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Indian equities fall for fourth day in a row
Sep-22-2020

Falling for fourth day in a row, Indian equity benchmarks ended Tuesday’s session with losses of over half percent each, mirroring sell-off in global markets on rising coronavirus cases across the globe. Markets made a cautious start and soon fell sharply, as traders got anxious with CARE Ratings’ a multi-sector survey showed that business activity is unlikely to touch pre-COVID-19 levels before March 2021, and 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. However, markets gave up most of their initial losses to come off their intraday low point in afternoon deals, as traders found some solace with Commerce Minister Piyush Goyal’s statement that the current crisis should be used as an opportunity to make the transition to clean energy smoother, faster, more resilient and affordable. Traders also took a note of former Niti Aayog vice chairman Arvind Panagariya’s statement that India will need fiscal stimulus, lower interest rates, faster bank recapitalisation and privatisation of some PSUs to return to 7 percent growth rate.

Though, frontline indices unable to hold recovery mode and resumed their downward trend in late afternoon session, tracking losses in index-heavyweights Maruti Suzuki, Larsen & Toubro and Indusind Bank. Traders also took 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. Meanwhile, India's imports from China declined by 27.63 percent during April-August this fiscal to $21.58 billion over the same period previous year. Value of imports from China stood at $4.98 billion in August and $5.58 in July.

On the global front, Asian markets ended mostly in red, as rising coronavirus cases and delays in fresh U.S. stimulus stoked worries that the quick economic recovery from the pandemic will be hampered. Speculation about further lockdown measures in Europe and reports that several global banks were involved in money laundering to the tune of $2 trillion between 1999 and 2017 also weighed on markets. However, European markets were trading higher, as Bank of England Governor Andrew Bailey downplayed the prospect of negative interest rates in the future. He said as escalating Covid-19 cases threaten the economic outlook, the central bank was looking hard at how it could support the economy further. Back home, on the sectoral front, agriculture related stocks were in focus as the government hiked the MSP for buying six rabi crops, including wheat, by up to 6%, as it sought to send a strong message to farmers on continuation of MSP-based procurement system. Besides, stocks related to cement industry also were in watch as India Ratings and Research (Ind-Ra) said cement demand is expected to decline by 10 to 15 percent year-on-year in the second quarter (July to September). It also said rural demand will continue to outperform urban demand and companies having higher individual home builder exposure will remain better placed.

Finally, the BSE Sensex fell 300.06 points or 0.79% to 37,734.08, while the CNX Nifty was down by 96.90 points or 0.86% to 11,153.65.

The BSE Sensex touched high and low of 38,209.97 and 37,531.14, respectively and there were 9 stocks advancing against 21 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.70%, while Small cap index was down by 1.61%.

The few gaining sectoral indices on the BSE were IT up by 0.91% and TECK up by 0.67%, while Industrials down by 2.49%, Capital Goods down by 2.47%, Oil & Gas down by 2.39%, Energy down by 1.98% and Consumer discretionary down by 1.84% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 2.43%, TCS up by 2.39%, Tech Mahindra up by 2.20%, Sun Pharma up by 1.35% and ICICI Bank up by 1.04%. On the flip side, Maruti Suzuki down by 2.83%, Larsen & Toubro down by 2.82%, Indusind Bank down by 2.79%, Axis Bank down by 2.59% and ONGC down by 2.32% were the top losers.

Meanwhile, Former Niti Aayog vice chairman -- Arvind Panagariya has said India will need fiscal stimulus, lower interest rates, faster bank recapitalisation and privatisation of some PSUs to return to 7 per cent growth rate. Panagariya further said the country lost nearly $125 billion in the April-June period due to the COVID-19 pandemic.

Besides, he pointed out that India's economic growth was slowing down even before COVID-19 hit the country because there was a lot of stress in the financial sector. He emphasised ‘so we need to recapitalise banks now, otherwise NPAs will rise again and it will be difficult for Indian economy to grow at 7-7.5 per cent again. So, we should not commit past mistakes’.

Talking about the farm sector, he said agriculture is important for India because too many people are dependent on it. But, he added agriculture cannot grow more than 4 per cent. So India needs more growth in services and manufacturing sector. India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9 per cent as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. However, agriculture grew by 3.4 per cent during the April -June quarter of the current fiscal.

The CNX Nifty traded in a range of 11,302.20 and 11,084.65 and there were 14 stocks advancing against 35 stocks declining, while 1 stock remain unchanged  on the index.

The top gainers on Nifty were TCS up by 2.34%, HCL Technologies up by 2.85%, TCS up by 2.46%, Sun Pharma up by 2.14%, Tech Mahindra up by 2.13% and Grasim Industries up by 1.51%. On the flip side, Zee Entertainment down by 6.60%, Adani Ports & SEZ down by 4.66%, Bharti Infratel down by 4.64%, GAIL India down by 4.48% and Maruti Suzuki down by 2.91% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 15.09 points or 0.26% to 5,819.38, France’s CAC rose 7.89 points or 0.16% to 4,799.93 and Germany’s DAX was up by 107.85 points or 0.86% to 12,650.29.

Asian markets ended mostly lower on Tuesday tracking Wall Street’s overnight losses amid possible delays in fresh US stimulus with allegations of illegal accounts and funds transfers by several global banks over nearly two decades. Further, concerns of possible lockdown in Europe due to fears that second wave of corona virus infections would lead to tougher travel restrictions, too weighed investors' sentiment. Escalating Sino-US tensions too added pressure on the market. Chinese shares ended down, despite China’s cabinet unveiling steps to spur new forms of consumption, including online shopping and payments, in a bid to support the recovery of the economy. Meanwhile, the Japanese market was closed for a holiday.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,274.30-42.64-1.29

Hang Seng

23,716.85-233.84-0.98

Jakarta Composite

4,934.09-65.27-1.31

KLSE Composite

1,505.786.350.42

Nikkei 225

-

-

-

Straits Times

2,463.29-22.42-0.90

KOSPI Composite

2,332.59-56.80-2.38

Taiwan Weighted

12,645.51-149.61-1.17
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