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Indian equity benchmarks closed lower for a fourth straight session on Thursday as new Delta and Delta plus variants of novel coronavirus push Covid-19 cases higher across the globe. Markets made slightly positive start as traders took some support with Principal Economic Adviser (PEA) Sanjeev Sanyal’s statement that the Indian economy is likely to witness close to double-digit growth in the current fiscal year despite the second Covid-19 wave ravaging the country. Some support came as data released by the RBI showed India reported a current account surplus of 0.9 percent of GDP in the pandemic-hit FY21, as against a deficit of 0.9 percent in FY20. However, key indices erased gains and turned lower in morning deals as Indian manufacturing activity fell back into decline in the month of June, as the intensification of the pandemic and strict containment measures negatively impacted on demand. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - fell to 48.1 in June as against 50.8 in May.

Markets continued to show choppy movement with negative bias, as India's external debt surged by $11.5 billion year-on-year to $570 billion as of March-end 2021, according to the Reserve Bank of India data. The external debt to GDP ratio rose to 21.1 per cent as of March-end 2021 from 20.6 per cent a year ago. Some concern also came with the rating agency -- Standard and Poor's (S&P) has said Indian banks face systemic risks as the country wades through the aftermath of the Covid-19 second wave. The banking sector's weak loans are likely to remain elevated at 11-12 per cent of gross loans in the next 12-18 months. Traders also took note of Principal Economic Advisor Sanjeev Sanyal’s statement that India's economy is on the mend after the pandemic-induced shocks but it may take an additional year or so to achieve the $5 trillion-mark. Meanwhile, India’s fiscal deficit in April-May stood at 8.2 per cent of the budget estimates (BE), as compared to 59 per cent in the same period last year. The deficit was less 30 per cent less of last-year's level of Rs. 4.7 trillion amid the nationwide lockdown to contain the coronavirus.

On the global front, Asian markets settled mostly lower on Thursday, following the mixed cues from Wall Street as the surge in infections due to the delta variant of the coronavirus, and curbs on travel in several countries raised some uncertainty about the pace of global economic rebound and rendered the mood cautious. European markets were trading higher as a slate of upbeat corporate results helped investors shake off concerns around a jump in inflation as well as the global spread of the Delta variant of the novel coronavirus. Back home, on the sectoral front, Power stocks were in focus as the Union Cabinet Committee of Economic Affairs gave its nod to a new scheme for revival of the power distribution sector in India. This is the second reform scheme for power distribution companies (discoms) announced by the BJP government, a year after the ambitious UDAY scheme concluded. There was some reaction in hospitality industry stocks with ICRA’s report that the second wave of the coronavirus pandemic has derailed the recovery of the hospitality industry, which is now expected to return to pre-Covid levels only in 2023-24.

Finally, the BSE Sensex fell 164.11 points or 0.31% to 52,318.60, while the CNX Nifty was down by 41.50 points or 0.26% to 15,680.00.   

The BSE Sensex touched high and low of 52,638.50 and 52,281.01, respectively and there were 13 stocks advancing against 17 stocks declining on the index.  

The broader indices ended mixed; the BSE Mid cap index fell 0.19%, while Small cap index was up by 0.32%.

The gaining sectoral indices on the BSE were Auto up by 0.79%, Consumer Discretionary up by 0.69%, Healthcare up by 0.64%, FMCG up by 0.38% and Consumer Durables up by 0.12%, while Power down by 1.44%, TECK down by 0.71%, Telecom down by 0.65%, IT down by 0.58% and Energy down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy's Lab up by 2.56%, Bajaj Auto up by 1.84%, Sun Pharma up by 1.37%, Asian Paints up by 1.08% and Maruti Suzuki up by 1.01%. On the flip side, Bajaj Finserv down by 2.20%, Infosys down by 1.32%, Ultratech Cement down by 1.02%, Tech Mahindra down by 1.01% and Indusind Bank down by 0.84% were the top losers.

Meanwhile, Principal Economic Adviser (PEA) Sanjeev Sanyal has said that the India’s Gross domestic product (GDP) is likely to witness close to double-digit growth in the current fiscal year (FY22) despite the second COVID-19 wave ravaging the country. He said the economy is slowly getting back to normalcy as the number of COVID-19 cases is declining.

Sanyal has stated that the growth will be bolstered by a slew of structural reforms undertaken by the government to address supply side constraints and opening more and more sectors for foreign investment. He also said ‘Most countries were focused on demand side measures (but) we were also focussed on supply side...virtually every week you will see new sectors being opened up. We have done major reforms in IT sector, BPO sector, geospatial sector and we can open up many other sectors because we want to be a part of the global supply chain.’

It is to be noted that many global and domestic institutions, including the World Bank and Reserve Bank of India (RBI) have slashed India's growth forecast for 2021-22 as economic recovery was halted by the devastating second wave of coronavirus infections. Earlier, the World Bank slashed its 2021-22 GDP growth forecast for India to 8.3 per cent from 10.1 per cent estimated in April, while RBI lowered it from 10.5 per cent to 9.5 per cent.

The CNX Nifty traded in a range of 15,755.55 and 15,667.05 and there were 26 stocks advancing against 24 stocks declining on the index.  

The top gainers on Nifty were Dr. Reddy's Lab up by 2.75%, Hindalco up by 2.07%, Bajaj Auto up by 1.74%, Tata Motors up by 1.44% and Sun Pharma up by 1.27%. On the flip side, Bajaj Finserv down by 2.23%, Britannia Industries down by 1.44%, Infosys down by 1.19%, Wipro down by 1.11% and Shree Cement down by 1.08% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 45.23 points or 0.64% to 7,082.70, France’s CAC rose 18.36 points or 0.28% to 6,526.19 and Germany’s DAX was up by 23.18 points or 0.15% to 15,554.22.

Asian markets settled mostly lower on Thursday ahead of the crucial monthly US Non-farm Payroll data due on Friday. Japanese shares closed down on concerns that the corona-virus delta variant will slow the economic recovery. Japan is expected to extend by two weeks or more coronavirus containment measures in the greater Tokyo area as infection numbers creep up less than a month before the Summer Olympics start. Further, Chinese shares ended lower amidst declines in industrial firms after data showing dip in Caixin China General Manufacturing PMI for June to 51.3, a three-month low from 52 in May. Meanwhile, Hong Kong’s stock market is closed for the Hong Kong Special Administrative Region Establishment Day.

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