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Indian equity benchmarks fell for second straight session on Tuesday dragged by losses in Metal, Telecom, Oil & Gas and Banking shares. After making cautious opening, key indices traded tad lower as S&P Global cut its growth forecasts for some of Asia's top economies including India, the Philippines and Malaysia, offsetting upgrades to China and South Africa and much of Latin America. The estimates, which feed into S&P's closely-followed sovereign ratings, saw India's growth projection chopped to 9.5% from 11% due to its COVID-19 outbreak. Selling further crept in with a domestic rating agency ICRA stating that nearly a third of loans by NBFCs are in risky segments, and the already elevated non-performing assets ratio for such lenders are expected to rise by up to 1 percent in FY22 due to the impact of the second COVID-19 wave. Markets added losses in late afternoon session, as unemployment rate came down further to 8.72% for the week ended June 27 from 9.35% in the previous week, but still remained higher than 8.16% recorded at the beginning of the second Covid-19 wave in early April. The unemployment rate has fallen on a fallen labour participation rate (LPR). The LPR fell from 40.5% in the previous week to 39.6%.

Traders failed to get support with Federation of Indian Exports Organisation (FIEO) stating that the 'little ambitious' exports target of $400 billion for the current fiscal is achievable but it requires aggressive marketing strategy and venturing into new markets. FIEO President A Sakthivel also said that free trade agreements with countries including UK, Europe, Australia, and the US would help further push the country's exports. Traders also overlooked Niti Aayog Vice Chairman Rajiv Kumar’s statement that the fresh set of stimulus measures announced by the finance minister will not only accelerate the revival of the economy but also enable a bolstering of employment opportunities. Finance Minister Nirmala Sitharaman on Monday announced Rs 1.5 lakh crore of additional credit for small and medium businesses, more funds for the healthcare sector, loans to tourism agencies and guides, and waiver of visa fee for foreign tourists as part of a fresh package to support the pandemic-hit economy.

On the global front, Asian markets settled mostly lower on Tuesday as outbreaks of the highly contagious Covid-19 variant Delta and reports of new travel curbs in some parts of the world raised concerns about a hindrance to global economic recovery. European markets were trading higher, as underlying sentiment was underpinned after the European Commission said that its economic sentiment indicator increased sharply in June to hit a 21-year high, driven mainly by a strong increase in confidence in the services sector. Back home, on the sectoral front, travel sector stocks were focus as the Centre announced free visas for 500,000 tourists and a loan guarantee scheme to support recognised tour operators and tourist guides whose business has been disrupted due to Covid-19 pandemic. There was some reaction in oil & gas industry stocks with report that India’s natural gas producers expect some cheer as the domestic gas price is set to rise after having fallen for two consecutive years.

Finally, the BSE Sensex fell 185.93 points or 0.35% to 52,549.66, while the CNX Nifty was down by 66.25 points or 0.42% to 15,748.45.  

The BSE Sensex touched high and low of 52,816.42 and 52,477.77, 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 0.42%, while Small cap index was down by 0.07%.

The few gaining sectoral indices on the BSE were Healthcare up by 0.73%, FMCG up by 0.55% and Utilities up by 0.41%, while Metal down by 1.35%, Telecom down by 1.22%, Oil & Gas down by 1.22%, Bankex down by 1.06%, Auto down by 1.02% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.75%, Hindustan Unilever up by 1.36%, NTPC up by 1.25%, Dr. Reddy's Lab up by 0.83% and Nestle up by 0.77%. On the flip side, Kotak Mahindra Bank down by 1.54%, ICICI Bank down by 1.52%, Tech Mahindra down by 1.47%, Bajaj Auto down by 1.39% and Mahindra & Mahindra down by 1.35% were the top losers.

Meanwhile, in a bid to help revival of the economy battered by coronavirus disease (covid-19) pandemic, Finance Minister Nirmala Sitharaman has announced a slew of measures, including Rs 1.1 lakh crore credit guarantee scheme for improving health infrastructure, and enhancing the limit under the ECLGS by 50 per cent to Rs 4.5 lakh crore for the MSME sector facing liquidity crunch. She said this comprises eight relief measures and other eight measures to support the economic growth.

She announced Rs 1.1 lakh crore loan guarantee scheme for COVID-affected sectors, including health sector, which includes guarantee cover for expansion or for new projects. Besides, she said, additional Rs 1.5 lakh crore limit enhancement done for Emergency Credit Line Guarantee Scheme (ECLGS) scheme. The existing limit for ECLGS scheme, announced as part of Rs 20-lakh crore Atmanirbhar Bharat Abiyan package in May 2020, was Rs 3 lakh crore. Last month, the finance ministry expanded the scope of the Rs 3 lakh crore ECLGS by including concessional loans to hospitals for setting up on-site oxygen generation plants.

Besides, the validity of the scheme was extended by three months to September 30 and or till guarantees for an amount of Rs 3 lakh crore are issued. The last date of disbursement under the scheme has been extended to December 31. Under the ECLGS 4.0, 100 per cent guarantee cover was given to loans up to Rs 2 crore to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants. The interest rate on these loans has been capped at 7.5 per cent, which means the banks can offer loans less than this ceiling.

The CNX Nifty traded in a range of 15,835.90 and 15,724.05 and there were 14 stocks advancing against 35 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Power Grid up by 2.31%, Cipla up by 1.51%, Nestle up by 1.27%, Hindustan Unilever up by 1.25% and Divi's Lab up by 1.11%. On the flip side, Indian Oil Corporation down by 2.39%, ONGC down by 2.17%, Hindalco down by 2.08%, Kotak Mahindra Bank down by 1.61% and ICICI Bank down by 1.55% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 13.67 points or 0.19% to 7,086.64, France’s CAC rose 24.73 points or 0.38% to 6,582.75 and Germany’s DAX was up by 140.63 points or 0.9% to 15,694.81.

Asian markets settled mostly lower on Tuesday, even though the S&P 500 and Nasdaq Composite both closed at record highs overnight. Global surge in new Covid-19 Delta plus variants clouding the outlook for the global economic recovery and weakened investors' appetite for risk. Hong Kong shares declined on tracking losses in state-owned energy players like China National Offshore Oil Corp (CNOOC) and PetroChina. Japanese shares dropped amid news on another impending State of Emergency in Tokyo and other areas due to signs of resurgence in coronavirus infections.

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