Weak trade continues over Dalal Street in late morning session

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 impacted domestic sentiments. Traders were cautious, as a domestic rating agency said 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.

Besides, rating agency Icra revised downwards the revenue growth forecast for the auto components industry in the current fiscal to 15-17 per cent, citing the impact of the Omicron wave, delayed recovery in semiconductors shortage and muted two-wheelers demand.

On the global front, Asian markets were trading mostly in red, after China's exports and imports grew at slower rates at the end of the year. The data from the General Administration of Customs revealed that exports grew 20.9 percent on a yearly basis in December after rising 22.0 percent in November. The annual growth was forecast to slow to 20.0 percent.

The BSE Sensex is currently trading at 60804.92, down by 430.38 points or 0.70% after trading in a range of 60757.03 and 61136.25. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.13%, while Small cap index was up by 0.11%.

The only gaining sectoral indices on the BSE were Capital Goods up by 0.60% and Industrials up by 0.41%, while Bankex down by 1.29%, Telecom down by 1.16%, Healthcare down by 0.66%, Utilities down by 0.51% and Realty down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 0.69%, Larsen & Toubro up by 0.54%, NTPC up by 0.48%, Ultratech Cement up by 0.32% and TCS up by 0.24%. On the flip side, Axis Bank down by 3.14%, Asian Paints down by 3.04%, HCL Tech. down by 2.09%, HDFC down by 2.08% and Wipro down by 1.62% were the top losers.

Meanwhile, Rating agency ICRA has 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. It, however, said despite the potential Omicron impact, the domestic aftermarket demand is expected to grow 8-10 per cent in FY22 while exports remain a bright spot in the Indian auto component story with an estimated growth of over 20 per cent this fiscal.

According to the report, most domestic original equipment sub-segments are expected to register healthy volume growth in FY2022, albeit, on a low base of the last fiscal. It said pass-through of commodity prices will also inflate revenues by 4-5 per cent. However, certain segments like two-wheelers (2W) and buses will be impacted by the Omicron wave. It also stated that easing of COVID 2.0 related lockdown restrictions and improvement in personal mobility, healthy freight movement and pent-up demand arising from deferment of purchases last year, supported replacement sales for auto components in Q2 and Q3 FY2022. It added that while there could be some impact on mobility because of the ongoing COVID wave, freight movement and deferment of fresh vehicle purchases will result in healthy replacement demand in Q4 FY2022.

On the export front, the rating agency said the Indian auto component suppliers have reported a healthy improvement in sales volumes to Europe in year-to-date FY22 and have a strong order book for the next few months, partly aided by the 'China+1' strategy. It said the third quarter has been relatively dull because of supply-chain issues, and the export order book for Indian auto component suppliers would have been even better if not for the chip shortages. It noted that relatively high infections and prolonged lockdowns in India's key export markets like Europe and the US remain a downside risk. However, over the long term, it said premiumisation of vehicles and focus on localisation will translate into relatively stronger growth for auto component suppliers.

The CNX Nifty is currently trading at 18149.00, down by 108.80 points or 0.60% after trading in a range of 18119.65 and 18232.10. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Tata Consumer Products up by 5.46%, Adani Ports & SEZ up by 1.74%, Indian Oil Corp. up by 1.28%, Infosys up by 0.96% and BPCL up by 0.60%. On the flip side, Axis Bank down by 3.20%, Asian Paints down by 3.16%, UPL down by 2.26%, HCL Tech. down by 2.14% and HDFC down by 2.09% were the top losers.

Asian markets were 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.