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Domestic markets wipe out opening gains; trade lower in early deals
May-24-2022

Indian equity benchmarks made flat-to-positive start on Tuesday tracking overnight gains on Wall Street. Soon, markets wipeout all the gains to enter into negative territory and are trading lower with marginal cut in early deals. Initially, markets took encouragement with a private report that the government’s cut in the fuel tax and measures to cool prices of iron, steel, coal, plastics and cement may drive down retail inflation in the short term. Though, traders turned cautious as ICRA Ratings said the economic growth may have slowed to 3.5 per cent in fourth quarter of 2021-22 from 5.4 per cent in the previous three-month period due to the impact of higher commodity prices on margins, decline in wheat yields and on higher base. The agency said the hiccups in the recovery of the contact-intensive services attributable to the third wave of COVID-19 in the country may have also affected the economic growth in the quarter.

Asian markets are also trading mostly lower despite the broadly positive cues from Wall Street overnight, as a further surge in coronavirus cases in Beijing ignited fears of economic slowdown amid supply chain concerns. Persistent inflation, looming interest rate hikes and the Ukraine war also weighed on market sentiment. Back home, metal stocks were in focus as Icra reacting to the duty-related measures taken by the government said the domestic steel sector has been hit by a moving train. In scrip specific development, Zomato soared despite widening its March quarter net loss. However, Marico rose after it acquired a 54 percent stake in breakfast and snacks brand True Elements. Besides, Logistics giant Delhivery and Venus Pipes and Tubes were debuted at premium on the BSE.

The BSE Sensex is currently trading at 54171.60, down by 117.01 points or 0.22% after trading in a range of 54116.53 and 54463.13. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.48%, while Small cap index was down by 0.27%.

The top gaining sectoral indices on the BSE were Bankex up by 0.33%, PSU up by 0.33%, Metal up by 0.29%, Auto up by 0.28%, while Capital Goods down by 0.95%, TECK down by 0.92%, FMCG down by 0.91%, Healthcare down by 0.85%, IT down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.89%, Mahindra & Mahindra up by 1.78%, Indusind Bank up by 1.26%, NTPC up by 0.77% and HDFC up by 0.72%. On the flip side, Hindustan Unilever down by 2.42%, Larsen & Toubro down by 1.32%, Infosys down by 1.21%, Bharti Airtel down by 1.06% and Ultratech Cement down by 1.00% were the top losers.

Meanwhile, ICRA Ratings has expressed concerns over India’s economic growth and has said the economic growth may have slowed to 3.5 per cent in fourth quarter of 2021-22 from 5.4 per cent in the previous three-month period due to the impact of higher commodity prices on margins, decline in wheat yields and on higher base. It said the hiccups in the recovery of the contact-intensive services attributable to the third wave of COVID-19 in the country may have also affected the economic growth in the quarter. It noted that even the gross value added (GVA) at basic prices (at constant 2011-12 prices) in Q4 FY2022 seems to have eased to 2.7 per cent from 4.7 per cent in Q3 FY2022. The National Statistical Office (NSO) will release the fourth quarter numbers of fiscal 2022 on May 31.

ICRA’s Chief Economist Aditi Nayar said Q4 was a challenging quarter, with the Omicron-fuelled third wave of COVID-19 arresting the momentum in contact-intensive services, and a pervasive pressure on margins from higher commodity prices. Moreover, the heatwave adversely affected wheat output in March 2022. She said ‘we are apprehensive that both agriculture and industry will post a sub-1 per cent GVA growth in Q4 FY2022, whereas services growth will print at around 5.4 per cent’.

The agency further said that the recent cut in excise duties on petrol and diesel will help boost sentiments and improve consumers’ disposable incomes, while simultaneously cooling the CPI inflation. Last week, the government had cut excise duty on petrol by a record Rs 8 per litre and that on diesel by Rs 6 per litre to give relief to consumers battering under high fuel prices that has also pushed inflation to a multi-year high. Retail inflation, as measured by consumer price-based inflation (CPI), accelerated to an eight-year high of 7.79 per cent in April. ICRA projects the average CPI inflation for FY2023 at 6.5 per cent, pencilling in a 40 basis points repo rate hike in the June 2022 monetary policy review, amid a terminal rate of 5.5 per cent.

The CNX Nifty is currently trading at 16170.70, down by 44.00 points or 0.27% after trading in a range of 16154.50 and 16262.80. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 1.83%, Power Grid up by 1.63%, Indusind Bank up by 1.25%, Dr. Reddy's Lab up by 0.79% and Bajaj Auto up by 0.75%. On the flip side, Divi's Lab down by 5.09%, Grasim Industries down by 4.66%, Hindustan Unilever down by 2.18%, Apollo Hospital down by 1.53% and Hindalco down by 1.27% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 138.45 points or 0.51% to 26,863.07, Hang Seng tumbled 279.61 points or 1.37% to 20,190.45, Taiwan Weighted lost 85.83 points or 0.53% to 16,070.58, KOSPI fell 23.80 points or 0.90% to 2,623.58 and Shanghai Composite was down by 34.49 points or 1.10% to 3,112.37. On the other hand, Straits Times added 6.18 points or 0.19% to 3,219.83 and Jakarta Composite was up by 85.46 points or 1.25% to 6,926.24.
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