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Domestic indices trade slightly lower in early deals
Jun-04-2020

Indian equity benchmarks made slightly positive start on Thursday tracking gains in global markets. But, soon markets slipped below neutral lines and are trading marginally in red in early deals, weighted down by selling in Realty, Consumer Durables and Consumer Discretionary counters. Traders turned cautious with report that India has on June 04 recorded its biggest spike in the number of coronavirus cases, with over 9,000 of them being reported in a single day, besides over 250 deaths. The total number of corona cases in the country stands at 216,824. Adding pessimism, after downgrading India's sovereign ratings, global credit ratings agency Moody's Investors Service said that the quality of retail and small business loans will also deteriorate. Though, downside remained capped with Union minister Prakash Javdekar’s statement that the government has formed an empowered group of secretaries to enhance investment in the country to offset the impact of coronavirus. Also, a private report stated that after ‘Russia approved the use of Avifavir, a derivative of favipiravir, for treatment of the new coronavirues, India is gearing up to ensure the antiviral drug is soon available here’. Meanwhile, the Union Cabinet has approved amendments to the Essential Commodities Act. The amendment will deregulate food items like cereals, pulses and onion from stockholding limit.

On the global front, Asian markets are trading mostly higher following the overnight rally on Wall Street as new US economic data added to investor optimism about a quick recovery from the coronavirus pandemic. Hopes of more stimulus measures also lifted stocks. The European Central Bank's policy decision is due later today. Street expects the ECB to boost the pandemic emergency purchase program by 500 billion euros, bringing it to 1.25 trillion euros.

Back home, aviation stocks were in focus with ratings agency Icra’s statement that air passenger traffic in the country is expected to remain under pressure for the first half (April-September) of the current fiscal, with the full year passenger volume likely to go down by about half despite some recovery in H2 FY21. In scrip specific development, Aurobindo Pharma rallied on reporting a 45% jump in consolidated net profit for the quarter ended March 31, 2020. On the other hand, BPCL edged down slightly as it reported a consolidated loss of Rs. 1,819.6 crore for the March quarter on inventory loss and lower gross refining margin.

The BSE Sensex is currently trading at 34038.98, down by 70.56 points or 0.21% after trading in a range of 33974.75 and 34310.14. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.18%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.81%, IT up by 0.75%, TECK up by 0.59%, Metal up by 0.35%, Utilities up by 0.29%, while Realty down by 1.64%, Consumer Durables down by 1.55%, Consumer Discretionary down by 0.64%, Bankex down by 0.60%, PSU down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.89%, Sun Pharma up by 1.71%, HCL Technologies up by 1.25%, TCS up by 1.08% and Bajaj Auto up by 0.94%. On the flip side, Titan Company down by 3.07%, HDFC down by 2.48%, Kotak Mahindra Bank down by 2.39%, ONGC down by 1.51% and Bajaj Finance down by 1.50% were the top losers.

Meanwhile, days after downgrading India's sovereign ratings, global credit ratings agency Moody's Investors Service has said that the quality of retail and small business loans will deteriorate, which account of 44 per cent of the total loans.  Elaborating on the key drivers behind India's sovereign downgrade, it said that the risks to the financial system are rising.

It said some sectors were already under strain before the coronavirus outbreak. For NBFIs, both assets and liabilities will come under a strain in the near term, this is about 10-15 per cent of bank loans. Private power sector exposure is about 8-10 per cent of bank loans. In the auto value chain, the most exposed banks are the private sector banks. It said that policymaking institutions face increasing challenges from lower growth, weaker fiscal conditions and rising financial sector stress.

The agency said that the risks to the financial system are rising. It added ‘our rating action signals downward pressure on the ratings and standalone assessments of most rated banks. Over 80 per cent of rated non-financial companies have negative outlooks or are under review for downgrade. Two-thirds of the rated infrastructure portfolio has a negative bias.

The CNX Nifty is currently trading at 10047.65, down by 13.90 points or 0.14% after trading in a range of 10022.40 and 10123.85. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.10%, Tech Mahindra up by 2.49%, UPL up by 2.23%, Sun Pharma up by 2.17% and Cipla up by 1.68%. On the flip side, Titan Company down by 2.77%, HDFC down by 2.21%, IOC down by 1.95%, Kotak Mahindra Bank down by 1.88% and Britannia Industries down by 1.66% were the top losers.

Asian markets are trading mostly higher; Nikkei 225 inched up 5.29 points or 0.02% to 22,619.05, Taiwan Weighted increased 50.54 points or 0.45% to 11,370.70, KOSPI gained 6.84 points or 0.32% to 2,153.84 and Jakarta Composite rose 45.83 points or 0.93% to 4,986.84. On the other hand, Straits Times declined 7.73 points or 0.29% to 2,692.66, Hang Seng slipped 28.70 points or 0.12% to 24,296.92 and Shanghai Composite was down by 6.20 points or 0.21% to 2,917.17.

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