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Indian equity markets continued to trade in red in the afternoon session on account of selling in frontline blue chip counters tracking other Asian markets. Traders were worried as spike in coronavirus infections in Asia, with Australia's most populous city of Sydney plunging into a lockdown after a cluster of cases involving the highly contagious Delta strain ballooned. While the fresh cases have declined in India, the Delta variant continues to be a cause of concern. Some anxiety also came with India Ratings and Research (Ind-Ra) statement its earlier estimate of gross domestic product (GDP) growth at 10.1 per cent for the current financial year (FY22) is unlikely to hold due to the speed and scale of Covid 2.0.

On the global front, Asian markets were trading mostly lower as spike in coronavirus cases across the region over the weekend hurt investor sentiment. In scrip specific development, shares of Thyrocare Technologies dipped after Docon Technologies, along with API Holdings, the parent company of unicorn PharmEasy, an online medical platform, on going to acquire 66.1 per cent equity stake in diagnostic chain firm for Rs 4,546 crore.

The BSE Sensex is currently trading at 52776.93, down by 148.11 points or 0.28% after trading in a range of 52728.70 and 53126.73. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.55%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.21%, Metal up by 1.08%, Utilities up by 0.93%, Basic Materials up by 0.81% and PSU was up by 0.59%, while TECK down by 0.56%, IT down by 0.55%, Capital Goods down by 0.48%, Telecom down by 0.35% and Energy was down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy's Lab up by 1.55%, Tata Steel up by 1.13%, Sun Pharma up by 0.99%, NTPC up by 0.90% and Indusind Bank was up by 0.52%. On the flip side, Titan Company down by 1.55%, TCS down by 1.20%, HCL Tech down by 0.88%, ITC down by 0.71% and Bajaj Finance was down by 0.66% were the top losers.

Meanwhile, S&P Global Ratings has said that the coronavirus disease (covid-19) pandemic could worsen structural deficits and indebtedness of states, despite a likely rebound in the economy over the next 12-24 months. It expects the country's economic growth to remain above average over the next few years and the rebound in the economy in the current fiscal ending March 31, 2022, will feed into states' revenues.

The US-based rating agency estimates revenues of states to increase by an average of 17 percent annually over fiscals 2021-2023. It noted that India's stronger growth than peer countries has been a key factor underpinning the sustainability of states' fiscal performance. It had cut India's growth forecast for the current fiscal to 9.5 percent from 11 percent earlier. It lowered the growth outlook saying that a severe second Covid-19 outbreak in April and May led sharp contraction in economic activity, but a gradual revival is underway.

S&P has stated that it will be hard for state governments to rapidly scale down elevated expenditures induced by Covid-19. The pandemic has led to increased spending on healthcare, social safety and digital infrastructure. It believes the extraordinary support from the central government and the Reserve Bank of India will remain a key pillar for states' fiscal framework and performance. A significant risk for the fiscal framework and performance of Indian states will be the Rs 3 trillion power sector reforms announced in FY2021-22 budget presented by the central government. While details of the proposed reform are not known yet, meaningful state participation is likely. The significant linkages between the power distribution companies (discoms) and states have led to the indebtedness of the discoms shifting to states.

The CNX Nifty is currently trading at 15829.95, down by 30.40 points or 0.19% after trading in a range of 15812.50 and 15915.65. There were 24 stocks advancing against 25 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Divi's Lab up by 2.15%, ONGC up by 1.78%, Adani Ports up by 1.63%, Dr. Reddy's Lab up by 1.56% and Tata Consumer Products was up by 1.44%. On the flip side, HDFC Life Insurance down by 2.70%, Titan Company down by 1.42%, TCS down by 1.24%, HCL Tech down by 0.97% and Larsen & Toubro was down by 0.78% were the top losers.

Asian markets were trading mostly lower; Nikkei 225 slipped 18.16 points or 0.06% to 29,048.02, KOSPI fell 0.95 points or 0.03% to 3,301.89, Hang Seng decreased 45.05 points or 0.15% to 29,243.17, Jakarta Composite lost 54.60 points or 0.91% to 5,967.80 and Shanghai Composite was down by 4.61 points or 0.13% to 3,602.95.

On the flip side, Taiwan Weighted strengthened 87.98 points or 0.5% to 17,590.97 and Straits Times was up by 9.69 points or 0.31% to 3,131.29.

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