Published on 28/09/2021 5:28:00 PM | Source: Accord Fintech

Key gauges end weaker on Tuesday on weak global cues

Posted in Market Outlook| #Market Outlook

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Indian equity benchmarks recovered from their intraday lows but ended over half percent lower on Tuesday dragged by Realty, Telecom, TECK and IT stocks amid weak global cues. After making cautious start, markets extended their losses in noon session, as traders were cautious, after the World Bank said that East Asia and Pacific region's recovery has been undermined by the spread of the COVID-19 Delta variant, which is likely slowing economic growth and increasing inequality in the region. Economic activity began to slow in the second quarter of 2021, and growth forecasts have been downgraded for most countries in the region, according to the World Bank's East Asia and Pacific Fall 2021 Economic Update. Traders also took note of report that the finance ministry said the government will borrow Rs 5.03 trillion in the second half of the current fiscal to fund the revenue gap for reviving the pandemic-hit economy. During the first half, the government has raised Rs 7.02 trillion by issuing bonds

However, key gauges recovered some of morning losses, as traders found some support with domestic rating agency Crisil Ratings’ report that the monthly collection ratios of its rated securitised pools has seen improvement due to the gradual easing of COVID-19 related restrictions. The ratios had declined between April and June 2021 following the second wave of the Covid-19 pandemic. Some optimism also came with labour survey finds that employment in nine selected sectors, including construction, manufacturing and IT/BPO, was at 3.08 crore in the April-June quarter of 2021-22, reflecting a growth of 29 per cent compared to 2.37 crore reported in the Economic Census of 2013-14. Meanwhile, Commerce and Industry Minister Piyush Goyal has said that the existing foreign trade policy (FTP) will be extended till March 31 next year. The government had earlier extended the FTP 2015-20 until September 30 this year due to the Covid-19 crisis. The Foreign Trade Policy provides guidelines for enhancing exports to push economic growth and create jobs.

On the global front, Asian markets settled mostly lower on Tuesday, while European markets were trading lower with worries about the potential impact of a widening power shortage in China and Fed tapering signals denting sentiment. Some concern also came as the National Bureau of Statistics said China's industrial profits continued to grow at a slower pace as higher input prices as well as shortage of materials lifted production cost. Industrial profits increased 10.1 percent year-on-year in August, following an annual growth of 16.4 percent in July. Back home, on the sectoral front, coal industry’s stocks were in focus with a private report that India’s massive fleet of coal plants are running dangerously low on stockpiles, which may force the nation to buy expensive shipments of the fuel or else risk blackouts. Stocks related to tourism sector were in action as union Tourism Minister G Kishan Reddy said his ministry is talking to various stakeholders for the recovery of the tourism sector affected by the COVID-19 pandemic, while stressing that vaccination is key for its revival.

Finally, the BSE Sensex fell 410.28 points or 0.68% to 59,667.60 and the CNX Nifty was down by 106.50 points or 0.60% to 17,748.60.     

The BSE Sensex touched high and low of 60,288.44 and 59,045.53, respectively and there were 10 stocks advancing against 20 stocks declining on the index.    

The broader indices ended in red; the BSE Mid cap index fell 0.71%, while Small cap index was down by 0.62%.

The top gaining sectoral indices on the BSE were PSU up by 2.06%, Utilities up by 1.74%, Power up by 1.49%, Oil & Gas up by 1.45% and Energy up by 1.21%, while Realty down by 3.02%, Telecom down by 2.60%, TECK down by 2.12%, IT down by 1.98% and Consumer Discretionary down by 0.75% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 4.40%, NTPC up by 3.94%, Sun Pharma up by 2.19%, Titan Company up by 1.84% and Kotak

Mahindra Bank up by 1.62%. On the flip side, Bharti Airtel down by 3.68%, Tech Mahindra down by 3.41%, Bajaj Finance down by 3.22%, Bajaj Finserv down by 2.73% and HCL Technologies down by 2.03% were the top losers.

Meanwhile, Ratings agency ICRA in its latest report has raised the country's FY22 real GDP (gross domestic product) forecast to 9 per cent from 8.5 per cent earlier, citing the brightening prospects for H2FY22. The report said the country is benefitting from the rapid ramp-up in Covid-19 vaccine administration, healthy advance estimates of kharif output and the withdrawal of expenditure management measures related to the government’s spending.

The report stated the widening coverage of Covid-19 vaccines is likely to boost confidence, which will in-turn re-energise demand for contact-intensive services, helping to revive the portions of the economy affected most by the pandemic. Moreover, it said the robust kharif harvest is also likely to sustain the consumption demand from the farm sector.

It mentioned the expected acceleration in the central government spending after the withdrawal of the earlier cash management guidelines will recharge this key driver of aggregate demand.  ICRA expects GVA growth at 8.6 per cent, while CPI inflation to be between 5.3-55 per cent in FY22. WPI inflation is expected to remain at 10 per cent in the current fiscal year.

The CNX Nifty traded in a range of 17,912.85 and 17,576.10 and there were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 4.43%, Coal India up by 4.22%, NTPC up by 3.74%, Sun Pharma up by 3.60% and Indian Oil Corporation up by 3.54%. On the flip side, Bharti Airtel down by 3.70%, Tech Mahindra down by 3.52%, Bajaj Finance down by 3.33%, Divi's Lab down by 2.81% and Bajaj Finserv down by 2.75% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 39.46 points or 0.56% to 7,023.94, France’s CAC decreased 117.36 points or 1.76% to 6,533.55 and Germany’s DAX decreased 188.45 points or 1.21% to 15,385.43.

Asian markets settled mostly lower on Tuesday, tracking lacklustre trading on Wall Street overnight. Further, concerns over potential impact of a widening power shortage in China, surging corona-virus cases and a rise in US treasury yields also kept the market sentiments bearish. While, global investors look ahead to speeches from several US Fed officials this week for cues on the central bank’s plan on hiking interest rates. Japanese shares ended slightly lower, despite expectations for a steady economic growth momentum under a new political leadership in the run-up to a ruling party election. However, Chinese markets gained after the Chinese central bank PBoC pledged to ensure a ‘healthy property market’ and protect homebuyers amid the China Evergrande Group debt crisis.


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