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Key gauges extend losses to fourth day

Indian equity benchmarks extended their losses to the fourth day on Wednesday, as weak global markets, a mixed set of Q3 earnings and selling by foreign institutional investors (FIIs) dented the domestic market mood in today's session. Besides, investors chose to book profits ahead of the Union Budget on Monday, February 1. Markets made pessimistic start, as sentiments remained down-beat with the latest round of FICCI's Economic Outlook Survey stated that India's gross domestic product (GDP) is expected to contract by 8 per cent in current financial year (FY21). The annual median growth forecast by the industry body is based on responses from leading economists representing industry, banking and financial services sector. Some concern also came with Reserve Bank data showing that overseas investment by domestic firms fell by over 42 per cent to $1.45 billion in December 2020. In the year-ago period, companies in India had invested $2.51 billion in their foreign firms (joint ventures / wholly-owned units).

Key indices continued to show a sluggish trend in second half of the session, as the UN has said that India's economy is projected to grow at 7.3 per cent in 2021, even as it is estimated to contract by 9.6 per cent in 2020 as lockdowns and other efforts to control the COVID-19 pandemic slashed domestic consumption. The World Economic Situation and Prospects 2021, produced by the United Nations Department of Economic and Social Affairs (UN DESA), said the world economy was hit by a once-in-a-century crisis - a Great Disruption unleashed by the COVID-19 pandemic in 2020. Market participants also took a note of IMF Chief Kristalina Georgieva's statement that all hands are needed on deck, be it businesses, governments or even central banks, for a sustainable and balanced recovery.

On the global front, Asian markets ended mostly higher on Wednesday, after the International Monetary Fund raised its forecast for global growth this year and said it sees major central banks holding their policy-rate settings through 2022. Gains, if any, were modest as investors looked ahead to the U.S. Federal Reserve's monetary policy decision due later in the day. Besides, China's industrial profits grew 20.1 percent year-on-year in December, bigger than the 15.5 percent increase registered in November. This was the eighth consecutive month of growth. In the whole year of 2020, profits of industrial firms increased 4.1 percent, in contrast to a 3.3 percent drop in 2019.

Finally, the BSE Sensex fell 937.66 points or 1.94% to 47,409.93, while the CNX Nifty was down by 271.40 points or 1.91% to 13,967.50.

The BSE Sensex touched high and low of 48,387.25 and 47,269.60, respectively and there were 6 stocks advancing against 24 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.38%, while Small cap index was down by 0.52%.

The top gaining sectoral index on the BSE was FMCG up by 0.28%, while Bankex down by 2.93%, Finance down by 2.72, Metal down by 2.54%, Realty down by 2.28% and Auto down by 2.11% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.57%, ITC up by 1.35%, Power Grid up by 1.21%, Ultratech Cement up by 0.80% and HCL Technologies up by 0.79%. On the flip side, Axis Bank down by 4.05%, Titan Company down by 3.88%, Indusind Bank down by 3.61%, HDFC Bank down by 3.60% and Dr. Reddys Lab down by 3.41% were the top losers.

Meanwhile, the latest round of FICCI's Economic Outlook Survey has stated that India's gross domestic product (GDP) is expected to contract by 8 per cent in current financial year (FY21). The annual median growth forecast by the industry body is based on responses from leading economists representing industry, banking and financial services sector. The survey was conducted in January.

The median growth forecast for agriculture and allied activities has been pegged at 3.5 per cent for FY21.  It stated agriculture sector has exhibited significant resilience in the face of the pandemic. Higher rabi acreage, good monsoons, higher reservoir levels and strong growth in tractor sales indicate continued buoyancy in the sector. However, industry and services sector, which were most severely hit due to the pandemic induced economic fallout, are expected to contract by 10 per cent and 9.2 per cent respectively during FY21.

It mentioned the industrial recovery is gaining traction, but the growth is still not broad based. The consumption activity did spur during the festive season as a result of pent-up demand built during the lockdown but sustaining it is important going ahead. Besides, it observed that some of the contact intensive service sectors like tourism, hospitality, entertainment, education, and health sector are yet to see normalcy.

The CNX Nifty traded in a range of 14,237.95 and 13,929.30 and there were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.62%, SBI Life Insurance up by 2.34%, Wipro up by 2.00%, ITC up by 1.42% and Ultratech Cement up by 1.15%. On the flip side, Tata Motors down by 4.44%, Tata Steel down by 4.28%, Titan Company down by 4.19%, Indusind Bank down by 4.02% and Hindalco Industries down by 3.97% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 16.00 points or 0.24% to 6,638.01, France’s CAC fell 15.08 points or 0.27% to 5,508.44 and Germany’s DAX was down by 72.49 points or 0.52% to 13,798.50.

Asian markets ended mostly higher on Wednesday, even as investors cautiously await the US Federal Reserve's monetary policy decision due later in the day. Market sentiments improved after International Monetary Fund, in its latest World Economic Outlook report, raised the global growth forecast for this year to 5.5 percent from 5.2 percent projected earlier and it sees major central banks holding their policy-rate settings through 2022. Japanese shares rose on investors' continued expectations for upbeat corporate earnings from major domestic firms. Chinese shares ended up slightly after official data showed the country's industrial profits increased notably at the end of 2020, suggesting a sustained recovery as the manufacturing sector rapidly emerged from its corona virus slump.

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