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Sensex, Nifty trade in deep red
Jan-18-2021

Indian equity benchmarks added more losses in late morning deals, with Sensex and Nifty trading in deep red. Mixed cues from other Asian markets impacted sentiments over the Dalal Street. Markets participants were negative as report states that the Indian economy is not recovering as fast as the government claims and the country's economy may contract 25 per cent in the current financial year. It further states that due to a big decline in the GDP during the current financial year, the budget estimates have gone completely out of gear and, therefore, there is a need to correct the Budget.

On the global front, Asian markets were trading mixed, even after China's economy gained further momentum towards the end of 2020 as the domestic activity continued to recover from the Covid-19 driven downturn. Gross domestic product climbed 6.5 percent on year in the fourth quarter of 2020. The rate exceeded the expected 6.1 percent and up from 4.9 percent growth posted in the third quarter. On a seasonally adjusted basis, GDP expanded 2.6 percent but slower than the revised 3 percent rise in the preceding three months.

The BSE Sensex is currently trading at 48585.90, down by 448.77 points or 0.92% after trading in a range of 48549.77 and 49122.23. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.12%, while Small cap index was down by 1.95%.

The only gaining sectoral indices on the BSE were Energy up by 0.38% and Consumer Durables up by 0.30%, while Metal down by 3.82%, Realty down by 2.73%, PSU down by 2.62%, Basic Materials down by 2.61% and Power down by 2.59% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.51%, HDFC Bank up by 0.93%, ITC up by 0.73%, Nestle up by 0.65% and Titan Co up by 0.43%. On the flip side, ONGC down by 4.49%, Indusind Bank down by 3.88%, Bajaj Finance down by 3.47%, Bajaj Finserv down by 3.38% and NTPC down by 3.28% were the top losers.

Meanwhile, former chief economic adviser Arvind Virmani has said that the Indian economy is likely to contract in the range of 5-7.5 per cent this fiscal (FY21) but will see a growth of 9 to 11 per cent in FY 2021-22. Further, Virmani said in the upcoming Budget, the government should come up with policies to accelerate India's economic growth.

Besides, he said that India can't become 'Aatmanirbhar' with the 20th century Direct Tax Code (DTC). He mentioned ‘There is a need to simplify direct taxes and indirect taxes for MSMEs. We can't have 21st century Aatmanirbhar with 20th century DTC... We need 21st century Direct Tax Code.’ He also emphasised that there is a need of 15 per cent uniform GST rate for 75 per cent of goods and services. Noting that production-linked incentive (PLI) was actually a very good scheme, Virmani said the government should promote employment generating exports.

He also pointed out that free trade agreements (FTAs) with the US, European Union (EU) and the UK are much important than with the Regional Comprehensive Economic Partnership (RCEP) because most MNCs are located in the US, EU and the UK. He also suggested that the government should spend more on infrastructure projects, modernise sewage system to deal with the future pandemic and invest on R&D on contagious diseases.

The CNX Nifty is currently trading at 14284.05, down by 149.65 points or 1.04% after trading in a range of 14263.60 and 14459.15. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.80%, Reliance Industries up by 1.59%, Eicher Motors up by 1.46%, Nestle up by 0.96% and HDFC Bank up by 0.91%. On the flip side, Tata Motors down by 5.82%, Tata Steel down by 4.67%, ONGC down by 4.49%, Hindalco down by 4.18% and JSW Steel down by 3.72% were the top losers.

Asian markets were trading mixed; Nikkei lost 216.19 points or 0.76% to 28,302.99, Straits Times slipped 21.98 points or 0.73% to 2,982.89, Taiwan Weighted fell 48.39 points or 0.31% to 15,568.00 and KOSPI declined 42.69 points or 1.38% to 3,043.21. On the other hand, Hang Seng gained 156.49 points or 0.55% to 28,730.35, Jakarta Composite rose 38.95 points or 0.61% to 6,412.36 and Shanghai Composite was up by 24.95 points or 0.70% to 3,591.33.

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