Indian markets trade lower in early deals; Nifty slips below 17,750 mark

Indian equity benchmarks have extended their previous session’s losses with gap-down opening on Thursday mirroring weak global cues. Markets are trading lower with cut of over half a percent each in early deals. Some cautiousness came in with a private report stating that the yield on the 10-year government bond inched up to nearly 7 per cent ahead of the Reserve Bank of India’s (RBI) monetary policy review scheduled for Friday on fears that the central bank may raise the inflation forecast. Traders failed to get any sense of relief with a working paper by the International Monetary Fund (IMF) stating that extreme poverty in India was as low as 0.8% in 2019 and the country managed to keep it at that level in 2020 despite the unprecedented Covid-19 outbreak, by resorting to food transfers through the Pradhan Mantri Garib Kalyan Yojana (PMGKY). Besides, Commerce and Industry Minister Piyush Goyal said that India and Australia should look at boosting the bilateral trade to $100 billion by 2030 from the current level of around $27.5 billion.

Most of the Asian markets are trading lower extending the losses in the previous session and following the broadly negative cues overnight from Wall Street, with investors pressing sales at several counters amid concerns about inflation and imminent monetary tightening by the Federal Reserve, and on reports about imposition of new sanctions by Western nations on Russia.

Back home, agriculture industry stocks were in focus with report that India’s exports of agricultural products, including marine and plantation products, for 2021-22 hit a record at $50 billion. That was up 20% on year. In scrip specific development, MTNL was in limelight as the government has deferred the merger of BSNL and MTNL due to financial reasons.

The BSE Sensex is currently trading at 59267.61, down by 342.80 points or 0.58% after trading in a range of 59205.36 and 59402.61. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.45%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were Utilities up by 2.29%, Power up by 2.28%, Realty up by 1.14%, Healthcare up by 0.76%, PSU up by 0.60%, while TECK down by 0.83%, IT down by 0.76%, Consumer Durables down by 0.73%, Telecom down by 0.48%, Auto down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.44%, Dr. Reddy's Lab up by 1.21%, Sun Pharma up by 0.76%, Axis Bank up by 0.63% and ITC up by 0.54%. On the flip side, Titan down by 2.34%, HDFC down by 2.02%, HDFC Bank down by 1.45%, Wipro down by 1.28% and Nestle down by 1.16% were the top losers.

Meanwhile, the International Monetary Fund’s (IMF) working paper titled ‘Pandemic, Poverty, and Inequality: Evidence from India’ stated that Pradhan Mantri Garib Kalyan Yojana (PMGKAY), which provides free foodgrains to poor people, played a key role in keeping extreme poverty in India at the lowest level of 0.8 per cent during the pandemic-hit 2020. The working paper presents estimates of poverty and consumption inequality in India for each of the years 2004-5 through the pandemic year 2020-21. It said ‘Extreme poverty was as low as 0.8 per cent in the pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020’. Under PMGKAY, which was launched in March 2020, the central government provides 5 kilograms of foodgrains per month for free. The additional free grain is over and above the normal quota provided under the National Food Security Act (NFSA) at a highly subsidised rate of Rs 2-3 per kilogram. PMGKAY has been extended till September 2022.

The working paper, prepared by Surjit S Bhalla, Karan Bhasin and Arvind Virmani, said that in the pandemic year 2020-21, extreme poverty was at its lowest level ever at 0.8 per cent of the population. Further, as early as 2016-17, extreme poverty had reached a low 2 per cent level. According to the more appropriate but 68 per cent higher Low Middle Income (LMI) poverty line of PPP (purchasing power parity) USD 3.2 a day, poverty in India registered 14.8 per cent in the pre-pandemic year 2019-20. This achievement is put in perspective by noting that in 2011-12, the official poverty level for the lower PPP USD 1.9 line was 12.2 per cent.

The working paper also said that for the first time in several decades, extreme poverty - those falling below the USD 1.9 per person per day in terms of purchasing power parity - in the world increased in the pandemic year 2020. As per the working paper, the pandemic support measures instituted by the government were critical in preventing any increase in the prevalence of extreme poverty and that food subsidies have reduced poverty on a consistent basis since the enactment of the FSA in 2013 and the co-incidental increase in the efficiency of targeting via Aadhaar. Further, it said the effect of the subsidy adjustments on poverty is striking.

The CNX Nifty is currently trading at 17719.45, down by 88.20 points or 0.50% after trading in a range of 17700.70 and 17755.45. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 1.77%, NTPC up by 1.70%, Cipla up by 1.55%, Dr. Reddy's Lab up by 1.08% and Divi's Lab up by 0.85%. On the flip side, Titan down by 2.34%, HDFC down by 2.09%, UPL down by 1.52%, HDFC Bank down by 1.43% and Nestle down by 1.19% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 513.09 points or 1.88% to 26,837.21, Straits Times declined 18.31 points or 0.53% to 3,404.64, Hang Seng plunged 262.28 points or 1.19% to 21,818.24, Taiwan Weighted lost 194.60 points or 1.11% to 17,327.90, KOSPI fell 39.04 points or 1.43% to 2,695.99 and Shanghai Composite was down by 32.37 points or 0.99% to 3,251.06, while Jakarta Composite rose 21.30 points or 0.30% to 7,125.52.