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Sluggish trend continues on street

Indian equity benchmarks continued to show a sluggish trend in afternoon session, with Sensex and Nifty trading below their psychological levels of 47,900 and 14,100, respectively. The sentiments were under pressure with Reserve Bank’s 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). Traders failed to get any solace with International Monetary Fund’s (IMF) projecting that India will reclaim the status of world's fastest-growing economy and projected its growth at 11.5 per cent in 2021 and India is rebounding to achieve the target of a $5 trillion economy. In scrip specific developments, Reliance Industries tumbled amid concerns over the Future Group deal

On the global front, Asian markets were trading mixed as investors looked to the Federal Reserve's guidance on its monetary policy. Back on street, on the sectoral front, auto stocks were in focus as government proposed the introduction of ‘green tax' on transport vehicles (buses, taxis, trucks) older than eight years in the range of 10-25 per cent of the applicable road tax.

The BSE Sensex is currently trading at 47809.28, down by 538.31 points or 1.11% after trading in a range of 47738.93 and 48387.25. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.50%, while Small cap index was down by 0.19%.

The only gaining sectoral indices on the BSE were FMCG was up by 0.27%, while Realty down by 1.35%, Energy down by 1.34%, Telecom down by 1.32%, Bankex down by 1.24% and Oil & Gas was down by 1.24% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.62%, Ultratech Cement up by 2.05%, ITC up by 1.80%, Mahindra & Mahindra up by 0.98% and HCL Tech was up by 0.84%. On the flip side, Axis Bank down by 3.20%, Asian Paints down by 2.68%, HDFC down by 2.57%, Sun Pharma down by 2.33% and HDFC Bank was down by 2.22% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that the Union Budget 2021 must redirect the government focus in resolving demand-side issues by moving away from fixing supply side problem which has been the focus since March when the coronavirus disease (covid-19) pandemic began to pummel the economy.

According to the report, the nationwide lockdown has resulted in the economy tanking 23.9 percent in the June quarter but made a dramatic recovery with the contraction improving to just 7.5 percent in Q2 and is likely to re-enter the green zone in the second half which may help the economy close FY21 with a contraction of 7.5-8 percent. It can be noted that since 2012, consumption demand has been the one of the biggest missing links in an economy that was nearly overheated after the heavy stimulus doses following the 2008 global financial crisis, making companies eschew investments and halt expansions, resulting in lower wage increases and job creation leading to a massive fall in consumption demand.

The report further warned that even if the supply-side bottlenecks get restored on account of various government/RBI measures it may soon run into difficulties due to the lack of adequate demand for goods and services.  It noted that the economy has shown some green shoots with several high frequency indicators reaching the pre-pandemic level of production, bolstered by a combination of festive/pent-up demand. But, it said after two consecutive months of positive growth, the factory output contracted in November, showing the fragility of the recovery. It added that an appropriate demand-side measure therefore is as important as supply-side measures.

The CNX Nifty is currently trading at 14095.25, down by 143.65 points or 1.01% after trading in a range of 14070.70 and 14237.95. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Wipro up by 3.21%, Tech Mahindra up by 2.70%, ITC up by 2.00%, Ultratech Cement up by 1.97% and HDFC Life Insurance was up by 1.58%. On the flip side, Axis Bank down by 3.12%, Tata Motors down by 2.97%, Asian Paints down by 2.58%, HDFC down by 2.47% and GAIL India was down by 2.44% were the top losers.

Asian markets were trading mixed, Nikkei 225 surged 89.03 points or 0.31% to 28,635.21, Hang Seng increased 37.45 points or 0.13% to 29,428.71, Taiwan Weighted strengthened 42.60 points or 0.27% to 15,701.45 and Straits Times was up by 18.06 points or 0.61% to 2,963.58.

On the other side; KOSPI fell 17.75 points or 0.57% to 3,122.56, Shanghai Composite declined 0.90 points or 0.03% to 3,568.53 and Jakarta Composite was down by 31.32 points or 0.51% to 6,108.85.

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