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Late sell off drags benchmarks lower for second straight day
Apr-20-2021
Sell off which emerged in last leg of trade mainly dragged the Indian equity benchmarks into red terrain on Tuesday. Markets started the day on optimistic note as traders took support with report that the government announced a liberalised and accelerated Covid-19 vaccination programme beginning May 1, where all above 18 years of age will be eligible to be vaccinated. Also, vaccine manufacturers have been empowered to release up to 50% of supplies directly to state governments and in the open market at pre-declared prices, a move that would boost availability of the prophylactics to the people. Some support also came with report that India reported a slight decline of 256,947 in the number of fresh coronavirus (Covid-19) cases on Tuesday, Worldometer showed.  Traders took note of report that the Reserve Bank of India has formed a six-member panel headed by Sudarshan Sen, former Executive Director, to carry out comprehensive review of the working of Asset Reconstruction Companies (ARCs) in the financial sector ecosystem. The panel will recommend suitable measures for enabling such entities to meet the growing requirements of the financial sector. The Committee will submit its report within three months from the date of its first meeting.
 
Sentiments turned pessimistic and markets started paring initial gains on report that a month's national lockdown can hurt GDP growth by 2 percentage points, while expecting governments to continue with localised restrictions to arrest the Covid spread. Selloff intensified in last leg of trade which dragged markets lower as traders turned cautious after the retailers' body Retailers Association of India (RAI) has said closure of economic activity at this juncture will lead to permanent closure of businesses and millions of job losses, amid varied localized restrictions being imposed across states in the wake of the second wave of COVID-19 pandemic.
 
Weakness in European counters too dampened sentiments with all the European markets were trading lower with global markets all showing lackluster sentiment. Asian markets ended mixed on Tuesday, after China kept its benchmark lending rates unchanged, as widely expected. The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate was maintained at 4.65 percent. The one-year and five-year loan prime rates were last lowered in April 2020. The one-year loan prime rate was cut by 20 basis points and five-year rate by 10 basis points last April.
 
Back home, Minister of Railways, Commerce & Industry, Consumer Affairs and Food & Public Distribution Piyush Goyal launched the Startup India Seed Fund Scheme (SISFS). The Fund aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization.
Finally, the BSE Sensex fell 243.62 points or 0.51% to 47705.80, while the CNX Nifty was down by 63.05 points or 0.44% to 14296.40. 

The BSE Sensex touched high and low of 48478.34 and 47438.50, respectively. There was 13 stock advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.49%, while Small cap index was up by 0.49%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.22%, Auto up by 0.90%, Capital Goods up by 0.89%, Telecom up by 0.80% and Consumer Discretionary Goods & Services up by 0.61%, while IT down by 1.05%, TECK down by 0.77%, Basic Materials down by 0.73%, FMCG down by 0.62% and Bankex down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 3.70%, Dr. Reddys Lab up by 3.69%, Bajaj Finance up by 2.95%, Bajaj Auto up by 2.02% and Mahindra & Mahindra up by 1.97%. On the flip side, Ultratech Cement down by 4.70%, HCL Tech down by 3.56%, HDFC down by 3.16%, Tech Mahindra down by 1.67% and HDFC Bank down by 1.50% were the top losers.

Meanwhile, raising concerns, the retailers' body Retailers Association of India (RAI) has said closure of economic activity at this juncture will lead to permanent closure of businesses and millions of job losses, amid varied localized restrictions being imposed across states in the wake of the second wave of COVID-19 pandemic.

Retailers Association of India further noted that the retail industry is beginning to see similar issues repeating in some form that were faced last year and underlined that non-essential or non-food retail and malls should be allowed to operate with strict surveillance.

As per RAI CEO Kumar Rajagopalan, shutting down non-essential or non-food retail and malls is not the solution. Considering the impact of last year on business, closure of economic activity at this stage will lead to permanent closure of businesses, thereby leading to millions of job losses. Instead, he added, there is an urgent need for stricter surveillance to ensure that all rules with regards to safety and hygiene and social distancing norms are being followed by one and all.

The CNX Nifty traded in a range of 14207.30 and 14526.95. There were 20 stocks advancing against 30 stock declining on the index.    

The top gainers on Nifty were Dr. Reddys Lab up by 3.80%, Bajaj Finserv up by 3.69%, Bajaj Finance up by 2.99%, HDFC Life Insurance up by 2.89% and Bajaj Auto up by 2.43%. On the flip side, Ultratech Cement down by 4.75%, HCL Tech down by 3.35%, HDFC down by 3.07%, Grasim Industries down by 2.48% and Shree Cement down by 2.45% were the top losers.

European markets were trading lower, UK’s FTSE 100 decreased 33.31 points or 0.48% to 6,966.77, France’s CAC decreased 45.35 points or 0.72% to 6,251.34 and Germany’s DAX was down by 27.69 points or 0.18% to 15,340.70.

Asian markets ended mixed on Tuesday tracking Wall Street's overnight losses as investors’ awaited direction from US corporate earnings, while concerns over surging corona-virus cases too dented the market sentiment. Japanese shares declined amid fears that possible reintroduction of Covid-19 lockdowns in the country, which could dampen the pace of economic recovery. Meanwhile, Chinese central bank (PBoC) kept its benchmark lending rates unchanged, as widely expected. The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate also was unchanged at 4.65 percent.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,472.94-4.61-0.13

Hang Seng

29,135.7329.580.10

Jakarta Composite

6,038.32-14.22-0.23

KLSE Composite

1,607.57

7.28

0.45

Nikkei 225

29,100.38-584.99-1.97

Straits Times

3,192.17-17.55-0.55

KOSPI Composite

3,220.7021.860.68

Taiwan Weighted

17,323.8760.590.35
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