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Published on 24/09/2020 5:41:13 PM | Source: LKP Securities Ltd

Markets fall for sixth consecutive day amid global selloff - LKP Securities

Posted in Market Outlook| #Market Outlook #LKP Securities Ltd

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Markets fall for sixth consecutive day amid global selloff

Falling for the sixth straight session, domestic equity benchmarks have witnessed massive selling pressure and settled near day’s low point on Thursday, following a heavy selloff in global equities as fears of fresh pandemic restrictions kept domestic investors jittery. All sectoral indices also witnessed deep cuts led by the IT, TECK, Auto and Metal indices down around 4% percent each. Key gauges opened on a negative note and stayed in red for whole day, as traders were anxious with the Department for Promotion of Industry and Internal Trade (DPIIT) in its latest data showed that foreign direct investment (FDI) equity inflows into India contracted by 60 per cent to $6.56 billion (Rs 49,820 crore) in first quarter of current financial year (Q1FY21). The overseas inflows during April-June 2019 stood at $16.33 billion. Market participants also took a note of the Federation of Indian Chambers of Commerce & Industry (FICCI) President Sangita Reddy’s statement that the economy can be revived only by boosting consumer sentiments, which are weak and need measures like discount vouchers from the government to spur the pending.

Sentiments remained downbeat with a report by rating agency S&P pointed out that India’s banking system will be among the last in the world to recover from disruptions caused by the covid-19 pandemic. It said ‘we have taken negative rating actions on Indian banks and non-banking financial institutions (NBFIs) as operating conditions have deteriorated through the crisis. The country entered the pandemic with an overhang of high nonperforming assets.’ The key indices also suffered due a sinking rupee which slipped 32 paise to quote at 73.89 against the US dollar. Separately, Commerce and Industry Minister Piyush Goyal has said that the government is in the process of finalizing a National Logistics Policy which will help bring down logistics cost significantly. He noted that stakeholder consultations are being held for the same.

On the global front, Asian markets ended mostly lower on Thursday, while European markets were trading mostly in red, amid worries about the global economic recovery due to urging coronavirus cases in certain parts of the world and uncertainty about new U.S. fiscal stimulus. Federal Reserve Chair Jerome Powell noted that despite progress in rebounding from the coronavirus economic downturn, ‘there is a long way to go’. European markets were trading mostly in red, as warning signs coming out of Europe about the risk of a second wave in the coronavirus pandemic raised fears of a slowing global recovery. Meanwhile, survey data from ifo Institute showed that German business confidence improved further in September. The business confidence index rose to 93.4 in September from 92.5 in August - coming in slightly below economists' forecast of 93.8. Back home, on the sectoral front, banking stocks were trading under pressure despite Indian Banks' Association chief executive Sunil Mehta stating that banks are working together in removing hurdles and speeding up the process of execution of inter-creditor agreement (ICA) in order to ensure faster resolution of bad assets amid COVID-19 pandemic. Besides, agriculture stocks were in focus as the Commission for Agricultural Costs and Prices (CACP) recommended a fertiliser cash subsidy of Rs 5,000 per year to farmers.

Finally, the BSE Sensex fell 1114.82 points or 2.96% to 36,553.60, while the CNX Nifty was down by 326.30 points or 2.93% to 10,805.55.

The BSE Sensex touched high and low of 37,304.26 and 36,495.98, respectively and there was 1 stock advancing against 29 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 2.14%, while Small cap index was down by 2.28%.

The top losing sectoral indices on the BSE were IT down by 4.45%, TECK down by 4.25%, Auto down by 3.56%, Metal down by 3.51% and Bankex down by 3.41%, while there were no gainers on BSE sectoral front.

The lone gainer on the Sensex was Hindustan Unilever up by 0.36%. On the flip side, Indusind Bank down by 7.10%, Bajaj Finance down by 6.63%, Mahindra & Mahindra down by 6.37%, Tech Mahindra down by 5.65% and TCs down by 5.50% were the top losers.

Meanwhile, the Department for Promotion of Industry and Internal Trade (DPIIT) in its latest data has said foreign direct investment (FDI) equity inflows into India contracted by 60 per cent to $6.56 billion (Rs 49,820 crore) in first quarter of current financial year (Q1FY21). The overseas inflows during April-June 2019 stood at $16.33 billion.

The data showed sectors which attracted foreign inflows during the first quarter of 2020-21 included services ($1.14 billion), computer software and hardware ($1.06 billion), telecommunications ($2 million), automobile ($326 million) and trading ($426 million).

Singapore emerged as the largest source of FDI in India during the first quarter of the fiscal with $1.82 billion investments. It was followed by the Netherlands ($1.08 billion), Mauritius ($900 million), the US ($640 million), and Japan ($412 million).

During the period, states which attracted FDI included Maharashtra, Karnataka, Delhi, Gujarat and Jharkhand. Total FDI inflows, which include re-invested earnings, stood at $11.51 billion during the first quarter of this fiscal. FDI is important as the country requires major investments to overhaul its infrastructure sector to boost growth.

The CNX Nifty traded in a range of 11,015.30 and 10,790.20 and there were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.85%, Zee Entertainment Enterprises up by 0.89% and Hindustan Unilever up by 0.25%. On the flip side, Indusind Bank down by 7.45%, Tata Motors down by 6.58%, Bajaj Finance down by 6.57%, Grasim Industries down by 5.68% and TCS down by 5.45% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 21.40 points or 0.36% to 5,877.86 and France’s CAC fell 4.46 points or 0.09% to 4,797.80, while Germany’s DAX rose 24.79 points or 0.2% to 12,667.76.

Asian markets ended mostly lower on Thursday, following sell-off on Wall Street overnight on renewed concerns over slowing global economic recovery due to resurgence of corona virus pandemic infections. Further, uncertainties surrounding the US presidential elections and economic warnings from US Federal Reserve officials also dampened investor sentiment. 'The US economy is recovering very robustly, but we are still in a deep hole,' said US Federal Vice Chairman Richard Clarida. South Korean shares plunged to hit over one-month low as tensions on the Korean Peninsula reignited and after reports that South Korea’s defense ministry said North Korea had killed a missing official from the South earlier this week. It marked the first time since July 2008 that a South Korean civilian has been shot dead in North Korea.

 

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