Post Session: Quick Review

Indian equity benchmarks ended the extremely volatile day of trade in red terrain on Tuesday as traders remained on sidelines ahead of GDP numbers for the July-September quarter to be released later today. India is expected to report strong growth as the economy bounces back from the pandemic lows. Markets started the session on an optimistic note as traders took encouragement with Minister of State for Finance Pankaj Chaudhary’s statement the net direct tax collection grew nearly 68 per cent during April 1 to November 23 to more than Rs 6.92 lakh crore. Some support also came in as India Ratings expects the economy to grow 8.3 per cent in Q2 and close the year with 9.4 per cent in FY'22. Markets extended gains as traders turned jubilant with Crisil Ratings in its latest report stating that after weathering multiple challenges over the past three fiscals, asset under management (AUM) of non-banking financial companies' (NBFCs) and housing finance companies (HFCs) is set to grow 8-10 percent in the fiscal 2023, helped by improvement in economic activity and strengthened balance sheet buffers.

However, markets witnessed sharp fall from high points of the day amid report that seven people arrived from South Africa in Maharashtra’s Thane city adjoining Mumbai since November 14 and all of them were tested in the wake of concerns over the new potentially more transmissible 'Omicron' variant of the coronavirus. Sentiments also dampened after drugmaker Moderna's CEO set off fresh alarm bells in financial markets on Tuesday after he warned that COVID-19 vaccines were unlikely to be as effective against the Omicron variant as they have been against the Delta version. Some cautiousness also crept in as Moody’s Analytics said the Omicron variant of COVID-19 adds new uncertainties to the global economic outlook but much will depend on its speed of transmission, hospitalisation and death rates, and also the effectiveness of vaccines.

Weakness in European counters too dampened sentiments with all the major European indices trading in red amid renewed fears that the Omicron coronavirus strain could hamper recovery. Asian markets too ended mostly in red as the head of drugmaker Moderna (MRNA) said that COVID-19 vaccines are unlikely to be as effective against the Omicron variant as they have been against the Delta strain.

Back home, the government has informed that scheduled commercial banks have written off bad loans amounting to Rs 46,382 crore during the first six months of 2021-22 (H1FY22). As per the RBI guidelines and policy approved by bank boards, non-performing loans, including, inter-alia, those in respect of which full provisioning has been made on completion of four years, are removed from the balance sheet of the bank concerned by way of the write-off. Meanwhile, aviation industry stocks remained in focus as the government said investments worth Rs 91,000 crore will be made for developing existing and new airports in different parts of the country, as several measures are being taken to boost the civil aviation sector.

The BSE Sensex ended at 57064.87, down by 195.71 points or 0.34% after trading in a range of 56867.51 and 58183.77. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.29%, while Small cap index was up by 1.45%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.26%, IT up by 0.95%, Realty up by 0.69%, TECK up by 0.56% and Consumer Discretionary Goods & Services up by 0.49%, while Metal down by 2.34%, Energy down by 1.04%, Bankex down by 0.85%, Auto down by 0.85% and Telecom down by 0.71% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid up by 3.43%, Titan Company up by 2.18%, Bajaj Finserv up by 1.98%, Nestle up by 1.33% and Bajaj Finance up by 1.27%. On the flip side, Tata Steel down by 3.87%, Kotak Mahindra Bank down by 2.87%, Bajaj Auto down by 1.72%, Mahindra & Mahindra down by 1.62% and Bharti Airtel down by 1.48% were the top losers. (Provisional)

Meanwhile, ahead of government’s Q2 GDP number release, India Ratings has said that it expects the economy to grow 8.3 percent in Q2 and close the year with 9.4 percent in FY22, which is 10 bps lower than the consensus forecast. The agency has attributed the higher growth to the nine consecutive quarters of over 3 percent agriculture growth, which has brightened consumer spending and the resultant uptick in private final consumption expenditure, which is likely to clip at around 10 percent in September quarter of the current fiscal. It added that another major reason is the near three-fold jump in vaccination, which soared to 890.21 million as of October-end from 335.72 million at June-end.

Noting that Q1 was impacted by the second wave leading to reduced workplace mobility and in turn economic activities, which at end-Q1 was 26 percent lower than the base line and 16 percent lower than baseline in FY21, it said mobility started improving only in Q2 yet it was only 7 percent annualised lower than the baseline at end-Q2 of FY22. The workplace mobility improved after vaccination pace gathered the momentum. Cumulative vaccinations jumped to 890.21 million at end-Q2 from 335.72 million at end-Q1. Even investment activities have found support from the government's focus on infrastructure and the agency expects the fixed capital formation to grow at around 8.5 percent in Q2.

The government capex grew 51.9 percent in Q2 as against 26.3 percent in the same previous quarter of the current fiscal and the aggregate capex of 24 states grew 62.2 percent in Q2 massively down from 98.4 percent in Q1. Yet private capex revival is still slow and limited to select sectors. Since H1 growth is mainly due to the lower base, economic growth is expected to revert closer to the medium/long trend growth from the second half onwards. However, the report said recent reforms like production-linked incentive scheme and sustained export growth may provide a fillip to the ongoing growth recovery.

The CNX Nifty ended at 16983.20, down by 70.75 points or 0.41% after trading in a range of 16931.40 and 17324.65. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 3.25%, Titan Company up by 2.21%, SBI Life Insurance up by 2.14%, Shree Cement up by 2.10% and Bajaj Finserv up by 2.05%. On the flip side, Tata Steel down by 3.91%, Kotak Mahindra Bank down by 2.86%, JSW Steel down by 2.75%, Adani Ports down by 2.67% and Mahindra & Mahindra down by 1.80% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 declined 97.25 points or 1.37% to 7,012.70, France’s CAC fell 92.18 points or 1.36% to 6,684.07 and Germany’s DAX was down by 219.70 points or 1.44% to 15,061.16.

Asian markets ended mostly lower on Tuesday after a warning from drugmaker Moderna CEO that existing Covid-19 vaccines would be less effective against the Omicron variant than they have been against the Delta variant. South Korean shares declined on disappointing factory output data and continuance of corona virus curbs. However, Chinese shares ended up as a jump in manufacturing PMI curbed hopes of policy easing. The official manufacturing Purchasing Manager’s Index (PMI) was at 50.1 in November, up from 49.2 in October.

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