Indices fall tracking decline in Asian markets; Sensex, Nifty slide as fiscal stimulus spend relatively small

The markets failed to be enthused by the government’s stimulus package announcements for small businesses. Asian equities slumped on Thursday after the head of the Federal Reserve warned of a “significantly worse” US recession than any downturn since World War Two because of coronavirus pandemic fallout, sentiments that drove bonds higher on a safety bid. Sensex slumped over 600 points in opening session on Thursday dragged by losses in index heavyweights Infosys, HDFC twins, Reliance Industries and ICICI Bank amid weak cues from global markets.After touching a low of 31,344.50, the 30-share index pared some early losses to trade 410.12 points or 1.28 percent lower at 31,598.49.Similarly, NSE Nifty tumbled 115.55 points, or 1.23 percent, to 9,268.The markets are disappointed because the immediate spend out of the big government fiscal stimulus is relatively small, and there are doubts on whether economic growth will revive soon and in proportion to the large size of the stimulus, they noted.The decline in the domestic indices is in line with the plunge in the Asian stock markets, analysts said.Around 9.42 AM, the Sensex was 31,600.62, lower by 407.99 points or -1.27 percent from the previous close of 32,008.61.[caption id="attachment_4444277" align="alignleft" width="380"] Representational image. Reuters.[/caption]It had opened at 31,466.33 and so far touched an intra-day-high of 31,628.56 and a low of 31,344.50.In the previous session, the BSE barometer settled 637.49 points or 2.03 percent higher at 32,008.61, while the broader Nifty jumped 187 points, or 2.03 percent, to finish at 9,383.55.NTPC was the top laggard in the Sensex pack, cracking around 4 percent, followed by Infosys, PowerGrid, Tech Mahindra, M&M, IndusInd Bank and ONGC.On the other hand, Bajaj Finance, Nestle India, Kotak Bank, Sun Pharma and UltraTech Cement were trading with gains.The government said on Wednesday it would offer nearly $60 billion of loan guarantees for small businesses, shadow banks and power companies, as part of a 20-trillion-rupee ($266 billion) fiscal and monetary package.The Nifty50 was trading at 9,266, lower by 117.55 points or 1.25 percent from the previous close.Foreign portfolio investors offloaded equities worth Rs 283.43 crore in the capital market on Wednesday, provisional exchange data showed.Gaurav Dua, Sr VP, Head Capital Market Strategy and Investments, Sharekhan by BNP Paribas, told PTI that equity markets are expected to appreciate the measures and not celebrate it with a big surge due to two key uncertainties-mechanism to fund the relief package, and quantum of immediate outflow from the government coffers.Rupee slips Rupee slipped 11 paise to 75.57 against US dollar in early trade.Global markets downOther Asian stock markets also fell as worries about a second wave of coronavirus infections and a dour warning from the head of the U.S. Federal Reserve dashed hopes for a quick recovery.Meanwhile, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with losses after the World Health Organization warned that the virus "may never go away".US Federal Reserve chief Jerome Powell warned of a "highly uncertain" outlook for the world''s top economy.On Wall Street, stock exchanges settled on a negative note in overnight trade.International oil benchmark Brent crude futures were trading flat at USD 29.19 per barrel.In India, the death toll due to COVID-19 rose to 2,549 and the number of cases climbed to 78,003, according to the health ministry.Globally, the number of cases linked to the disease has crossed 43.47 lakh and the death toll has topped 2.97 lakh. --With inputs from agencies