Bears hold tight grip over Dalal Street in late morning deals

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 remained worried, amid reports that India's growth recovery has been led by capital expenditure push by the government so far, but fiscal constraints might prove to be a challenge going forward in terms of driving investments. Besides, IT industry body Nasscom said a parliamentary panel's recommendations to expand the scope of the data protection bill to cover non-personal data needs careful analysis and deeper debate.

On the global front, Asian markets were trading mostly in red, after the Bank of Japan decided to scale back its pandemic related funding measures as the economy is set to recover amid waning supply-side constraints. The board, governed by Haruhiko Kuroda, decided to end the additional purchases of CP and corporate bonds at the end of March 2022 as scheduled.

The BSE Sensex is currently trading at 57146.48, down by 754.66 points or 1.30% after trading in a range of 57091.34 and 58062.28. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.82%, while Small cap index was down by 1.43%.

The only gaining sectoral indices on the BSE were IT up by 1.59% and TECK up by 1.00%, while Energy down by 2.66%, Realty down by 2.63%, Auto down by 2.27%, Telecom down by 2.17% and Oil & Gas down by 2.14% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 3.08%, HCL Tech up by 1.19% and TCS up by 0.43%. On the flip side, Indusind Bank down by 3.41%, Titan Co down by 3.12%, Bajaj Finserv down by 3.02%, Reliance Industries down by 3.02% and Hindustan Unilever down by 3.00% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that the coronavirus pandemic sharply boosted revenue and operating profit margins of national-level diagnostic firms during first half of the year (H1FY22) which may help them log out 2021-22 with around 55 per cent jump in topline growth and around 800 basis points increase in operating margins. It also expects the prices of diagnostic tests to stabilise at current levels due to focus on volume growth and higher competitive intensity from unorganized players.

According to the report, the diagnostics industry saw a sharp 74 per cent jump in revenue in April-September partly due to low base and partly due to higher demands for COVID tests, while non-COVID tests slipped. This growth is in line with the active cases that touched an all-time high in May 2021, peaking at over 4x the first wave peak. It said despite regulated pricing on COVID tests, better volume mix led to improved realization in H1 (April-September). Operating profit margins has improved to 32 per cent in H1 from 23 per cent in H1 FY21 and 30 per cent in Q4 FY21, given the low base, operating leverage benefits from increased realisations and stabilized raw material prices.

The agency expects operating margin levels to improve sharply to 30-32 per cent in FY22 from 27.2 per cent in FY21 and is likely to stabilise in the 29-30 per cent range during FY23 due to focus on volume growth against the prevailing pricing pressures. It said as most industry players follow an asset-light model, capex requirements have remained minimal, limiting the long-term debt. Still net-debt position for national-level companies is expected to remain negative in the near-term on the back of sizeable cash balances and healthy accruals.

The CNX Nifty is currently trading at 17024.35, down by 224.05 points or 1.30% after trading in a range of 17002.10 and 17298.15. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.07%, Wipro up by 1.42%, HCL Tech. up by 1.13%, Hindalco up by 0.46% and TCS up by 0.37%. On the flip side, Tata Motors down by 4.01%, Indusind Bank down by 3.31%, Titan Co down by 3.08%, Hindustan Unilever down by 3.01% and Bajaj Finserv down by 2.83% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 467.41 points or 1.61% to 28,598.91, Hang Seng decreased 300.31 points or 1.28% to 23,175.19, Shanghai Composite declined 33.25 points or 0.9% to 3,641.77, Jakarta Composite lost 27.59 points or 0.42% to 6,567.21, Taiwan Weighted dropped 16.00 points or 0.09% to 17,769.74 and Straits Times trembled 8.70 points or 0.28% to 3,120.10. On the flip side, KOSPI rose 0.75 points or 0.02% to 3,007.16.