Key gauges continue to trade lower in morning deals

Indian equity benchmarks continued to trade lower in morning deals, on the back of weak global cues. Traders remained cautious with Niti Aayog Vice-Chairman Rajiv Kumar’s statement the country needs much more 'equitable' growth as inequality could lead to tensions in society. He further said the country's democracy will not permit the kind of K-shaped growth it has seen in the past, where different sections of the population have been growing at different paces. Traders also took a note of a domestic rating agency ICRA’s statement that the upcoming budget is unlikely to make any provision for recapitalisation of state-owned lenders, as over Rs 3.36 lakh crore has been spent on the banks in the last six years.

On the global front, Asian markets are trading mostly in red, as traders remain worried and cautious amid the rapid spread of the coronavirus Omicron variant in most countries and the likely economic impact of the related curbs. Back home, on the sectoral front, stocks related to auto components industry remained in focus as rating agency ICRA revised downwards the revenue growth forecast for the auto components industry in the current fiscal (FY22) by 200 bps to 15-17 percent from the earlier estimates, citing the impact of the Omicron wave, delayed recovery in semiconductors shortage and muted two-wheelers demand.

The BSE Sensex is currently trading at 60992.69, down by 242.61 points or 0.40% after trading in a range of 60757.03 and 61136.25. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.18%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.95%, Industrials up by 0.59%, Basic Materials up by 0.30%, Consumer Durables up by 0.17% and Energy up by 0.15%, while Bankex down by 0.82%, Telecom down by 0.74%, Realty down by 0.67%, TECK down by 0.54% and IT down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.09%, Ultratech Cement up by 0.94%, Power Grid Corporation up by 0.60%, NTPC up by 0.56% and Maruti Suzuki up by 0.39%. On the flip side, Axis Bank down by 2.73%, HCL Technologies down by 2.70%, Asian Paints down by 2.44%, HDFC down by 1.26% and Wipro down by 1.21% were the top losers.

Meanwhile, Ratings agency Crisil has said the ongoing third pandemic wave led by Omicron could pose fresh turbulence for air traffic, pushing its full recovery into fiscal 2024. It said that a material impact on the credit quality of airport operators, however, is unlikely as the dip in revenue is expected to be limited by a likely strong rebound, and the operators have adequate debt servicing cushions, liquidity buffers and financial flexibility to absorb the blip in traffic.

It stated an analysis of the top four private airports -- Delhi, Mumbai, Bengaluru and Hyderabad -- which accounted for 90 per cent of air passenger traffic handled by private airports and 50 per cent of all passenger traffic last fiscal, indicates as much. The high infection rate of Omicron has resulted in several state governments and local authorities, such as Delhi and Mumbai, announcing restrictions on movement.

In fact, domestic traffic is down by 25 per cent from the highs of December 2021 in the first week of January 2022 itself. Both personal and business travel will take a hit in January and February, leading to air traffic plunging an estimated 30 per cent sequentially in the fourth quarter of this fiscal. It mentioned ‘this spill-over impact is likely to delay recovery of air traffic from our earlier expectation of it happening in fiscal 2023.’ However, recovery is expected to be achieved within the early part of fiscal 2024.

This is because air traffic is likely to rebound faster this time around, compared to the second wave, when it took from May to November 2021 to recover from 16 per cent to 85 per cent of the fiscal 2020 traffic. It added the rebound confidence is underpinned by higher proportion of vaccinated populace -- over 71 per cent now vis-a-vis only 5 per cent as of end May 2021 -- as well as learnings of governments and authorities from the past waves in implementing Covid-19 protocols for safe travel. The case load, too, is expected to peak in February and return to the December 2021 level by the end of March 2022.

The CNX Nifty is currently trading at 18192.65, down by 65.15 points or 0.36% after trading in a range of 18119.65 and 18232.10. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Tata Consumer Product up by 4.89%, Indian Oil Corporation up by 1.94%, Larsen & Toubro up by 1.16%, Ultratech Cement up by 0.91% and Adani Ports &SEZ up by 0.71%. On the flip side, Axis Bank down by 2.86%, HCL Technologies down by 2.73%, Asian Paints down by 2.68%, UPL down by 1.69% and ONGC down by 1.40% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 377.10 points or 1.32% to 28,112.03, Hang Seng decreased 219.70 points or 0.9% to 24,210.07, Taiwan Weighted dropped 130.85 points or 0.71% to 18,306.08, KOSPI fell 40.99 points or 1.38% to 2,921.10 and Shanghai Composite declined 21.40 points or 0.6% to 3,533.86.

On the flip side, Jakarta Composite soared 4.73 points or 0.07% to 6,663.09 and Straits Times advanced 12.07 points or 0.37% to 3,269.37.