Benchmarks end lower; Nifty slips below 16,900 mark

Indian equity benchmarks ended nearly a per cent lower on Wednesday, tracking a weak trend in global markets. Markets started off on pessimistic note, as traders were concerned as the fourth round of the Quarterly Employment Survey (QES) released by the Labour Ministry showed that employment generation in nine non-farm sectors slowed down in the March quarter of FY22, possibly under the impact of Omicron variant of Covid-19, with additional job creation dipping to 350,000 during the quarter, from 390,000 in the preceding December quarter of the financial year.  However, key gauges erased all the losses to trade flat in afternoon deals, as traders took some support with the income tax department’s statement that the net direct tax collection has increased 23 per cent to Rs 7.04 lakh crore so far this fiscal. Some support also came as Economic affairs secretary Ajay Seth dismissed the concerns over depletion of forex reserve as overblown and said India has fairly large reserve to tide over the current situation.

But, markets failed to hold recovery and fell sharply in late afternoon deals to end near day’s low point as the Reserve Bank's rate-setting panel started its 3-day deliberations on Wednesday amid expectations of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed. Traders also remain concerned with continued foreign fund outflows. Foreign institutional investors (FIIs) have net sold shares worth Rs 2,823.96 crore on September 27, as per provisional data available on the NSE. Meanwhile, capital markets regulator SEBI came out with a new framework for daily price limit for commodity futures contracts in a bid to resolve the difference in closing price at domestic exchange and global bourse.

On the global front, European markets were trading lower as investors fretted about energy shortages and Britain's radical tax cuts to spur growth. News about the large amount of gas leakage from the Nord Stream pipelines has deepened concerns over energy and the overall economic circumstances in Europe. The International Monetary Fund has urged the U.K. government to 're-evaluate' a package of unfunded tax cuts, saying it may fuel inflation and would likely increase economic inequality. Weak consumer sentiment readings from Germany and France also raised concerns about the economic outlook. Asian markets settled down on Wednesday, as traders are cautious and remained worried that efforts by central banks around the world to curb inflation may trigger a global recession.

Back home, steel industry stocks remained in watch as the commerce ministry recommended imposition of anti-dumping duty on Chinese steel tubes and pipes for five years to guard domestic players from cheap imports from the neighbouring country. Stocks related to travel and tourism industry were in focus as report stated that the travel and tourism industry has witnessed 28 per cent growth in job postings during June-August.

Finally, the BSE Sensex fell 509.24 points or 0.89% to 56,598.28 and the CNX Nifty was down by 148.80 points or 0.87% to 16,858.60. 

The BSE Sensex touched high and low of 57,213.33 and 56,485.67, respectively. There were 12 stocks advancing against 18 stocks declining on the index. 

The broader indices ended in red; the BSE Mid cap index fell 0.47%, while Small cap index was down by 0.43%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.46%, IT up by 0.28%, TECK up by 0.25% and Auto up by 0.08%, while Metal down by 2.32%, Bankex down by 1.52%, Energy down by 1.09%, PSU down by 1.09% and Utilities down by 1.08% were the losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.90%, Sun Pharma up by 2.21%, Dr. Reddy's Lab up by 2.03%, Power Grid Corporation up by 1.42% and Nestle up by 1.23%. On the flip side, ITC down by 2.97%, Axis Bank down by 2.84%, Reliance Industries down by 2.64%, Tata Steel down by 2.41% and Indusind Bank down by 2.07% were the top losers.

Meanwhile, with a drop in oil and commodity prices, investment in the Indian capital markets through participatory notes rose to Rs 84,810 crore at the end of August, after three consecutive monthly declines. Participatory notes (P-notes) are issued by registered FPIs to overseas investors who wish to be a part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.

According to Securities and Exchange Board of India (SEBI) data, the value of P-note investments in Indian markets -- equity, debt, and hybrid securities -- stood at Rs 84,810 crore in August compared to Rs 75,725 crore in July-end. In comparison, investment through the route was Rs 80,092 crore in June-end, Rs 86,706 crore in May-end and Rs 90,580 crore at the end of April.

Of the total Rs 84,810 crore invested through the route till August 2022, Rs 75,389 crore was invested in equities, Rs 9,330 crore in debt, and Rs 91 crore in hybrid securities. In comparison, Rs 66,050 crore was invested in equities and Rs 9,592 crore in debt during July this year.

The CNX Nifty traded in a range of 17,037.60 and 16,820.40. There were 15 stocks advancing against 35 stocks declining on the index.  

The top gainers on Nifty were Asian Paints up by 2.80%, Sun Pharma up by 2.10%, Dr. Reddy's Lab up by 1.78%, Eicher Motors up by 1.72% and Power Grid Corporation up by 1.20%. On the flip side, Hindalco down by 3.65%, JSW Steel down by 3.44%, Axis Bank down by 3.25%, ITC down by 3.09% and Reliance Industries down by 2.74% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 23.59 points or 0.34% to 6,961.00, France’s CAC decreased 20.35 points or 0.35% to 5,733.47 and Germany’s DAX decreased 54.83 points or 0.45% to 12,084.85.

Asian markets settled down on Wednesday on persistent worries over global recession in the wake of aggressive monetary tightening in major economies, while concerns of Europe's energy crisis, United Kingdom’s tax cutting plans and hawkish comments from Federal Reserve officials have also made investors nervous. Chicago Fed President Charles Evans, St. Louis Fed President James Bullard and Minneapolis Federal Reserve Bank President Neel Kashkari all said they need to keep raising interest rates to restore price stability. Seoul shares dropped as the Korean won hit a 13-year low. Chinese shares declined sharply as the yuan hit a record low, while Hong Kong shares plunged ahead of China's Communist Party Congress in October. Japanese shares fell as investors fretted about the inflationary impact of the yen's recent sharp moves.

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