Weak trade continues over Dalal Street

Weak trade continued over the Dalal Street in late morning session, with both Sensex and Nifty trading in deep red. Negative cues from other Asian markets also impacted domestic sentiments. Traders got worried, amid reports that the Centre’s capital expenditure (capex) declined for the second consecutive month in November, when it fell by more than half, year-on-year (YoY). It was down 24.11 per cent in October. This comes despite Finance Minister Nirmala Sitharaman nudging ministries and departments to spend more on this front.

Adding more concerns, another report stated that the cost of debt-funds for the states has touched the highest level so far this fiscal with the weighted average cut-off crossing the 7.16 percentage points at the latest auctions, up 11 bps over the past week, reflecting the hardening yields even for the government securities.

On the global front, Asian markets were trading mostly in red, even after China's services activity growth improved at the end of the year with firms posting faster increase in new work. The survey results from IHS Markit showed that the Caixin services Purchasing Managers' Index rose to 53.1 in December from 52.1 in November. A reading above 50.0 indicates expansion in the sector. Output increased in each of the past four months.

The BSE Sensex is currently trading at 59422.97, down by 800.18 points or 1.33% after trading in a range of 59300.18 and 59781.86. 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 0.43%, while Small cap index was down by 0.18%.

The only gaining sectoral index on the BSE was Telecom up by 2.08%, while Realty down by 2.09%, IT down by 1.85%, Energy down by 1.44%, TECK down by 1.37% and Bankex down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.31%, SBI up by 0.25%, Maruti Suzuki up by 0.21% and Indusind Bank up by 0.04%. On the flip side, Infosys down by 2.27%, HCL Tech down by 2.10%, HDFC down by 2.07%, NTPC down by 1.97% and Reliance Industries down by 1.95% were the top losers.

Meanwhile, Rating agency ICRA in its latest repost has said that a focussed road map, including timely interventions by the government, is necessary for the country in order to achieve the net zero target by 2070. It calls for timely interventions by the government and large capex/investments in GHG (greenhouse gas) emitting sectors like power, industry and transport.

According to the report, ambitious targets for COP26 open massive investment opportunities across segments stemming from 500 GW renewables by 2030, higher EV penetration (10 per cent by 2025), and 20 per cent ethanol blending for petrol (3x increase from current levels). It also improves energy efficiencies (battery storage, smart cities, etc.) and leads to the improvement in carbon capture from enhancing green cover and the use of advanced technologies. This would be a daunting task, and would need massive policy interventions to ensure investments across aforementioned sectors remain profitable enough to sustain well beyond 2030.

The report noted that being one of the fastest-growing economies in the world, India needs to find a fine balance between reductions in carbon emission, and surging energy needs. As the country enters the developed economy tag over the next few years, the per capita energy consumption is set to surge multifold (with China being 4x and the US being 10x of India). The government policies need to ensure no compromise in its ever-expanding energy needs that could hamper its growth ambitions, while simultaneously working towards removing the tag of one of the most polluting nations in the world.

The CNX Nifty is currently trading at 17687.15, down by 238.10 points or 1.33% after trading in a range of 17661.75 and 17797.95. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.14%, UPL up by 2.06%, Bajaj Auto up by 0.76%, Hindalco up by 0.72% and Coal India up by 0.39%. On the flip side, Adani Ports & SEZ down by 2.85%, JSW Steel down by 2.30%, Infosys down by 2.27%, Reliance Industries down by 2.20% and HCL Tech. down by 2.07% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 786.71 points or 2.68% to 28,545.45, Taiwan Weighted dropped 206.91 points or 1.12% to 18,293.05, Hang Seng decreased 82.65 points or 0.36% to 22,824.60, Jakarta Composite lost 52.62 points or 0.79% to 6,609.68, KOSPI fell 29.68 points or 1% to 2,924.29 and Shanghai Composite declined 5.68 points or 0.16% to 3,589.50. On the flip side, Straits Times advanced 16.51 points or 0.52% to 3,179.95.