Bears hold tight grip over Dalal Street

Bears were holding a tight grip over the Dalal Street in late morning session, with both Sensex and Nifty trading in deep red. Negative cues from other Asian markets impacted domestic sentiments. Traders were cautious, after the CBDT said that the Income Tax Department has detected huge unaccounted income after it raided some Indian companies and their associates, being controlled by a neighbouring country, in Delhi, Maharashtra and Gujarat. Stocks suffered their sharpest drop after the detection of a new and possibly vaccine-resistant coronavirus variant.

On the global front, Asian markets were trading in red, even after Hong Kong's merchandise exports increased in October. The data from the Census and Statistics Department showed that exports rose 21.4 percent year-on-year in October, after a 16.5 percent increase in September. Imports gained 17.7 percent annually in October, after a 23.5 percent increase in the previous month.

The BSE Sensex is currently trading at 57687.05, down by 1108.04 points or 1.88% after trading in a range of 57307.08 and 58254.79. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.87%, while Small cap index was down by 1.08%.

The only gaining sectoral index on the BSE was Healthcare up by 1.77%, while Realty down by 4.55%, Metal down by 2.91%, Auto down by 2.80%, Oil & Gas down by 2.64% and PSU down by 2.52% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy's Lab up by 3.87%, Nestle up by 0.89%, TCS up by 0.54% and Asian Paints up by 0.20%. On the flip side, Maruti Suzuki down by 3.76%, HDFC down by 3.54%, Tata Steel down by 3.53%, Mahindra & Mahindra down by 3.49% and Indusind Bank down by 3.17% were the top losers.

Meanwhile, Moody's Investors Service has said that India's rising vaccination rate, stabilizing consumer confidence, low interest rates and higher public spending underpin positive credit fundamentals for the corporate sector. It also expects India's economic growth would rebound strongly with GDP expanding 9.3 per cent in the current fiscal ending March 2022 and 7.9 per cent in 2023. It noted that credit fundamentals are favorable for India's companies on a sustained economic recovery and earnings of rated companies' will rise on strong consumer demand and high commodity prices.

According to the report, India's steady progress on inoculation against the coronavirus will support a sustained recovery in economic activity. Consumer demand, spending and manufacturing activity are recovering following the easing of pandemic restrictions. These trends, including high commodity prices, will propel significant growth in rated companies' EBITDA (earnings before interest, taxes, depreciation, and amortization) over the next 12-18 months. Growing government spending on infrastructure will support demand for steel and cement.

However, the report said if new waves of infections were to occur, it could trigger fresh lockdowns and erode consumer sentiment. It said such a scenario will dampen economic activity and consumer demand, potentially leading to subdued EBITDA growth of less than 15-20 percent for Indian companies over the next 12-18 months. In addition, it said delays in government spending, energy shortages that lower industrial production or softening commodity prices could curtail companies' earnings.

The CNX Nifty is currently trading at 17195.35, down by 340.90 points or 1.94% after trading in a range of 17088.20 and 17355.40. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Cipla up by 6.56%, Dr. Reddy's Lab up by 3.77%, Divi's Lab up by 2.04%, Nestle up by 0.80% and Britannia Inds up by 0.60%. On the flip side, Tata Motors down by 4.15%, BPCL down by 4.01%, ONGC down by 3.97%, Hindalco down by 3.81% and Maruti Suzuki down by 3.80% were the top losers.

All Asian markets were trading in red; Nikkei 225 slipped 833.34 points or 2.82% to 28,665.94, Jakarta Composite lost 96.26 points or 1.44% to 6,603.09, Hang Seng decreased 526.61 points or 2.13% to 24,213.55, Taiwan Weighted dropped 293.75 points or 1.66% to 17,360.44, Shanghai Composite declined 18.00 points or 0.5% to 3,566.18, Straits Times trembled 42.61 points or 1.32% to 3,178.91 and KOSPI fell 47.35 points or 1.59% to 2,932.92.