, HDFC Bank up by 0.25% and SBI was up by 0.05%. On the flip side, Mahindra & Mahindra down by 2.85%, Maruti Suzuki down by 2.72%, HCL Tech down by 2.70%, Larsen & Toubro down by 2.49% and Indusind Bank was down by 2.45% were the top losers.

Meanwhile, Department of Economic Affairs (DEA) Secretary Ajay Seth has said that India needs to double the capital expenditure (capex) in the medium term from about 5-6 percent of the Gross Domestic Product (GDP) currently to fund infrastructure. He said efforts have to be made to channelise all avenues of savings for garnering resources for stepping up investment in the infrastructure sector.

Seth has stated that economic growth has to come from a virtuous cycle of private investment with private sector having a larger and larger economic role, while government’s role would be that of a facilitator. He said that the Indian capital market has to mature to enable investors to attract long term funds. He said ‘when it comes to long term financing, that is something our capital markets are yet to mature where we can attract long term investors from say the household sector to put that long term money. Because for infrastructure long term money is required’.

DEA Secretary further highlighted that India’s banking sector is now on a much stronger footing post major reforms such as the Insolvency and Bankruptcy Code and the setting up of a ‘bad bank’, among others. However, he noted that long term financing is an area where India’s capital markets are yet to mature.

The CNX Nifty is currently trading at 17700.75, down by 197.90 points or 1.11% after trading in a range of 17700.50 and 17945.60. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were SBI Life Insurance up by 0.65%, Power Grid up by 0.52%, Asian Paints up by 0.37%, HDFC Bank up by 0.14% and Indian Oil Corporation was up by 0.08%. On the flip side, Tata Motors down by 4.60%, Eicher Motors down by 3.16%, Maruti Suzuki down by 2.94%, Mahindra & Mahindra down by 2.90% and Tech Mahindra was down by 2.82% were the top losers.

Asian markets were trading mostly lower; Hang Seng decreased 342.69 points or 1.34% to 25,307.39, Nikkei 225 slipped 89.67 points or 0.3% to 29,598.66, Jakarta Composite lost 41.95 points or 0.63% to 6,633.85, Shanghai Composite declined 10.63 points or 0.3% to 3,526.74 and KOSPI was down by 9.38 points or 0.32% to 2,953.04.

On the other hand, Straits Times advanced 3.25 points or 0.1% to 3,235.93 and Taiwan Weighted was up by 77.33 points or 0.44% to 17,841.37.