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Sensex, Nifty continue to trade below neutral lines
Oct-22-2020

Weak trade continued over the Dalal Street, with both Sensex and Nifty trading below their neutral lines. Negative cues from other Asian markets impacted sentiments over the street. Traders got worried, after export growth declined in India in the third quarter of 2020 relative to the same quarter last year but picked up pace in September, according to a global trade update by the UN. The UNCTAD's new global trade update said that global trade recorded a 5 per cent drop in the third quarter of 2020 compared with the same period last year. This marks an improvement on the 19 per cent year-on-year plunge recorded in the second quarter, and the United Nations Conference on Trade and Development (UNCTAD) expects the frail recovery to continue in the fourth quarter.

On the global front, Asian markets were trading lower, even after Malaysia's consumer prices fell in September. The data from the Department of Statistics showed that consumer prices declined 1.4 percent year-on-year in September, same as in August. The annual fall was largely driven by the decline in transportation cost, when prices fell 9.9 percent. Prices for housing, water, electricity, gas and other fuels declined 3.0 percent yearly in September and prices for clothing and footwear fell 0.6 percent.

The BSE Sensex is currently trading at 40583.30, down by 124.01 points or 0.30% after trading in a range of 40413.65 and 40721.57. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.06%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Telecom up by 1.21%, Capital Goods up by 0.86%, Industrials up by 0.66%, Oil & Gas up by 0.42% and Consumer Durables up by 0.41%, while Healthcare down by 1.58%, IT down by 0.68%, Energy down by 0.50%, Auto down by 0.47% and TECK down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.47%, Larsen & Toubro up by 1.25%, ONGC up by 1.25%, Bajaj Finance up by 1.00% and NTPC up by 0.61%. On the flip side, Indusind Bank down by 1.58%, Sun Pharma down by 1.43%, Nestle down by 1.19%, Tech Mahindra down by 1.16% and Asian Paints down by 1.00% were the top losers.

Meanwhile, with an aim to enable banks to provide liquidity support to a host of sectors, including agriculture, retail, drugs and pharmaceuticals and MSMEs, the Reserve Bank of India (RBI) has announced an 'on tap' Targeted Long-Term Repo Operations (TLTRO) scheme of up to Rs 1 trillion. It said investments made by banks under this facility will be classified as held to maturity (HTM) even in excess of 25 per cent of total investment permitted to be included in the HTM portfolio. All exposures under this facility will also be exempted from reckoning under the large exposure framework (LEF).

Securities acquired by the banks with the intention to hold them up to maturity are classified under 'held to maturity (HTM)'. RBI in its Statement of Developmental and Regulatory Policies, which was issued with the bi-monthly monetary policy review on October 9, announced that it would conduct on tap TLTRO of up to three years tenor for a total amount of up to Rs 1 trillion at a floating rate linked to the policy repo rate. All banks eligible under the Liquidity Adjustment Facility (LAF) can participate in the scheme.

Liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial paper and non-convertible debentures issued by entities in sectors like agriculture; agri-infrastructure; secured retail; MSMEs; and drugs, pharmaceuticals and healthcare -- over and above the outstanding level of their investments in such instruments as on September 30, 2020. Liquidity availed under the scheme can also be used to extend loans and advances to these sectors. The scheme will remain operational from October 22, 2020 till March 31, 2021.

The CNX Nifty is currently trading at 11899.80, down by 37.85 points or 0.32% after trading in a range of 11853.55 and 11939.55. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 1.63%, Tata Motors up by 1.50%, Britannia up by 1.42%, ONGC up by 1.40% and Larsen & Toubro up by 1.35%. On the flip side, Dr. Reddy’s Lab down by 2.48%, Hero MotoCorp down by 1.77%, Cipla down by 1.71%, Eicher Motors down by 1.67% and Sun Pharma down by 1.47% were the top losers.

Asian markets were trading lower; Hang Seng decreased 55.31 points or 0.22% to 24,699.11, Nikkei 225 slipped 161.01 points or 0.68% to 23,478.45, Taiwan Weighted dropped 22.43 points or 0.17% to 12,854.82, KOSPI fell 26.82 points or 1.13% to 2,344.04, Straits Times trembled 5.51 points or 0.22% to 2,520.10, Shanghai Composite declined 27.70 points or 0.83% to 3,297.32 and Jakarta Composite lost 16.43 points or 0.32% to 5,080.02.

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