Selling intensifies on Dalal Street; key gauges down 1%

Key gauges extended their losses to trade near intraday lows in last leg of the trade as investors kept an eye on the spread of the new coronavirus variant and measures governments are taking to restrain it. Sentiments also remained dampened after a private report highlighted a curious case of increase in aggregate bank deposits followed by subsequent slump in alternate fortnights, which is quite a contrarian trend. As per the provisional data released by RBI for the fortnight ended 19 November 2021, all scheduled commercial banks' (ASCB) aggregate deposits have slumped by Rs 2.7 lakh crore during the fortnight. This slump in deposits follows an abrupt increase by Rs 3.3 lakh crore during the previous fortnight ended 5 November 2021.

On the global front, European markets have made a positive start despite lingering worries about the spread of the new coronavirus variant. Asian markets were trading mixed as investors shrugged off concerns about China after ride-hailing giant Didi Global announced plans to take its shares off the New York Stock Exchange (NYSE).

Back home, traders shrugged off report that the Naukri JobSpeak index recorded a 26 per cent year-on-year (YoY) growth in November on the back of increased retail fervour, festive hype and the opening up of educational institutes. Meanwhile, Star Health will cut the offer for sale portion of its IPO after the offering received a tepid response in its subscription period ending yesterday. The IPO of the country’s largest private health insurance firm was not fully subscribed by the close of bidding on Thursday, signalling that demand for IPOs in India could be waning. It was subscribed at just 79%, getting bids worth $427.37 million, despite it extending the subscription period for its offering.

The BSE Sensex is currently trading at 57830.08, down by 631.21 points or 1.08% after trading in a range of 57812.24 and 58757.09. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.04%, while Small cap index was up by 0.42%.

The gaining sectoral indices on the BSE were Capital Goods up by 0.78%, Industrials up by 0.36%, Realty up by 0.24% and  Basic Materials up by 0.19%, while Energy down by 1.85%, Telecom down by 1.03%, Bankex down by 0.94%, FMCG down by 0.74% and Healthcare down by 0.70% were the losing indices on BSE.

The few gainers on the Sensex were Larsen & Toubro up by 0.96%, Ultratech Cement up by 0.45% and Indusind Bank up by 0.20%. On the flip side, Power Grid down by 2.94%, Reliance Industries down by 2.55%, Asian Paints down by 2.19%, Kotak Mahindra Bank down by 2.16% and Tech Mahindra down by 2.09% were the top losers.

Meanwhile, crisil in its latest report stated that the public Capex cycle has turned the corner with the Central and states capital expenditure nearly crossing FY20 levels, growing faster than the gross domestic product rate. It added that this indicating durable recovery to the pre-pandemic levels. While the Central Capex has already crossed the pre-pandemic trendline, states too should do so if the budgetary targets are met, which implies that the pandemic did not cause a major permanent loss in the government Capex in terms of trend.

It said if the budgetary targets for Capex are met by both the Centre and states this fiscal, the pre-pandemic decadal trend for the overall Capex will be revisited, and added that despite a tight fiscal position, the Central Capex grew 31 per cent over the last fiscal and if the trend is maintained, it is set to overshoot by 12 per cent pre-pandemic trend level, and for the states it expects them to meet 80-85 per cent of their Capex target. The budget targets a 26 per cent increase over the revised estimates of the last fiscal and if this is met, Central Capex could outpace the pre-pandemic decadal trend by 12 per cent. Put another way, Central Capex will have to grow 19 per cent in the second half year-on-year to achieve that.

The report noted the pandemic-related spending and the simultaneous decline in their revenue have led to higher fiscal deficits and debt levels, with the Central fiscal deficit widening to 9.4 per cent of GDP in fiscal 2021 from 4.6 per cent in fiscal 2020. The combined deficit had crossed the 13 per cent mark in FY21. Despite this, the Central Capex was 31 per cent higher than that of fiscal 2021, while the states saw a modest rise in fiscal 2020. It can be noted that the state Capex is typically 1.4 times higher than Central Capex, thereby playing the predominant role in infrastructure building. In the first half of the current fiscal, the Centre spent 41 per cent of its budgeted target for the entire year.

On the other hand, the states spent 29 per cent of their targets (based on data available for 16 major states -- Andhra, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, MP, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, and UP -- which account for 80 per cent of state Capex). The Central Capex during April-October was Rs 2.5 lakh crore, or 28 per cent higher year-on-year, and represented 46 per cent of the budgeted spend for the full fiscal. Notably, it is 26 per cent higher than the pre-pandemic level or fiscal 2020. Sector-wise, the Capex was higher over H1 of fiscals 2020 and 2021, in road transport and highways, railways, housing, telecommunication and health.

The CNX Nifty is currently trading at 17243.45, down by 158.20 points or 0.91% after trading in a range of 17221.85 and 17489.80. There were 15 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.45%, BPCL up by 1.97%, ONGC up by 1.11%, Larsen & Toubro up by 1.05% and Indian Oil Corporation up by 0.75%. On the flip side, Power Grid down by 2.80%, Reliance Industries down by 2.58%, Kotak Mahindra Bank down by 2.19%, Asian Paints down by 1.91% and Tech Mahindra down by 1.80% were the top losers.

Asian markets were trading mixed; Nikkei 225 surged 276.20 points or 1.00% to 28,029.57, Straits Times rose 9.61 points or 0.31% to 3,101.72, KOSPI advanced 23.06 points or 0.78% to 2,968.33, Shanghai Composite was up by 33.59 points or 0.94% to 3,607.43. On the other hand, Hang Seng fell 22.24 points or 0.09% to 23,766.69, Taiwan Weighted lost 27.74 points or 0.16% to 17,697.14 and Jakarta Composite declined 45.31 points or 0.69% to 6,538.51.

European markets were trading higher, UK’s FTSE 100 added 17.15 points or 0.24% to 7,146.36, France’s CAC gained 22.43 points or 0.33% to 6,818.18 and Germany’s DAX was up by 62.61 points or 0.41% to 15,325.72.