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Indices snap three-day winning streak on broad-based selling pressure

Indian equity benchmarks began with gains on Friday but erased all gains as the day neared the closing bell, on the back of a broad-based selling pressure. The benchmarks staged a gap up opening mirroring gains in other Asian markets. Sentiments got a boost with PHD Chamber of Commerce and Industry report showing that as economic activities gather pace and investor sentiments revive, GDP growth is likely to enter a double-digit growth trajectory and may grow at more than 11 per cent in the next financial year. Some support also came in with Commerce Secretary Anup Wadhawan’s statement that the country's exports are steadily recovering and it is expected to record a healthy growth rate in March. Sentiments remained upbeat as the Centre said the acceleration in delivering COVID-19 vaccine shots has been achieved in collaboration with the private sector which administered more than 23 per cent of the doses. Union Health Secretary Rajesh Bhushan said 71.23 percent of coronavirus vaccine doses have been administered in government hospitals, while 28.77 percent of these doses have been contributed by private facilities.

However, due to profit taking at higher levels, benchmarks nosedived in afternoon trading. Sentiment turned pessimistic with SBI report stating that India’s combined federal and states’ budget gap in the current fiscal year will reach 12.7% on increased healthcare spending and a collapse in revenue amid the pandemic. Some concern also came with the private report that number of industrial investment proposals touched a record low in 2020, the pandemic year. And in value terms they were at a three year low as economic activity came to a standstill during the prolonged lockdown in the quarter ended June. Investors remained on the sidelines ahead of the industrial production data for January and CPI inflation data for February that are slated to be released later in the day. 

On the global front, Asian markets ended mostly higher on Friday reflecting investor optimism over the passing of the $1.9 trillion U.S. stimulus package and the European Central Bank's (ECB) move to slow the early rise in long-term borrowing costs. European markets were trading lower as the selloff on U.S. Treasuries resumed, with yields on the 10-year notes climbing back above 1.6 percent. The focus now turns to U.S. producer-price data due out later in the day and the Federal Reserve decision next week.  Back home, on the sectoral front, aviation stocks ended lower as rating agency ICRA has a negative credit outlook on Indian aviation industry, reflecting a view that financial performance of airlines is likely to remain weak in near-to-medium term amid weak air traffic. Insurance stocks were buzzing as Cabinet cleared amendments to the Insurance Act to pave the way for raising the foreign direct investment (FDI) limit up to 74% from 49%, as proposed in the Budget for FY22. The amendments will have to be ratified by Parliament to take effect.

Finally, the BSE Sensex fell 487.43 points or 0.95% to 50,792.08, while the CNX Nifty was down by 143.85 points or 0.95% to 15,030.95. 

The BSE Sensex touched high and low of 51,821.84 and 50,538.43, respectively. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.45%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Utilities up by 1.33%, Power up by 0.74%, Consumer Durables up by 0.26% and Oil & Gas up by 0.13%, while Auto down by 1.60%, Energy down by 1.39%, Bankex down by 1.28%, Consumer Discretionary down by 0.94% and FMCG down by 0.91% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.28%, Titan Company up by 0.76%, ONGC up by 0.52% and Infosys up by 0.48%. On the flip side, Bajaj Auto down by 3.10%, Maruti Suzuki down by 2.40%, ICICI Bank down by 2.06%, Sun Pharma down by 2.04% and Reliance Industries down by 1.97% were the top losers.

Meanwhile, Commerce Secretary Anup Wadhawan has said that India’s exports are steadily recovering and it is expected to record a healthy growth rate in March. He also said the country's merchandise exports were impacted on account of the COVID pandemic. He said ‘but since then, there is a steady cumulative recovery. Our exports turned positive in September 2020. After September, there was borderline negative (growth) for a few months, then in January 2021, it was positive again.’

Wadhawan has stated that February was more or less even and now March is again promising to be significantly positive. He noted that India's exports borne the shock well and it has recovered quickly from the pandemic. He also said there is a need to recover in areas like gems and jewellery and petroleum and there is a need to sustain the gains in areas like pharma, and food products.

Taking about trade agreements, he said that India has implemented 10 free trade pacts and six preferential trade agreement. He said ‘we have FTAs (free trade agreement) with major economic powers including with Japan, Korea and ASEAN, and we have not done badly in FTA and we are serious about growing this space.’ He pointed out that India is emerging as a major investment destination hub in the world and the government is taking steps in that direction. He added that huge investment opportunities are there in the services sector like finance, and insurance.

European markets were trading lower; UK’s FTSE 100 decreased 21.24 points or 0.32% to 6,715.72, France’s CAC fell 10.16 points or 0.17% to 6,023.60 and Germany’s DAX was down by 101.87 points or 0.7% to 14,467.52.

Asian markets ended mostly higher on Friday, tracking Wall Street gains overnight with investors' optimism over the passing of the $1.9 trillion US stimulus package and after data showing a less than expected rise in jobless claims last week. Market sentiments improved further after a dovish European Central Bank (ECB) meeting prompted a retreat in bond yields and eased global concerns about rising inflation. Chinese shares ended higher despite worries about the latest Sino-US tensions after the Jeo Biden administration amended licenses for companies to sell to telecommunications equipment maker Huawei Technologies. Further, Japanese shares gained with optimism about a swifter economic recovery from the pandemic following encouraging US labor market data and easing bond yields.

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