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Indices continue lackluster trade

Indian equity benchmarks continued their weak trade in afternoon session, with Sensex and Nifty down by 69 and 11 points respectively. Stocks from energy, oil and gas and PSU counters were trading lower, while basic materials, banking and healthcare counters were supporting the markets. Traders remained on sidelines on report that Indian and Chinese troops came face-to-face at Naku La in North Sikkim last week amid the tense border standoff between the two sides in eastern Ladakh. They said the Chinese troops attempted to transgress into the Indian side of the Line of Actual Control (LAC) but were stopped by the Indian military personnel. It is learnt that a brawl broke out when the Indian troops stopped the Chinese soldiers. Meanwhile, reflecting strong momentum, India witnessed 19 initial public offers worth $1.84 billion in the fourth quarter of 2020. In the latest December quarter, there were 19 IPOs valued at $1.836 billion and the largest was that of Gland Pharma with an issue size of $869 million. There were just 11 IPOs in the year-ago period.

On the global front, Asian markets were trading mixed amid some hopes for recovering economies slammed by the pandemic, as market attention turned to upcoming company earnings. Back on street, in scrip specific developments, Aurobindo gained as govt nods for promotion of manufacturing bulk drugs and Ultratech Cement surged on reporting over 2-fold jump in Q3 consolidated net profit .

The BSE Sensex is currently trading at 48808.62, down by 69.92 points or 0.14% after trading in a range of 48512.02 and 49263.15. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.61%, while Small cap index was down by 0.84%.

The top gaining sectoral indices on the BSE were Basic Materials up by 0.94%, Bankex up by 0.85%, Healthcare up by 0.72%, Capital Goods up by 0.31% and Realty was up by 0.27%, while Energy down by 3.90%, Oil & Gas down by 2.11%, PSU down by 1.08%, Power down by 0.90% and Consumer Discretionary was down by 0.90% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.86%, Bajaj Finserv up by 1.97%, Sun Pharma up by 1.90%, HDFC Bank up by 1.56% and HDFC was up by 1.17%. On the flip side, Reliance Industries down by 4.62%, Asian Paints down by 2.76%, ONGC down by 2.21%, HCL Tech down by 1.71% and Nestle was down by 1.68% were the top losers.

Meanwhile, rating agency ICRA in its latest report has said that the tea industry may continue to face challenges in the next financial year (FY 2021-22) with hike in wages and its impact on prices, as production returns to normal. It also expects the challenges for the tea industry to remain in 2021-22, after considerable improvement in performance during 2020-21. It said that the impact on bulk tea prices once the production returns to normal in the new season would be a critical factor determining the profitability in the next financial year. it added that West Bengal has recently announced a 15 per cent increase in wage rates, on an interim basis, which would increase the cost of production for bulk tea companies.

The report stated domestic tea prices have witnessed a significant increase in the current financial year, with the North India (NI) auction average increasing by 46 per cent y-o-y during April-December 2020 and the South India (SI) auction average up by 41 per cent during the same period. Tea prices witnessed a sharp increase on the back of a 10 per cent fall in domestic production, while consumption remained firm. While tea prices moderated during November-mid December 2020, following a seasonal quality decline amid normal production levels in September and October 2020, the prices rebounded in the recent auctions in the domestic market in the calender year 2020. Thus, the profitability of NI-based bulk tea players is expected to witness a significant improvement in 2020-21, on the back of a sharp improvement already witnessed in the first half of 2020-21 and significantly lower losses expected in the second half of 2020-21.

However, the rating agency stated the sustainability of the same in 2021-22 will depend on the price and input costs. ICRA Vice-President and Sector Head (Corporate Sector Ratings) Kaushik Das said, 'While it would be premature to comment on the exact level of tea prices, nonetheless, overall prices are likely to witness a negative bias, once the production returns to normal in the new season.' He added that trend in prices apart, another challenge facing the industry is the increase in wage rates. 'West Bengal has already announced an interim wage increase, Assam is also likely to follow along similar lines.' Das also said the sustenance of the healthy profitability would be critical to ensure the long-term financial health of the bulk tea industry.

The CNX Nifty is currently trading at 14360.20, down by 11.70 points or 0.08% after trading in a range of 14260.25 and 14491.10. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 9.86%, Cipla up by 4.35%, UPL up by 4.35%, Axis Bank up by 2.75% and JSW Steel was up by 2.30%. On the flip side, Reliance Industries down by 4.67%, Eicher Motors down by 2.87%, Asian Paints down by 2.73%, Tata Motors down by 2.37% and BPCL was down by 2.22% were the top losers.

Asian markets were trading mixed; KOSPI rose 68.36 points or 2.18% to 3,208.99, Shanghai Composite gained 4.76 points or 0.13% to 3,611.51, Nikkei 225 surged 190.84 points or 0.67% to 28,822.29 and Hang Seng was up by 571.51 points or 1.94% to 30,019.36.

On the other hand, Jakarta Composite lost 86.76 points or 1.38% to 6,220.37, Taiwan Weighted dropped 72.49 points or 0.45% to 15,946.54 and Straits Times was down by 10.92 points or 0.37% to 2,980.61.

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