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Indian equity benchmarks recovered partially from day’s lows but failed to erase all the losses and ended with around a percent lower on Thursday, amid weakness in the global market that declined as the US Federal Reserve’s signal to steadily tighten policy soured global investor sentiment. The benchmark indices opened on a sharply lower note, as traders got anxious with the International Monetary Fund (IMF) in its latest update of World Economic Outlook has cut India's economic growth forecast to 9 per cent for the current fiscal year ending March 31 (FY22) from its earlier projection of a 9.5 per cent GDP growth, on concerns over the impact of a spread of new variant of coronavirus on business activity and mobility. The Indian economy had contracted by 7.3 per cent in the 2020-21 fiscal year. Continues selling in FIIs also weighed on the markets. As per provisional data available on the NSE, foreign institutional investors (FIIs) net sold shares worth Rs 7,094.48 crore on January 25.

Key gauges extended losses in afternoon deals, as sentiments remain dampened with Icra Ratings’ statement that the securitisation volumes in microfinance loans, which saw improvement in the first nine months of FY22, may witness some impact in the fourth quarter (Q4FY22) due to concerns around the third wave of COVID infections that may affect the repayment capabilities of the borrowers who have a marginal financial profile. Traders were cautious, as India's rank improved one place to 85 among 180 countries in a corruption perception index (CPI) of 2021, according to a new report by Transparency International which, however, raised concern over the country's democratic status. However healthy buying in the banking, auto and finance space pared the losses significantly. Traders also took some support with Vedanta’s Chairman Anil Agarwal statement that India is on the growth path with innovation and digitalisation and stressed that government policies have created tremendous resources available for deployment in the country.

On the global front, Asian markets settled mostly lower on Thursday after the U.S. Federal signaled it plans to hike interest rates in March and end its bond purchases that month to counter escalating inflation. The hawkish tone, reflecting the upside risks to inflation triggered a dollar rally and dented the appeal of equities. Escalating Russia-Ukraine political tensions also sapped investors' appetite for riskier assets. European markets were trading mostly in green on the back of positive earnings news. Back home, on the sectoral front, gems and jewellery related stocks were in focus as the commerce ministry said gems and jewellery exports rose by 71 per cent during April-December 2021 to $28.9 billion as compared to $16.9 billion in the same period of the previous year.  Besides, stocks related to telecom industry too were in action as telecom operators Reliance Jio, Bharti Airtel and Vodafone Idea in their submission to the sector regulator Trai have sought allocation of spectrum through auction and opposed giving away any amount of airwaves to any commercial entity through any other means.

Finally, the BSE Sensex fell 581.21 points or 1.00% to 57,276.94 and the CNX Nifty was down by 167.80 points or 0.97% to 17,110.15.

The BSE Sensex touched high and low of 57,508.61 and 56,439.36, respectively. There were 9 stocks advancing against 21 stocks declining on the index. 

The broader indices ended in red; the BSE Mid cap index fell 1.25%, while Small cap index was down by 0.82%.

The few gaining sectoral indices on the BSE were Bankex up by 0.97%, Auto up by 0.43% and Finance up by 0.07%, while IT down by 3.10%, TECK down by 2.75%, Consumer Durables down by 2.58%, Healthcare down by 1.80% and Realty down by 1.70% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.81%, SBI up by 2.75%, Maruti Suzuki up by 2.52%, Kotak Mahindra Bank up by 2.02% and Sun Pharma up by 0.64%. On the flip side, HCL Technologies down by 4.17%, Tech Mahindra down by 3.66%, Dr. Reddy's Lab down by 3.42%, Wipro down by 3.22% and TCS down by 3.18% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its latest update of World Economic Outlook has cut India's economic growth forecast to 9 per cent for the current fiscal year ending March 31 (FY22) from its earlier projection of a 9.5 per cent GDP growth, on concerns over the impact of a spread of new variant of coronavirus on business activity and mobility. The Indian economy had contracted by 7.3 per cent in the 2020-21 fiscal year. As per the report, the agency put the forecast for the next fiscal FY23 (April 2022 to March 2023) at 7.1 per cent. According to the IMF, India's prospects for 2023 are marked up on expected improvements to credit growth and, subsequently, investment and consumption, building on better-than-anticipated performance of the financial sector.

The IMF said that global growth is expected to moderate from 5.9 in 2021 to 4.4 per cent in 2022, half a percentage point lower for 2022 than in the October WEO, largely reflecting forecast markdowns in the two largest economies -- the US and China. It said a revised assumption removing the Build Back Better fiscal policy package from the baseline, earlier withdrawal of monetary accommodation, and continued supply shortages produced a downward 1.2 percentage-point revision for the United States.

In China, pandemic-induced disruptions related to the zero-tolerance COVID-19 policy and protracted financial stress among property developers have induced a 0.8 percentage-point downgrade. The global growth is expected to slow to 3.8 per cent in 2023. The report said ‘Although this is 0.2 percentage point higher than in the previous forecast, the upgrade largely reflects a mechanical pickup after current drags on growth dissipate in the second half of 2022. The forecast is conditional on adverse health outcomes declining to low levels in most countries by end-2022, assuming vaccination rates improve worldwide and therapies become more effective’.

The CNX Nifty traded in a range of 17,182.50 and 16,866.75 and there was 15 stocks advancing against 35 stocks declining on the index. 

The top gainers on Nifty were Axis Bank up by 3.28%, SBI up by 2.79%, Cipla up by 2.31%, Maruti Suzuki up by 2.31% and Kotak Mahindra Bank up by 2.18%. On the flip side, HCL Technologies down by 3.93%, Tech Mahindra down by 3.57%, Dr. Reddy's Lab down by 3.38%, TCS down by 3.13% and Wipro down by 3.09% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 36.35 points or 0.49% to 7,506.13 and France’s CAC increased 1.64 points or 0.02% to 6,983.60, while Germany’s DAX decreased 51.34 points or 0.33% to 15,408.05.

Asian markets settled mostly lower on Thursday tracking overnight losses in Wall Street after the US Federal Reserve signalled interest rates hikes as early as March and end its bond purchases that month to counter escalating inflation. Escalating Russia-Ukraine political tensions also dampened investors' sentiments. Chinese shares hit their lowest levels in nearly 16 months because the Fed's hawkish stance sparked heavy selling by foreign investors. Further, Seoul shares declined after Central bank data showed that sentiment among South Korean businesses over the economic situation worsened in January, due to higher logistics cost and weaker demand in the construction and electronic sectors.

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