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Benchmarks end volatile session flat with negative bias

Indian equity benchmarks witnessed a volatile trading session on Wednesday and closed the day flat with negative bias amid weakness across Asian markets. After making cautious start, key gauges managed to keep heads in green terrain in morning session, as traders were taking support from private report stating that Indians are slowly making their way back to the office and is witnessing a consumption revival in the country with spending intent shifting towards more discretionary items. It also said decreasing number of COVID-19 cases as well as an aggressive vaccination drive have brought in a new wave of confidence amongst Indian consumers. Some support also came with Niti Aayog member V K Saraswat’s statement that the Indian innovation ecosystem is driven by knowledge economy, fundamental research driven by marketplace, and disruptive technologies like machine learning and artificial intelligence.

However, markets continued to dance between gains and losses ahead of the closing bell, as traders were concerned as the Organisation for Economic Co-operation and Development (OECD) cut its projection of India's economic growth by 0.2 percentage points to 9.7 per cent for the current financial year. Some anxiety also came in after Asian Development Bank (ADB) has revised down India's Gross domestic product (GDP) growth forecast to 10 percent for the current fiscal (FY22) from 11 percent predicted earlier, citing the adverse impact of the second wave of the pandemic. Adding to the pessimism, India recorded a spike of 27,333 new Covid-19 cases in the past 24 hours. The country also witnessed 385 deaths, taking the death toll to 445,801. 

On the global front, Asian markets ended mostly lower on Wednesday as investors turned cautious ahead of the outcome of US Federal Reserve's two-day meeting ending later in the day. The US Fed will decide on when it would start tapering its bond buying plan and raising interest rates. European markets were trading higher after debt-laden China Evergrande said it would make some interest payments. Back home, on the sectoral front, telecom stocks were in focus as the government is actively considering allowing adjusted gross revenue (AGR) moratorium through legislation. In September 2020, the Supreme Court in a judgment had said that the amount payable needed to be coughed up in 10 instalments ending 2031. Stocks related to Gems and Jewellery sector too were in action as Crisil Ratings said after two consecutive years of decline, the revenue of gold jewellery retailers is poised to grow 12 to 14 per cent on-year this fiscal. This will be driven by stable gold prices and recovery in discretionary spending, including on wedding and festive jewellery.

Finally, the BSE Sensex fell 77.94 points or 0.13% to 58,927.33 and the CNX Nifty was down by 15.35 points or 0.09% to 17,546.65.    

The BSE Sensex touched high and low of 59,178.44 and 58,878.38, respectively and there were 16 stocks advancing against 13 stocks declining, while 1 stock remains unchanged on the index.   

The broader indices ended in green; the BSE Mid cap index rose 1.51%, while Small cap index was up by 1.19%.

The top gaining sectoral indices on the BSE were Realty up by 8.39%, Consumer discretionary up by 1.90%, Metal up by 1.57%, Auto up by 1.43% and Basic Materials up by 1.02%, while Bankex down by 0.75%, Utilities down by 0.45%, FMCG down by 0.24% and Power down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 3.70%, Mahindra & Mahindra up by 1.92%, HCL Technologies up by 1.29%, Bajaj Auto up by 1.12% and Reliance Industries up by 1.10%. On the flip side, HDFC down by 1.46%, Nestle down by 1.22%, Kotak Mahindra Bank down by 1.19%, ICICI Bank down by 1.12% and HDFC Bank down by 0.99% were the top losers.

Meanwhile, the Organisation for Economic Co-operation and Development (OECD) in its latest report has cut its projection of India's economic growth by 0.2 percentage points to 9.7 per cent for the current financial year (FY22). The economy was projected to grow by 7.9 per cent next financial year, 0.3 percentage point slower than pegged by it earlier. If the projections come out to be correct, India's economy would be the fastest growing large economy in both these years. It would be followed by China at 8.5 per cent in 2021 and Spain at 6.6 per cent in 2022. China is pegged to be slowing down to 5.8 per cent in the next calendar year.

OECD said high-frequency activity indicators, such as the Google location-based measures of retail and recreation mobility, suggest global activity continued to strengthen in recent months, helped by improvements in Europe and a marked rebound in both India and Latin America.

However, it said the gap between output in India's economy from pre-pandemic level is projected to be too high. The output shortfall from the pre-pandemic path at the end of 2022 in the median G20 emerging-market economy is projected to be twice of that in the median G20 advanced economy, and particularly high in India and Indonesia. Besides, it projected consumer price inflation in India to fall to 5.9 per cent in the current financial year compared to 6.2 per cent in the previous year. At this rate, the inflation would be a tad lower than the upper range of the Reserve Bank of India's upper tolerance range -- six per cent. OECD saw inflation fall to 5.5 per cent next year.

The CNX Nifty traded in a range of 17,610.45 and 17,524.00 and there were 27 stocks advancing against 22 stocks declining, while 1 stock remains unchanged on the index.      

The top gainers on Nifty were Coal India up by 3.61%, Tech Mahindra up by 3.58%, Hindalco up by 2.73%, Tata Motors up by 2.67% and Mahindra & Mahindra up by 1.96%. On the flip side, Nestle down by 1.47%, HDFC down by 1.35%, ICICI Bank down by 1.17%, ONGC down by 1.15% and HDFC Bank down by 1.02% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 78.28 points or 1.12% to 7,059.26, France’s CAC rose 68.62 points or 1.05% to 6,621.35 and Germany’s DAX was up by 83.01 points or 0.54% to 15,431.54.

Asian markets ended mostly lower on Wednesday ahead of US Fed meeting outcome for a clear signal on when tapering may begin. Japanese shares declined due to concerns over domestic economic situation. The Bank of Japan (BOJ) kept its ultra-supportive monetary policy steady but offered a bleaker view on exports and factory output as Asian factory shutdowns caused supply-chain disruptions for some manufacturers. However, Chinese shares ended higher after markets resumed trading after local holidays and developer China Evergrande’s assurance to settle interest payments on a domestic bond also lifts real estate shares. Liquidity infusion by PBoC into the country's financial system too helped Chinese market sentiment. Meanwhile, markets in Hong Kong and South Korea were closed due to local holidays.

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