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Weak trade persists over Dalal Street
Sep-22-2020

Weak trade continued over the Dalal Street in late morning deals, with both Sensex and Nifty trading in red terrain. In line with the larger peers, the broader indices were too trading sluggish. Negative cues from other Asian markets kept indices down in red terrain. Traders were seen taking a note of reports that markets regulator Sebi permitted foreign portfolio investors (FPI) to write off shares of all the companies which they are unable to sell. As per operational guidelines for FPIs and designated depository participants (DDPs) issued in November 2019, write-off of securities held by FPIs who wished to surrender their registration was permitted only in respect of shares of companies which are unlisted/ illiquid / suspended/ delisted.

On the global front, Asian markets were trading in red, even after Hong Kong's consumer price declined for the second straight month in August. The data from the Census and Statistics Department showed that the consumer price index fell 0.4 percent year-on-year in August, following a 2.3 percent decrease in July. Excluding the effects of all government's one-off relief measures, core inflation was 0.1 percent in August versus 0.2 percent in the previous month.

The BSE Sensex is currently trading at 37785.50, down by 248.64 points or 0.65% after trading in a range of 37531.14 and 38209.97. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.51%, while Small cap index was down by 1.96%.

The only gaining sectoral indices on the BSE were Telecom up by 0.35% and IT up by 0.01%, while Realty down by 2.44%, Industrials down by 2.38%, Capital Goods down by 2.15%, Auto down by 1.94% and Consumer Discretionary down by 1.89% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 1.47%, Bharti Airtel up by 1.42%, HCL Tech up by 1.38%, Ultratech Cement up by 1.21% and TCS up by 0.96%. On the flip side, Maruti Suzuki down by 2.90%, ONGC down by 2.18%, Mahindra & Mahindra down by 1.94%, Larsen & Toubro down by 1.71% and Bajaj Finance down by 1.61% were the top losers.

Meanwhile, a multi-sector survey conducted by CARE Ratings has showed that business activity is unlikely to touch pre-COVID-19 levels before March 2021. It added that there is a need for the government to step in and give a ‘push’ to the economy as it has not done enough till now. The smaller businesses have reported more stress than the larger ones in the survey of over 600 companies conducted by the agency between August 25 and September 13.

The rating agency said ‘majority of participants said the government has not done enough for the revival of their sector and they expect more support from the government’. As per the survey, 72% of the respondents said the government should do more for revival of their industry and are pinning hopes on sops like deferment of statutory dues, credit enhancements or guarantees and even tax subsidies. It said the survey has revealed a ‘mix picture’ from an overall perspective, with two-thirds of those polled saying they expect to hit the pre-COVID-19 levels only in March 2021, while construction, real estate and service sector companies feel they will do so only in the next fiscal.

CARE Ratings said there has been a pick-up in activity lately but there is a need for standardisation in the unlock process without having the localised lockdowns, the survey participants, which included chief executives, chiefs of finance at companies and investors. It noted that companies in the construction, real estate, manufacturing and power sectors said they are facing problems because of the return of migrant labourers back to their villages. Besides, it said the small business segment reported more pain because of the migrant labour issue than the larger enterprises, with over a third of the former saying the migrant labourers have not returned back to work.

Some businesses also said lack of clarity on loan moratorium guidelines by the Reserve Bank of India (RBI) is among the factors that have severely affected performance of companies in their sector. Over half of the respondents across small and large businesses said there will be rise in the non-performing assets for banks from their sector due to the impact of COVID-19, and also feel that it may trigger consolidation moves over the next six months.

The CNX Nifty is currently trading at 11172.75, down by 77.80 points or 0.69% after trading in a range of 11084.65 and 11302.20. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 1.96%, Cipla up by 1.89%, Bharti Airtel up by 1.61%, Tech Mahindra up by 1.58% and HCL Tech up by 1.33%. On the flip side, Zee Entertainment down by 5.46%, Adani Ports & SEZ down by 4.13%, Bharti Infratel down by 3.50%, Maruti Suzuki down by 3.17% and GAIL India down by 2.95% were the top losers.

Asian markets were trading in red; Hang Seng decreased 82.08 points or 0.34% to 23,868.61, Taiwan Weighted dropped 129.04 points or 1.01% to 12,666.08, Shanghai Composite declined 4.06 points or 0.12% to 3,312.88, Jakarta Composite lost 43.37 points or 0.87% to 4,955.99, KOSPI fell 50.91 points or 2.13% to 2,338.48 and Straits Times trembled 16.80 points or 0.68% to 2,468.91.

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