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Indices end lower for fourth consecutive day

Indian equity benchmarks dropped for the fourth consecutive day on Wednesday, as concerns pertaining to recent rise in Covid-19 cases in various parts of the country and high inflation continued to weigh on investors’ sentiments. Additionally, weak cues from global markets ahead of FOMC meeting outcome also caused selling in domestic equities. Markets made cautious start, as traders remained anxious with India Ratings and Research (Ind-Ra) in its latest report stated that the performance of unsecured assets classes, such as microfinance loans, unsecured business loans and consumer loans, is worsening with deteriorating financial conditions of borrowers. For secured asset classes, it has a stable performance outlook given the recovery in the economy in FY22. However, markets witnessed some buying in late morning deals, as some support came with the commerce ministry's preliminary data stating that India's exports grew 17.27 percent to $14.22 billion during March 1-14 as compared to the year-ago period, showing healthy signs of revival. The key sectors which recorded a healthy growth in exports include engineering, rice, gems and jewellery.

But benchmarks once again fell into red terrain in afternoon session and ended over a percent lower, as traders were worried as Union Health Secretary Rajesh Bhusan warned that Maharashtra was at the beginning of a second wave of the COVID-19 pandemic. In a letter to the Maharashtra government, said that a report by the Central team that had visited the state from March 7-11 found that there was very limited active effort to track, test, isolate cases and quarantine the contacts. There was some cautiousness too as India reported 28,869 fresh Covid-19 cases on Tuesday pushing the overall tally to 11,438,464, according to Worldometer. The death toll from the deadly infection jumped to 159,079. Traders overlooked reports that the retail industry's business is on the brink of full recovery as it achieved 93 per cent of the pre-COVID sales in February.

On the global front, Asian markets ended mostly lower on Wednesday, while European markets were trading mostly in red, as investors looked ahead to the Federal Reserve's monetary policy announcement due out later in the day. With bond markets flagging the threat of inflation, market participants are looking for central bank's forecasts for the economy, inflation and interest rates. Back home, on the sectoral front, oil stocks were in focus as India's fuel demand, except ATF, has returned to pre-COVID levels and a reflating economy will help consumption grow in near future. Metal stocks were in watch as ratings agency India Ratings and Research (Ind-Ra) revised its outlook on the domestic steel sector from negative to stable for the fiscal year beginning April 1, 2021.

Finally, the BSE Sensex fell 562.34 points or 1.12% to 49,801.62, while the CNX Nifty was down by 189.15 points or 1.27% to 14,721.30.   

The BSE Sensex touched high and low of 50,561.12 and 49,718.65, respectively. There were 4 stocks advancing against 26 stocks declining on the index. 

The broader indices ended in red; the BSE Mid cap index fell 2.28%, while Small cap index was down by 2.12%.

The top losing sectoral indices on the BSE were Oil & Gas down by 3.22%, PSU down by 3.11%, Power down by 2.87%, Realty down by 2.79%, Energy down by 2.45%,while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were ITC up by 1.20%, Infosys up by 0.21%, TCS up by 0.13% and HDFC up by 0.12%. On the flip side, ONGC down by 4.95%, NTPC down by 2.92%, Sun Pharma down by 2.80%, SBI down by 2.75% and Indusind Bank down by 2.54% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that the performance of unsecured assets classes, such as microfinance loans, unsecured business loans and consumer loans, is worsening with deteriorating financial conditions of borrowers. For secured asset classes, it has a stable performance outlook given the recovery in the economy in FY22.

The report stated that the Reserve Bank of India's moratorium on repayment of loans has delayed the stress in these segments where delinquencies have not yet stabilised and higher loan losses are expected to materialise in FY22. It also noted that vehicle loans -- including loans for commercial vehicles, passenger vehicles and two-wheelers -- have a stable asset performance outlook, given the pickup in economic activities witnessed in the second half of FY21. It added that small business loans are expected to witness differentiated performances depending on the loan type.

As per the report, secured business loans (principally loans against property) also has a stable asset performance outlook, due to the borrower's higher propensity to repay. digitisation initiatives are also expected to help with better portfolio monitoring and in reducing soft delinquencies. It noted that the focus has shifted to building quality secured loan portfolios, upping process efficiency and automating customer follow-ups. It added that recovery momentum and continued policy support in FY22 will be key for loan performance.

The CNX Nifty traded in a range of 14,956.55 and 14,696.05. There were 2 stocks advancing against 48 stock declining on the index. 

The top gainers on Nifty were ITC up by 1.49%, Infosys up by 0.22%. On the flip side, BPCL down by 5.03%, ONGC down by 4.74%, Tata Motors down by 4.52%, Adani Ports &SEZ down by 4.37% and Coal India down by 4.08% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 20.92 points or 0.31% to 6,782.69 and France’s CAC fell 12.09 points or 0.2% to 6,043.34, while Germany’s DAX increased 6.04 points or 0.04% to 14,563.62.

Asian markets ended mostly lower on Wednesday, tracking Wall Street, as investors looked ahead to the Federal Reserve's monetary policy announcement due out later in the day. Chinese market ended marginally lower as the US sanctioned an additional 24 Chinese and Hong Kong officials over Beijing's ongoing crackdown on political freedoms in the semi-autonomous city. Further, Japanese markets ended a choppy session little changed after trade data for February showed the country's exports dropped 4.5 percent year-on-year in February.

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