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Indian equity benchmarks ended lower by around a percent on Wednesday amid a global sell-off, triggered by concerns about world economic growth. All sectors were in the red, with Power, Utilities and Telecom shares being the biggest draggers. Key gauges made a negative start and showed weakness throughout the session, as traders were cautious with the International Monetary Fund’s (IMF) Asia and Pacific Department’s Acting Director Anne-Marie Gulde-Wolf stating that the surge in oil prices due to the Ukrainian war has pushed up inflation in India, which needs monetary tightening and measures to address structural weaknesses to improve growth potential. Sentiments remained down-beat with a private report stating that the pandemic seems to have dented the prospects of beneficiaries hoping to enrol in minority schemes. While the fund utilisation under minority schemes had reached its peak in 2019-20, with the government spending Rs 6,575 crore, it has since declined. 

Indices continued to show a sluggish trend in late afternoon session as India reports 2,927 fresh cases and 2,252 recoveries, in the last 24 hours. Besides, stock exchange data showed foreign institutional investors continued their selling spree, offloading shares worth Rs 1,174.05 crore on Tuesday. Market participants largely overlooked CBDT Chairman J B Mohapatra’s statement that the net direct tax collection has registered a whopping 49.02 per cent growth to over Rs 14.09 lakh crore in the 2021-22 fiscal as the country’s economy ‘bounced back’ after being hit by the COVID-19 pandemic. Traders also paid no heed towards private report stated that as the country recovers from the pandemic, the retail industry has resumed its growth trajectory and is likely to witness 10 per cent annual growth to reach approximately $2 trillion by 2032.

On the global front, Asian markets ended mostly lower on Wednesday following the broadly negative cues from Wall Street, on concerns of elevated inflation and the potential economic impact from the widely expected U.S. monetary tightening continued to weigh on investors as they digest the latest earnings news. Lingering worries also remain about the Covid-19 lockdowns in China and the ongoing war in Ukraine. European markets were trading in green despite worries of a global slowdown and pain-points from the war in eastern Europe. Back home, stocks related to steel industry were in focus as Minister of Steel Faggan Singh Kulaste stated that India exported 13.5 million tonne (MT) of finished steel valuing Rs 1 lakh crore in the last financial year (FY22). According to official data, India's finished steel exports were at 10.78 million tonne in 2020-21. Besides, edible oil industry stocks also were in watch with private report that India's palm oil imports in May are set to rise above 600,000 tonnes despite the restriction imposed by Indonesia on exports as most of the contracted quantity will be loaded before Jakarta's ban becomes effective.  

Finally, the BSE Sensex fell 537.22 points or 0.94% to 56,819.39 and the CNX Nifty was down by 162.40 points or 0.94% to 17,038.40.        

The BSE Sensex touched high and low of 57,079.03 and 56,584.04, respectively. There were 6 stocks advancing against 24 stocks declining on the index.     

The broader indices ended in red; the BSE Mid cap index fell 0.97%, while Small cap index was down by 0.63%.

The top losing sectoral indices on the BSE were Power down by 1.96%, Utilities down by 1.90%, Telecom down by 1.72%, Consumer Durables down by 1.35% and PSU down by 1.34%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Tata Steel up by 1.05%, Asian Paints up by 0.72%, TCS up by 0.47%, HCL Technologies up by 0.17% and Reliance Industries up by 0.08%. On the flip side, Bajaj Finance down by 7.24%, Bajaj Finserv down by 3.88%, ICICI Bank down by 2.21%, Titan Company down by 2.19% and Dr. Reddy's Lab down by 1.94% were the top losers.

Meanwhile, the International Monetary Fund’s (IMF) Asia and Pacific Department’s Acting Director Anne-Marie Gulde-Wolf said that the surge in oil prices due to the Ukrainian war has pushed up inflation in India, which needs monetary tightening and measures to address structural weaknesses to improve growth potential. She said according to estimates, the country's economy is likely to grow at 8.2 per cent in 2022-23, down 0.8 per percentage points. She added ‘So while still strong, it is a significant downgrade. We really see the difficult policy tradeoff for policymakers supporting the worldwide controlling of inflation, which has already started going up’.

She said ‘the reason why inflation has gone up is really the spillovers from the war in Ukraine, where India is particularly dependent on oil and commodity imports’. She added ‘in the short run, we think a commodity fiscal stance is appropriate, supporting vulnerable households and putting focus on infrastructure investment’. She recommended monetary tightening and measures to check structural weaknesses. She also said ‘well-communicated monetary policy actions are needed but probably some monetary tightening’.

She further said ‘to enhance India's growth potential, it is important to address structural weaknesses of the Indian economy that provide bottlenecks to achieve longer-lasting growth. These bottlenecks are in the labour market, land market, better educational outcomes, and very much also getting higher share of females into the labour force’. She said ‘so, in sum, the potential is definitely there but it will require policy actions’.

The CNX Nifty traded in a range of 17,110.70 and 16,958.45. There were 10 stocks advancing against 39 stocks declining, 1 stock remain unchanged on the index.     

The top gainers on Nifty were Hero MotoCorp up by 3.85%, Tata Steel up by 1.25%, Asian Paints up by 0.62%, HCL Technologies 0.43% and Eicher Motors up by 0.40%. On the flip side, Bajaj Finance down by 7.24%, Bajaj Finserv down by 3.84%, Tata Consumer Product down by 2.81%, Shree Cement down by 2.72% and Adani Ports &Special down by 2.58% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 57.13 points or 0.77% to 7,443.32, France’s CAC increased 52.98 points or 0.83% to 6,467.55 and Germany’s DAX increased 74.80 points or 0.54% to 13,831.20.

Asian markets ended mostly lower on Wednesday tracking the overnight losses in Wall Street, despite recovery in the Chinese benchmarks after Beijing redoubled confidence-boosting efforts with promises of more support for the slowing economy. Concerns about the prospects for aggressive interest rate hikes in the United States to combat rising inflation also added pressure on market sentiments. Hong Kong shares ended flat, driven by worries over Covid outbreaks in China and heightened geopolitical tensions.

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