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Sensex, Nifty end volatile session in red on Tuesday
May-24-2022

Indian equity benchmarks ended volatile session in red on Tuesday. After a cautious start, markets traded volatile, 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.

In early afternoon deals, key indices managed to trade in green terrain for a little time. Domestic sentiments were positive, as capital markets regulator Sebi allowed mutual funds to launch passively managed Equity-Linked Savings Schemes (ELSS). But again, markets came back in red in the last hours of the trade to end on a lower note, amid a private report stating that the Centre's decision to cut excise duty on petrol and diesel will put pressure on the fiscal deficit which has been estimated at 6.4 per cent of GDP for the current financial year.

On the global front, European markets were trading lower as reminders of the risks to global growth from both China and the U.S. put a quick end to Monday's relief rally. Asian markets settled mostly lower, after the manufacturing sector in Japan continued to expand in May, albeit at a slower pace, the latest survey from Jibun Bank showed on Tuesday with a manufacturing PMI score of 53.2. That's down from 53.5 in April, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

Back home, metal stocks remained 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. Besides, infra sector stock were also in focus, as Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained a neutral outlook for the overall infrastructure sector for FY23, amid likelihood of a stable operating performance for majority of the projects, long-term visibility of revenue under concession agreements and power purchase agreements, and expected improved cargo and traffic volumes.

Finally, the BSE Sensex fell 236.00 points or 0.43% to 54052.61 and the CNX Nifty was down by 89.55 points or 0.55% to 16125.15. 

The BSE Sensex touched high and low of 54524.37 and 53886.28, respectively. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index was down by 0.85%, while Small cap index down by 1.14%.

The only gaining sectoral index on the BSE was Bankex up by 0.13%, while IT down by 1.75%, Utilities down by 1.70%, Power down by 1.64%, TECK down by 1.64% and FMCG down by 1.38% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy's Lab up by 1.80%, HDFC up by 1.74%, Kotak Mahindra Bank up by 1.35%, HDFC Bank up by 1.23% and Power Grid up by 1.09%. On the flip side, Tech Mahindra down by 3.92%, Hindustan Unilever down by 2.98%, HCL Tech down by 2.57%, Asian Paints down by 2.33% and NTPC down by 2.10% were the top losers.

Meanwhile, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained a neutral outlook for the overall infrastructure sector for FY23, amid likelihood of a stable operating performance for majority of the projects, long-term visibility of revenue under concession agreements and power purchase agreements, and expected improved cargo and traffic volumes.

The rating agency further noted that internal liquidity, adequacy of operations and maintenance, mitigation of cost overrun and strength of sponsors are critical monitorables. Ind-Ra also underlined headwinds for the sector such as a downward revision in the economic outlook, elevated commodity prices, rising interest rate, land acquisitions delays, construction stage risks and counterparty risks.

According to the report, there is a continued preference for infrastructure investment trusts and pooled financing structures. Refinancing is generally focused on establishing pooled structures to raise funds, elongating the tenor and/or releasing of some sponsor investments. The consequence of rising interest rates is also a key monitorable.

The CNX Nifty traded in a range of 16262.80 and 16078.60. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy's Lab up by 1.97%, HDFC up by 1.70%, Kotak Mahindra Bank up by 1.44%, Power Grid up by 1.42% and HDFC Bank up by 1.23%. On the flip side, Divi's Lab down by 6.00%, Tech Mahindra down by 4.02%, Grasim Industries down by 3.87%, Hindustan Unilever down by 3.05% and Hindalco down by 2.82% were the top losers.

European markets were trading lower, UK’s FTSE 100 decreased 43.01 points or 0.57% to 7,470.43, France’s CAC decreased 79.68 points or 1.25% to 6,279.06 and Germany’s DAX was down by 133.16 points or 0.94% to 14,042.24.

Asian markets settled mostly lower on Tuesday even after US President Joe Biden's comments that he was considering easing tariffs on Chinese goods. Market sentiments weakened further after social media platform Snap warned that it will miss earnings forecasts for the current quarter due to a faster than expected deterioration in macroeconomic conditions. Japanese shares slipped as a survey showed activity in the Japanese manufacturing sector grew at the slowest pace in three months in May amid supply bottlenecks, while Toyota announced a cut in its global production plan by one lakh in June amid chip crisis. Chinese shares settled lower after investment banks UBS Group and JPMorgan Chase downgraded their forecasts for China's economic growth this year. Hong Kong shares fell, led by declines from Chinese e-commerce giant Alibaba and video-sharing platform Kuaishou. Moreover, Seoul shares declined amid fears that the US central bank's tightening to curb inflation could hurt economic growth.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,070.93-75.93-2.41

Hang Seng

20,112.10-357.96-1.75

Jakarta Composite

6,914.1473.361.07

KLSE Composite

1,531.30-11.23-0.73

Nikkei 225

26,748.14-253.38-0.94

Straits Times

3,195.04-18.61-0.58

KOSPI Composite

2,605.87-41.51-1.57

Taiwan Weighted

15,963.63-192.78-1.19
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