Benchmarks continue to trade in red terrain in morning deals

Indian equity benchmarks continued to trade in red terrain in morning deals, tracking weakness across Asia on renewed concerns about COVID-19. Traders remained cautious with Former Reserve Bank of India Governor Duvvuri Subbarao’s statement that the central bank could lose control over the money supply and inflation management if cryptocurrency is allowed in the country. Rao also said India's case for issuing a central bank digital currency (CBDC) may not be strong as there are capital controls. However, losses remain capped as some support also came with Finance Minister Nirmala Sitharaman’s statement that for a strong, sustainable and inclusive recovery of the global economy hit by the outbreak of COVID-19 pandemic, it is imperative to ensure collective progress of all countries. She stressed on the critical role of multilateralism and collective action in achieving the goal of global recovery. 

On the global front, Asian markets were trading lower after China Evergrande Group and Kaisa Group Holdings officially defaulted on their dollar debt, fueling worries about a broader contagion. Investors also awaited a report on U.S. consumer inflation due to be released later in the day that could impact the outlook for Fed policy. Back home, on the sectoral front, jewelry industry stocks’ remained in watch  as a report by the World Gold Council (WGC) showed that imports made up 86 per cent of India’s gold supply between 2016-2020, and inbound shipments continue to grow despite high import duty.

The BSE Sensex is currently trading at 58639.83, down by 167.30 points or 0.28% after trading in a range of 58495.12 and 58850.24. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.26%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Industrials up by 0.93%, Capital Goods up by 0.61%, Auto up by 0.54%, Consumer Discretionary up by 0.49% and Realty up by 0.40%, while Consumer Durables down by 1.06%, IT down by 0.35%, TECK down by 0.33%, Energy down by 0.27% and Bankex down by 0.25% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 3.08%, Mahindra & Mahindra up by 1.53%, Sun Pharma up by 1.39%, Bajaj Auto up by 0.49% and ITC up by 0.40%. On the flip side, Titan Company down by 3.02%, Tech Mahindra down by 1.84%, Bajaj Finserv down by 0.97%, Nestle down by 0.93% and HDFC down by 0.84% were the top losers.

Meanwhile, Former Reserve Bank of India Governor Duvvuri Subbarao has said the central bank could lose control over money supply and inflation management if cryptocurrency is allowed in the country. He also said India’s case for issuing a central bank digital currency (CBDC) may not be strong as there are capital controls.

He mentioned ‘Crypto is backed by algorithms and there is fear that the central bank might lose control over money supply and inflation management. There are also concerns that crypto will disrupt the monetary policy.’

Further, he stated CBDC also needs robust data protection laws. According to him cash is on its way out in India and digital payments are becoming popular. However, He said owing to the pandemic, currency circulation has increased as people held on to cash due to lockdowns. The central bank’s role as last-resort lender should not be hampered.

The CNX Nifty is currently trading at 17480.00, down by 36.85 points or 0.21% after trading in a range of 17433.45 and 17534.35. There were 22 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 3.12%, Adani Ports &SEZ up by 2.89%, Grasim Industries up by 1.71%, Mahindra & Mahindra up by 1.46% and Sun Pharma up by 1.28%. On the flip side, Titan Company down by 3.04%, Tech Mahindra down by 1.81%, Divi's Lab down by 1.44%, Nestle down by 1.02% and Bajaj Finserv down by 0.99% were the top losers.

Asian markets were trading lower; Hang Seng decreased 122.01 points or 0.5% to 24,132.85, Shanghai Composite declined 11.92 points or 0.32% to 3,661.12, KOSPI fell 21.79 points or 0.72% to 3,007.78, Straits Times trembled 7.69 points or 0.24% to 3,134.76, Jakarta Composite lost 31.77 points or 0.48% to 6,612.16, Taiwan Weighted dropped 78.83 points or 0.44% to 17,835.29 and Nikkei 225 slipped 151.57 points or 0.53% to 28,573.90.