Benchmarks end flat with negative bias on Tuesday

Indian equity benchmarks swung between gains and losses throughout the day and ended flat with negative bias on Tuesday as investors awaited the outcome of a key meeting of the RBI's Monetary Policy Committee due this week. The indices started the day in green, as sentiments got boost as Chief Economic Advisor (CEA) V Anantha Nageswaran said the Indian economy is showing resilience and on the path to recovery. He added that private demand and the services sector are doing better than expected. Traders took note of report that economic grouping OECD in a report retained the GDP growth projections for India at 6.9 per cent for the current financial year despite the global economy losing momentum in wake of the Russia-Ukraine war. However, key gauges went into negative territory in the late morning deals as traders turned cautious as Finance minister Nirmala Sitharaman said ‘some people do also speak that a falling rupee also helps exports. Whether it does or doesn’t, theoretically it may, but in today’s condition, with recession outside and demand not really as adequately as it should be, even a fall in the rupee may or may not help our exports. We are conscious about these basic facts’.

But, key indices once again entered into green terrain in afternoon deals, taking support from report that government will extend again the validity of the current foreign trade policy (FTP), which provides a road map for boosting external commerce in goods and services, by six months through March 31, 2023. The decision was taken after demands from various industry associations and state-backed export promotion councils due to the uncertain external environment. However, markets failed to hold gains and ended in the flat territory, as investors remained concerned over persistent foreign fund outflows. Foreign institutional investors (FIIs) were net sellers in the capital market, offloading shares worth Rs 5,101.30 crore on Monday, according to stock exchange data.

On the global front, European markets were trading mostly in green as the dollar paused for breath and U.K. ten-year gilt yields slipped back after their recent surges. The euro rose and the British pound stabilized after the Bank of England (BoE) vowed it 'will not hesitate' to change interest rates by as much as needed, intending to reassure markets unnerved by last Friday's budget. Asian markets ended mixed on Tuesday after recent string of losses on worries that efforts by central banks to curb inflation may trigger a global inflation.

Back home, stocks related to telecom sector were in watch as a domestic rating agency India Ratings and Research (Ind-Ra) in its latest report has said that the draft Indian Telecommunication Bill may not help accelerate the resolution process for insolvent companies in the sector. Besides, cement stocks were in limelight after rating agency Crisil in its latest report has said that the operating profitability of cement companies is set to fall by 15 per cent year-on-year to Rs 900-925 per tonne this fiscal (FY23), adding to the pain of a 9 per cent decline last fiscal, as an increase in realisations will not be enough to offset the increase in prices of coal, petcoke and diesel that has pushed the average cost of production higher.

Finally, the BSE Sensex fell 37.70 points or 0.07% to 57,107.52 and the CNX Nifty was down by 8.90 points or 0.05% to 17,007.40.

The BSE Sensex touched high and low of 57,704.57 and 56,950.52, respectively. There were 18 stocks advancing against 12 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.01%, while Small cap index was up by 0.49%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.24%, Energy up by 0.91%, TECK up by 0.75%, Telecom up by 0.73% and Healthcare up by 0.69%, while Metal down by 0.83%, Bankex down by 0.78%, Capital Goods down by 0.71%, Utilities down by 0.59% and Power down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.81%, Indusind Bank up by 1.32%, Dr. Reddy's Lab up by 1.29%, HCL Technologies up by 1.25% and Nestle up by 1.19%. On the flip side, Tata Steel down by 2.25%, Titan Company down by 1.79%, Kotak Mahindra Bank down by 1.52%, SBI down by 1.39% and Tech Mahindra down by 1.08% were the top losers.

Meanwhile, the Organisation for Economic Cooperation and Development (OECD) in its latest Interim Economic Outlook has retained the India’s Gross Domestic Product (GDP) growth projection at 6.9 per cent for the current financial year (FY23) despite the global economy losing momentum in wake of the Russia-Ukraine war. In the June 2022 Economic Outlook, the OECD projected the GDP growth for India at 6.9 per cent. It said ‘Softer external demand is a factor in India’s projected slowdown from 8.7 per cent annual growth in FY2021-22 to around 7 per cent in FY 2022-23 and around 5¾ per cent in FY 2023-24, but this still represents rapid growth in the context of a weak global economy’.

It also said the global economy has lost momentum in the wake of Russia’s war of aggression in Ukraine, which is dragging down growth and putting additional upward pressure on inflation worldwide. The outlook projects global growth at a modest 3 per cent this year before slowing further to just 2.2 per cent in 2023. This is well below the pace of economic growth projected prior to the war and represents around USD 2.8 trillion in foregone global output in 2023. It further said growth in China has also been hit and is expected to drop to a projected 3.2 per cent in 2022.

It noted that except for the 2020 pandemic, this will be the lowest growth rate in China since the 1970s. Inflation is projected to recede gradually through 2023 in most G20 countries as the tighter monetary policy takes effect and global growth slows. Headline inflation is projected to ease from 8.2 per cent this year to 6.6 per cent in 2023 in the G20 economies, and fall from 6.2 per cent this year to 4 per cent in 2023 in the G20 advanced economies. The report projects inflation for India at 6.7 per cent, at the same level as in its June 22 Economic Outlook.

The CNX Nifty traded in a range of 17,176.45 and 16,942.35. There were 28 stocks advancing against 22 stocks declining on the index.  

The top gainers on Nifty were Cipla up by 3.41%, Tata Consumer Product up by 2.48%, Shree Cement up by 2.36%, Power Grid Corporation up by 2.19% and Indusind Bank up by 2.11%. On the flip side, Hero MotoCorp down by 2.88%, Adani Ports &SEZ down by 1.96%, Titan Company down by 1.91%, Tata Steel down by 1.90%, and SBI Life Insurance down by 1.41% were the top losers.

European markets were trading mostly in green; France’s CAC increased 36.83 points or 0.64% to 5,806.22 and Germany’s DAX increased 75.02 points or 0.61% to 12,302.94, while UK’s FTSE 100 decreased 11.42 points or 0.16% to 7,009.53.

Asian markets ended mixed on Tuesday on the back of weak cues from US markets overnight as recession fears grew along with raising concerns over efforts by central banks to curb inflation. Seoul shares gained slightly after a survey showed consumer confidence in the country strengthened in September. Chinese shares rose after the Chinese central bank, PBoC, injected about $24.7 billion of liquidity via repo market operations in a bid to maintain liquidity in the banking system. While data showing that profits at Chinese industrial firms declined further in August.

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