Pausing three-day gaining streak, Indian equity benchmarks ended Friday’s session on lower note with losses of more than half percent, following weak cues from other Asian markets. Markets started the session in negative territory, as India Ratings (Ind-Ra) expects most sectors to experience varying degrees of revenue contraction during FY21 due to demand and supply disruptions caused by the novel coronavirus, or COVID-19, pandemic. Selling further crept in amid the Reserve Bank of India (RBI) unexpectedly slashed benchmark interest rates to their lowest levels since 2000 and extended the moratorium on repayment of bank for three months to ramp up support for the economy which is likely to contract for the first time in over four decades. The central bank, which advanced the monetary policy committee (MPC) meeting for the second time since March, extended the three-month moratorium of loan repayments, from June 1 to August 31 and raised the limit on banks' group exposure to companies.
Key bourses continued their weak run in final hour of trade, as Moody's Investors Service said India's economy is expected to contract for the first time in more than four decades saying economic damage owing to the coronavirus-induced lockdown will be significant with lower consumption and sluggish business activity. However, markets managed to pared some initial losses as traders found some support with Commerce and Industry Minister Piyush Goyal’s statement that in order to make India a self-reliant country and a global supplier, the government has recognised 12 sectors, including auto components, textiles, industrial machinery and furniture, where attention would be given. Goyal said that a self-reliant India will ensure production of quality products on a large scale, fulfil India's requirements and encourage export of surplus production.
On the global front, Asian markets ended in red on Friday, while European markets were trading lower, as a deterioration in U.S.-China ties compounded fears of slower recovery from the economic damage wreaked by the COVID-19 pandemic. Back home, select auto stocks ended higher with Union Minister Nitin Gadkari’s statement that the government is set to introduce a vehicle scrappage policy, under which recycling clusters may be established near ports, expressing confidence that India will emerge as the world's leading automobile manufacturing hub in five years. However, shipping sector’s stocks fell as ratings agency ICRA said impacted by COVID-19, major ports in India witnessed a steep 21 per cent volume contraction in April and bulk cargo throughput may shrink up to 8 per cent in the current fiscal (FY21).
Finally, the BSE Sensex lost 260.31 points or 0.84% to 30,672.59, while the CNX Nifty was down by 67.00 points or 0.74% to 9,039.25.
The BSE Sensex touched high and low of 31,107.91 and 30,474.88, respectively and there were 12 stocks advancing against 18 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index fell 0.83%, while Small cap index was down by 0.23%.
The top gaining sectoral indices on the BSE were IT up by 1.68%, TECK up by 1.44%, Healthcare up by 0.43%, Auto up by 0.37%, Consumer Discretionary up by 0.31% while, Finance down by 3.00%, Bankex down by 2.44%, Metal down by 1.98%, Realty down by 1.47%, Industrials down by 0.61% were the top losing indices on BSE.
The top gainers on the Sensex were Mahindra & Mahindra up by 4.46%, Infosys up by 3.01%, Asian Paints up by 2.72%, Ultratech Cement up by 1.90% and Tech Mahindra up by 1.88%. On the flip side, Axis Bank down by 5.65%, HDFC down by 4.99%, Bajaj Finance down by 4.67%, ICICI Bank down by 4.32% and Bajaj Auto down by 3.28% were the top losers.
Meanwhile, Minister of MSME and Road Transport and Highways Nitin Gadkari has said that the government is set to introduce the much-awaited vehicle scrappage policy to boost India’s auto manufacturing. He also said under the policy, recycling clusters may be established near ports. He expressed confidence that India will emerge as the world's leading automobile manufacturing hub in five years.
The minister said ‘now, we are going to start the new scrapping policy, by which old cars, trucks and buses will be scrapped.’ He also has stated that the government has decided to increase the depth of the country's ports by 18 metres, and automobile clusters comprising recycling plants can be set up near the ports.
Gadkari further stated that the material recycled will be useful for the automobile industry as it will reduce cost of manufacturing cars, buses, and trucks, increasing India's competitiveness in international markets. He added that within five years, India will be the number one manufacturing hub of all cars, buses and trucks, with all fuel, ethanol, methanol, bio-CNG, LNG, electric as well as hydrogen fuel cells.
The CNX Nifty traded in a range of 9,149.60 and 8,968.55 and there were 24 stocks advancing against 26 stocks declining on the index.
The top gainers on Nifty were Zee Entertainment up by 7.11%, Mahindra & Mahindra up by 4.43%, Cipla up by 3.31%, Shree Cement up by 3.11% and Infosys up by 2.95%. On the flip side, Axis Bank down by 5.21%, HDFC down by 5.10%, Bajaj Finserv down by 4.61%, Bajaj Finance down by 4.54% and Hindalco Industries down by 3.94% were the top losers.
European markets were trading lower; UK’s FTSE 100 decreased 76.45 points or 1.27% to 5,938.80, France’s CAC decreased 19.16 points or 0.43% to 4,426.29 and Germany’s DAX decreased 81.23 points or 0.73% to 10,984.70.
Asian markets ended lower on Friday, led by a nearly 6% decline in Hong Kong shares after China said it would introduce a proposal for a national security law in the city, fuelled worries over Sino-US tensions. US President Donald Trump warned that the United States would react strongly if China follows through on plans to impose new national security legislation on Hong Kong after last year’s often violent pro-democracy unrest. Market sentiments weakened further by tracking Wall Street losses followed by dismal employment data from the US Labor Department showing that another 2.4 million people filed for unemployment benefits last week. That brings the total number of filings during the pandemic to more than 38 million. Investors largely shrugged off the Bank of Japan's (BoJ) decision to launch a new lending program worth 30 trillion yen ($279 billion) that aims to channel more funds to small and medium-sized businesses to cushion COVID-19's economic blow.
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