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Indian equity benchmarks slipped for the fifth straight session and ended over a percent lower on Thursday, as a rise in US bond yields spooked investors. Besides, a single-day increase of over 35,800 Covid-19 cases, the highest since December 6, 2020, made market participants question the sustainability of the economic recovery. Domestic indices made gap-up opening, as traders took encouragement with former chief of Shanghai-based New Development Bank, K V Kamath expressed optimism that India's sovereign rating would go up on the back of efforts being taken by the government to push economic reforms. Some support also came after a parliamentary panel has suggested to the Department of Commerce to take appropriate measures to check further deterioration in exports and crucial imports for preventing more disruptions in the supply chains. Traders also took note of report that Oil Minister Dharmendra Pradhan said India and the UAE discussed ways to strengthen energy cooperation, despite the nation asking its refiners to reduce their reliance on Middle Eastern oil.

But, domestic indices gave up all intra-day gains and fell sharply lower in late afternoon session, as some concern came with a joined survey carried out by FICCI-IBA has stated that asset quality of banks, which saw some improvement in the second half of 2020, is likely to worsen during the first six months of 2021. The survey was conducted on 20 banks, including public sector, private sector and foreign banks, representing about 59 per cent of the banking industry, as classified by asset size. Some worries came with the private report that India's central bank may have to delay the start of monetary policy normalisation by three months amid rising COVID-19 cases, but barring the return of stringent lockdowns there is no significant threat to the economy's recovery. Separately, commerce and Industry Minister Piyush Goyal has called upon all investors to stick to the spirit and ambit of laws and not try to find loopholes in the policies, while inviting them to take advantage of the 'demand, democracy and demographic dividend' in India.

On the global front, Asian markets ended higher on Thursday, while European markets were trading higher, following positive cues from Wall Street. Investors are largely upbeat about a global economic recovery after the Federal Reserve projected the US economy to grow 6.5 percent this year, the fastest pace in four decades, due to the successful vaccine rollout and recently agreed on fiscal stimulus. The central bank also indicated its universally expected decision to keep interest rates at near-zero levels through 2023, despite an improving economic outlook. Back home, on the sectoral front, aviation stocks were in focus as Indian aviation regulator DGCA said around 78.27 lakh (7.8 million) domestic passengers travelled by air in February 2021 which is 36.71 per cent lower than the corresponding period last year. Chemical industry’s stocks too were buzzing as the government said the Indian chemical industry has an opportunity to attract investment of about Rs 10 lakh crore by 2025 as the country offers a location advantage.

Finally, the BSE Sensex fell 585.10 points or 1.17% to 49,216.52, while the CNX Nifty was down by 163.45 points or 1.11% to 14,557.85.  

The BSE Sensex touched high and low of 50,296.35 and 48,962.36, respectively. There were 9 stocks advancing against 21 stocks declining on the index.  

The broader indices ended in red; the BSE Mid cap index fell 1.33%, while Small cap index was down by 1.58%.

The only gaining sectoral indices on the BSE were Telecom up by 0.54% and FMCG up by 0.16%, while IT down by 3.02%, TECK down by 2.54%, Energy down by 1.87%, Healthcare down by 1.83% and Realty down by 1.65% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 3.25%, Bajaj Auto up by 2.46%, Mahindra & Mahindra up by 1.03%, Maruti Suzuki up by 0.72% and Bharti Airtel up by 0.60%. On the flip side, HCL Tech. down by 3.97%, Infosys down by 3.67%, Dr. Reddys Lab down by 3.34%, TCS down by 2.44% and Tech Mahindra down by 2.36% were the top losers.

Meanwhile, a joined survey carried out by FICCI-IBA has stated that asset quality of banks, which saw some improvement in the second half of 2020, is likely to worsen during the first six months of 2021. The survey was conducted on 20 banks, including public sector, private sector and foreign banks, representing about 59 per cent of the banking industry, as classified by asset size.

The survey showed in the current round of the survey, half of the respondent banks reported a decline in NPAs during the second half of 2020. About 78 percent of participating state-run banks have cited a reduction in NPA levels. However, in terms of outlook, nearly 68 percent of respondent bankers expect the NPA levels to be above 10 percent in the first half of 2021. Close to 37 percent of respondents expect NPA levels to be upwards of 12 percent.

It further stated that some of the high NPA risk sectors identified by majority of respondent bankers in the current round of survey include tourism and hospitality, MSME, aviation and restaurants. Around 55 per cent of respondents believe NPAs to rise substantially in the tourism and hospitality sector, while another 45 per cent reported that NPAs are likely to increase moderately in this sector. Another high NPA risk sector reported in the current round of survey is the MSME sector, with 84 per cent respondents expecting an increase in NPAs in this sector. Close to 89 per cent respondents also expect the restaurant sector to see an increase in NPAs, though only 26 per cent expect NPAs to increase substantially in this segment.

The CNX Nifty traded in a range of 14,875.20 and 14,478.60. There were 17 stocks advancing against 33 stock declining on the index. 

The top gainers on Nifty were ITC up by 3.99%, Bajaj Auto up by 2.94%, Hindalco up by 1.95%, Grasim Industries up by 1.82% and Bharti Airtel up by 1.50%. On the flip side, HCL Technologies down by 3.47%, Infosys down by 3.26%, Divis Lab down by 3.00%, Dr. Reddys Lab down by 2.89% and Hero MotoCorp down by 2.45% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 6.10 points or 0.09% to 6,768.77, France’s CAC increased 16.08 points or 0.27% to 6,070.90 and Germany’s DAX increased 170.24 points or 1.17% to 14,766.85.

Asian markets ended higher on Thursday, tracking gains in US stocks overnight after the US Federal Reserve committed to maintaining accommodative monetary policy and projected the US economy to grow 6.5 percent this year as the corona-virus crisis eases. Meanwhile, inflation is expected to reach 2.4 percent this year above the central bank’s 2 percent target, US Federal Chairman Jerome Powell called it’s a temporary surge that will not change the Fed’s pledge to keep its benchmark overnight interest rate near zero as part of an effort to ensure the economic wounds from the corona-virus pandemic are fully healed. Japanese shares ended sharply higher, while the Japanese Yen perked up after reports suggested that the Bank of Japan will agree to allow yields to trade in a wider band when it ends a two-day policy meeting on Friday.

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