IGI Logo

Indian equity benchmarks fell for the second straight session on Tuesday, led by selling pressure in realty, metal and power stocks amid weak global cues. Key indices made negative start and traded lower for whole day, as traders remained cautious with a private report that investments by private equity and venture capital funds declined by 22 per cent to $5.4 billion in June, as compared to the $6.9 billion in the year-ago period. Some cautiousness also came in as ratings agency Crisil said the lull in monsoon over the past 15 days up to July 12 has impacted pace of sowing of kharif crops in 2021-22 crop year (July-June). Traders were also concerned with Minister of State for Finance Bhagwat K Karad stating that the recovery as a percentage of gross non-performing assets moderated to 12.8 percent in 2020-21 from 15.8 percent in the previous fiscal year against the backdrop of the pandemic. Traders also took a note of report where Parliament informed that over Rs 81,000 crore GST compensation is due to states for 2020-21, while for April-May this year, Rs 55,345 crore is outstanding. The economic impact of the pandemic has led to higher compensation requirement due to lower GST collection and at the same time lower collection of GST compensation cess.

However, markets recouped some intra-day losses as traders found some solace with Union minister Pankaj Chaudhary’s statement that Indian economy is showing signs of revival since the peaking of the second COVID wave in the first half of May on the back of targeted fiscal relief, strong push for capital expenditure, RBI's monetary policy measures, and a rapid vaccination drive. Some support also came as Chief Economic Adviser (CEA) K V Subramanian has expressed hope that economic growth during the current financial year (FY22) would be around 11 per cent as projected in the latest Economic Survey. He also said the overall impact of the second wave on the economy will not be very large. But, markets failed to erased all the losses and ended lower as Asian Development Bank (ADB) in its latest report has downgraded India's economic growth forecast for the current financial year to 10 percent, from 11 percent projected in April.

On the global front, Asian markets ended lower on Tuesday as concerns around the global spread of the Delta strain and rising tensions between China and the West dented sentiment and stoked demand for safe-haven assets. Investors also kept an eye on Treasury yields, with U.S. President Joe Biden adding his voice to assurances that inflationary pressures will be temporary. European markets were trading higher helped by a handful of positive corporate earnings and production updates from miners. Back home, on the sectoral front, aviation stocks ended lower even as Directorate General of Civil Aviation (DGCA) in its latest data has indicated that around 31.13 lakh domestic passengers travelled by air in June, 47 percent higher than the 21.15 lakh who travelled in May. It said 57.25 lakh people had travelled within the country by air in April. 

Finally, the BSE Sensex fell 354.89 points or 0.68% to 52,198.51, while the CNX Nifty was down by 120.30 points or 0.76% to 15,632.10.  

The BSE Sensex touched high and low of 52,465.03 and 52,013.51, respectively and there were 9 stocks advancing against 21 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.28%, while Small cap index was down by 1.44%.

The top losing sectoral indices on the BSE were Realty down by 2.41%, Metal down by 2.39%, Power down by 2.29%, Telecom down by 2.15%, Utilities down by 1.99%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Asian Paints up by 6.04%, Ultratech Cement up by 1.52%, Hindustan Unilever up by 0.97%, Nestle up by 0.82% and Maruti Suzuki up by 0.68%. On the flip side, Indusind Bank down by 3.32%, Tata Steel down by 2.65%, NTPC down by 2.39%, Bharti Airtel down by 2.31% and HCL Technologies down by 2.29% were the top losers.

Meanwhile, Union minister Pankaj Chaudhary has said that Indian economy is showing signs of revival since the peaking of the second COVID wave in the first half of May on the back of targeted fiscal relief, strong push for capital expenditure, RBI's monetary policy measures, and a rapid vaccination drive. India's real Gross Domestic Product (GDP) is estimated to grow 0.5 percent in Q3 and 1.6 percent in Q4 of 2020-21, leading to an upward revision in annual real GDP growth from (-)8.0 percent (2nd advance estimates) to (-)7.3 percent.

The minister noted that the momentum of economic recovery was, however, moderated by the onset of the second wave of COVID. According to him, the government has formulated a multi-pronged strategy to ensure that the prices of essential commodities like pulses and oilseeds remain controlled. The strategy includes the issuance of orders imposing stock limits on pulses applicable to wholesalers, retailers, millers, and importers with effect from July 2 and increasing the number of price monitoring centers under the Price Monitoring Scheme.

Citing RBI's Monetary Policy Committee's (MPC) resolution on June 4, the minister said the rising trajectory of international commodity prices, especially of crude, together with logistics costs, pose upside risks to the inflation outlook. However, he said these cost pressures are expected to be mitigated by a normal south-west monsoon, comfortable buffer stocks, recent supply-side interventions in pulses market, declining caseload of COVID and gradual easing of movement restriction across states.

The CNX Nifty traded in a range of 15,728.45 and 15,578.55 and there were 10 stocks advancing against 40 stocks declining on the index.   

The top gainers on Nifty were Asian Paints up by 5.47%, Ultratech Cement up by 1.77%, Hindustan Unilever up by 0.97%, Maruti Suzuki up by 0.76% and Grasim Industries up by 0.72%. On the flip side, Hindalco down by 3.72%, Indusind Bank down by 3.19%, Tata Steel down by 2.72%, NTPC down by 2.59% and Bharti Airtel down by 2.44% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 40.25 points or 0.59% to 6,884.64, France’s CAC increased 50.73 points or 0.81% to 6,346.70 and Germany’s DAX increased 49.15 points or 0.32% to 15,182.35.

Asian markets ended lower on Tuesday tracking Wall Street’s overnight losses and concerns over surging of the Delta coronavirus variant that could threaten the outlook for economic recovery. Further, rising tensions between China and the West also dented market sentiment. Chinese shares ended marginally lower after Chinese central bank PBoC kept its July loan prime rate (LPR) unchanged. Japanese shares ended lower as concerns grew over the corona-virus surge ahead of a four-day weekend from Thursday, with the Tokyo Olympics opening on Friday. Markets in Malaysia, Singapore and Indonesia are closed on account of Eid-ul-Adha.

Above views are of the author and not of the website kindly read disclaimer