Markets end lower on selling across the board
Indian equity benchmarks ended the Friday’s trade in red terrain as traders opted to book profit especially in IT names that came out with their quarterly numbers. Markets started the session with caution as traders were concerned as India registered 15,515 fresh Covid-19 cases in the last 24 hours, taking the tally to 10,528,346. Traders were also seen taking a note of reports that Former Reserve Bank of India (RBI) Governor Raghuram Rajan says the government should take advantage of the peaks in the Indian equity markets right now and sell stakes in PSUs while prioritising spending to get the economy back on track. He said the upcoming Budget for the fiscal year beginning April 1 should look to provide 'relief to the poorer households and small and medium enterprises.'
Sentiments also remained dampened after rating agency CRISIL’s report which projected CPI Inflation at 6.4% for fiscal 2021 (FY21). It mentioned that after eight months above the Reserve Bank of India (RBI's) target band of 2-6%, Consumer Price Index (CPI) inflation was finally back in range, declining for the second straight month to a below-consensus 4.6% in December, from 6.9% in November. Average CPI inflation during April-December now measures 6.6%, down from the April-November average of 6.9%.Market participants overlooked report that Prime Minister Narendra Modi will launch India's Covid-19 vaccination drive tomorrow via video conferencing. This will be the world's largest vaccination programme covering the entire length and breadth of the country. Meanwhile, the government has notified a modified scheme to provide financial assistance to distilleries producing first-generation ethanol from feedstocks, including cereals.
Selling intensified after European counters made a negative start as traders remained concerned over Covid-related restrictions with the announcement of additional US stimulus. Asian markets ended mostly lower on Friday, even after the Bank of Japan upgraded its economic assessment of three out of nine regions and downgraded one. Many regions, while noting that their economy had been in a severe situation due to the impact of the novel coronavirus, there were signs of picking up. However, the impact of a resurgence of Covid-19 had been pointed out recently, primarily in the services industry, the bank noted.
Back home, bank credit rose 6.66 per cent (on a YoY basis) in the fortnight ended January 1, 2021, up from 6.1 per cent in the previous fortnight (December 18, 2020). The third quarter (Q3FY21) was marked by festive season, giving a push to credit demand. On the sectoral front, auto stocks remained in focus with industry body SIAM’s statement that passenger vehicle wholesales in India slipped to a ten-year low in the April-December this fiscal, and the industry will have to work hard to regain better volumes and business health.
Finally, the BSE Sensex fell 549.49 points or 1.11% to 49,034.67, while the CNX Nifty was down by 161.90 points or 1.11% to 14,433.70.
The BSE Sensex touched high and low of 49,656.71 and 48,795.79, respectively and there were 4 stocks advancing against 26 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index declined 1.25%, while Small cap index was down by 1.06%.
The lone gaining sectoral index on the BSE was Telecom up by 3.68%, while Oil & Gas down by 2.43%, IT down by 1.93%, PSU down by 1.80%, Realty down by 1.77% and Capital Goods down by 1.72% were the top losing indices on the BSE.
The few gainers on the Sensex were Bharti Airtel up by 3.84%, ITC up by 1.77%, Bajaj Auto up by 0.16% and Bajaj Finance was up by 0.03%. On the flip side, Tech Mahindra down by 3.92%, HCL Tech down by 3.73%, ONGC down by 3.48%, Asian Paints down by 2.76% and Ultratech Cement down by 2.39% were the top losers.
Meanwhile, rating agency CRISIL has projected CPI Inflation at 6.4% for fiscal 2021 (FY21). It mentioned that after eight months above the Reserve Bank of India (RBI's) target band of 2-6%, Consumer Price Index (CPI) inflation was finally back in range, declining for the second straight month to a below-consensus 4.6% in December, from 6.9% in November. Average CPI inflation during April-December now measures 6.6%, down from the April-November average of 6.9%.
According to CRISIL, not only did CPI inflation fall on-month, aided by a massive decline in food prices, but the high base effect of last year also helped pull down headline inflation. But while core inflation softened marginally, fuel inflation went up in December. It said Core inflation, i.e., headline sans food and beverages, and fuel and light, softened only marginally at 5.6%, just 15 basis points (bps) lower than November, suggesting continuing stickiness in core inflation. This could be reflective of mild improvement in demand conditions on one hand and rising input prices on the other. Core inflation has a weight of 47.3%, and is a sizeable contributor to headline inflation.
It noted that clothing and footwear inflation rose to 3.5% in December, from 3.4% in November. Another category that saw upward inflation price pressure was recreation and amusement that rose to 5.2% from 4.5%. Health inflation also rose to 6.0% from 5.6%. That said, inflation softened in idiosyncratic categories, i.e. personal care and effects (to 11.7% from 12.0%) and transport and communication (to 9.3% from 11.1%).
The CNX Nifty traded in a range of 14,357.85 and 14,617.45 and there were 8 stocks advancing against 42 stocks declining on the index.
The top gainers on Nifty were Tata Motors up by 6.65%, Bharti Airtel up by 3.95%, UPL up by 2.63%, ITC up by 1.75% and Grasim Industries up by 1.27%. On the flip side, Tech Mahindra down by 3.95%, HCL Tech down by 3.72%, Wipro down by 3.63%, GAIL India down by 3.33% and ONGC down by 3.14% were the top losers.
European markets were trading lower; UK’s FTSE 100 declined 21.93 points or 0.32% to 6,780.03, France’s CAC decreased 27.87 points or 0.49% to 5,653.27 and Germany’s DAX was down by 49.93 points or 0.36% to 13,938.77.
Asian markets ended mostly lower on Friday despite US President-elect joe Biden unveiled details of a $1.9 trillion stimulus proposal to support US households and businesses amid the corona virus pandemic. Japanese shares declined from a 30-year high hit the previous day even as tech-related shares gained after Taiwanese chipmaker TSMC posted its best-ever quarterly profit. Meanwhile, Chinese shares ended on a flat note on lingering Sino-US tensions after the US government blacklisted Chinese smartphone maker Xiaomi Corp and ten other companies over alleged military links.
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