HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Benchmarks end volatile session in negative territory
Jul-10-2020

Indian stock markets ended Friday's volatile session in the negative territory, as relentless rise in Covid-19 cases both in India as well as on the global front weighed on investor sentiment. Sensex and Nifty settled below their crucial 36,600 and 10,800 levels, respectively. Key indices opened in red and stayed in the negative terrain for whole trading session, following the bearish cues from the other Asian markets. Traders remain concerned with a private report that India's GDP will contract by 3 percent in FY21 because of the coronavirus pandemic, assuming the economy is opened up fully from next month. It also said the RBI will monetise the fiscal deficit through purchase of government bonds of up to $95 billion through open market operations, and its revaluation reserves of $127 billion may also be used to recapitalise state-run banks.

However, key gauges showed some signs of revival in the late afternoon session, taking support from Principal Economic Adviser Sanjeev Sanyal’s statement that the government will undertake measures to boost demand and there is both monetary and fiscal headroom available. He stated that economic activity is steadily getting back on track. Sanyal indicated that the Reserve Bank of India (RBI) may cut interest rates further as a monetary policy tool to improve demand. Traders also took a note of report that Prime Minister Narendra Modi, in an effort to woo global investors, said that India has massive opportunities in various sectors such as defence, agriculture, and MSMEs. He emphasized on the opportunity that India provides, being one of the fastest-growing economies in the world. But, domestic bourses failed to carry the momentum and settled in red, as cautiousness remained in the markets ahead of Index of Industrial Production (IIP) data, which is scheduled to be announced post market hours.

On the global front, Asian markets ended lower on Friday, as a surge in coronavirus cases stoked fears that new lockdowns could take a toll on the economic recovery. Investors also turned cautious ahead of the corporate earnings season beginning next week. Meanwhile, the Bank of Japan downgraded economic assessment of all nine regions for the second straight time, citing the impact of the novel coronavirus. European markets were trading higher, even as coronavirus cases surged in the U.S. and record spikes of infections in Hong Kong and Tokyo fueled fears of a second wave hitting Asia. Back home, majority of auto stocks ended lower with Crisil Research’s report that automotive aftermarket spending is expected to decline by 11 percent in the current financial year (FY21) owing to nationwide lockdown to limit the spread of Coronavirus disease (COVID-19) pandemic. Pharma stocks were also in focus with Indian Pharmaceutical Alliance’s (IPA) statement that Indian pharma industry is committed to an uninterrupted supply of quality medicines to patients in India and globally.

Finally, the BSE Sensex fell 143.36 points or 0.39% to 36,594.33, while the CNX Nifty was down by 45.40 points or 0.42% to 10,768.05.  

The BSE Sensex touched high and low of 36,748.89 and 36,401.11, 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 0.72%, while Small cap index was down by 0.35%.

The top gaining sectoral indices on the BSE were Energy up by 2.29%, Telecom up by 0.75%, Realty up by 0.67%, Healthcare up by 0.67% and FMCG up by 0.56%, while Bankex down by 2.22%, Finance down by 1.95%, Consumer Durables down by 1.81%, Capital Goods down by 1.08%, Utilities down by 1.07% and Basic Materials down by 0.93% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.95%, Sun Pharma up by 2.36%, Hindustan Unilever up by 2.22%, Bharti Airtel up by 1.03% and TCS up by 0.78%. On the flip side, Axis Bank down by 3.14%, Indusind Bank down by 3.13%, Titan Company down by 3.01%, HDFC down by 2.87% and ICICI Bank down by 2.75% were the top losers.

Meanwhile, Crisil Research in its latest report has said that automotive aftermarket spending is expected to decline by 11 percent in the current financial year (FY21) owing to nationwide lockdown to limit the spread of Coronavirus disease (COVID-19) pandemic. Based on the analysis of 75 mega districts in the country, which account for 43 percent of the segment's total revenue, it expects the annual running of vehicles (in kilometres) to decline, with three-wheelers likely to see the highest decline of 22 percent and passenger vehicles and tractors seeing the lowest decline of 4 percent during FY21.

According to the report, these districts together account for a significant chunk of automobile sales by original equipment manufactures (OEMs) and 46 percent of total number of automobiles in the country. It said aftermarket automotive spends are typically driven by annual running and replacement frequency. It noted that the economic crisis brought on by the extended lockdown is expected to whip up the woes of the auto component industry, including tyres, engine oil and lubricants, this fiscal.

The report further stated that utilisation in commercial vehicles had reached 25-30 percent by May-end and is likely to touch pre-Covid levels only by September, and reduced running along with the highly price-sensitive nature of customers in this segment will drive down aftermarket spends. In two-wheelers, a high proportion of aftermarket spend goes towards tyre and engine oil replacement, which will be sharply lower as both are directly linked with annual running. Besides, two-wheeler owners are likely to heavily downtrade or opt for cheaper options in the aftermarket, given the impact of the economic slowdown. Usage of two-wheelers should improve gradually as commuters increasingly prefer personal vehicle.

The CNX Nifty traded in a range of 10,819.40 and 10,713.00 and there were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 3.11%, Hindustan Unilever up by 2.49%, Sun Pharma up by 2.27%, Britannia Industries up by 1.53% and Bharti Airtel up by 1.05%. On the flip side, Axis Bank down by 3.21%, GAIL India down by 2.84%, ICICI bank down by 2.82%, Indusind Bank down by 2.79% and HDFC down by 2.72% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 28.25 points or 0.47% to 6,077.87, France’s CAC increased 17.06 points or 0.35% to 4,938.07 and Germany’s DAX increased 36.75 points or 0.29% to 12,526.21.

Asian markets ended mostly down on Friday, hit by weakness in Wall Street as surging corona virus cases across America raised fears of another lockdown in several states and dimmed prospects for a quick economic recovery. US sets one day record with more than 60,500 new corona virus infections on Thursday. Investors also turned cautious ahead of the corporate earnings season beginning next week. Chinese shares ended lower as state media discouraged retail investors from chasing the market higher. Market sentiment dented further after reports that the United States imposed sanctions on the highest ranking Chinese official yet targeted over alleged human rights abuses against the Uighur Muslim minority, a move likely to further ratchet up tensions between Washington and Beijing. Japanese shares declined as the safe-haven yen strengthened after Tokyo reported an all-time high of 243 new corona virus cases in the city. Meanwhile, the Bank of Japan downgraded its assessments of all nine regional economies for the second straight quarter, as the novel corona virus pandemic has continued to impact a wide range of business sectors.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,383.32
-67.27

-1.95

Hang Seng

25,727.41
-482.75
-1.84

Jakarta Composite

5,031.26
-21.53
-0.43

KLSE Composite

1,591.84

8.59

0.54

Nikkei 225

22,290.81
-238.48
-1.06

Straits Times

-

-

-

KOSPI Composite

2,150.25
-17.65
-0.81

Taiwan Weighted

12,073.68
-119.01
-0.98



  RELATED NEWS >>