IGI Logo

Indian equity benchmarks extended their fall for the fifth straight session and ended lower with losses of over two percent on Thursday, as investors remained worried ahead of Index of Industrial Production (IIP) data for March and crucial retail inflation (CPI) reading for April, which will be released later today. A broader decline in global stocks following U.S. consumer price data also dented investor sentiment. The markets made a gap down opening, as traders were concerned with private report that tightening of policy rates by major central banks, including the RBI, would adversely impact demand in the next 6-8 months and slow down the recovery process. Some anxiety was also among the local traders with private report has lowered its forecasts for India's economic growth in the next two fiscal years, saying a global slowdown, surging oil prices and weak domestic demand would take a toll on Asia's third-largest economy. It said gross domestic product growth will be 7.6% for fiscal 2023 and 6.7% for fiscal 2024, 30 basis points lower than the previous estimates.

Benchmarks enlarged their losses in late afternoon session, amid a private report stating that India Inc stares at a further decline in operating margins and profitability in the coming quarters owing to the twin blows of a depreciation in the value of the rupee against major currencies and a rise in interest rates after a surprise intervention by the Reserve Bank of India (RBI) last week. Adding to the pessimism, FPIs have continued their selling spree for seven straight months now. According to NSE data, FPIs sold Rs 3,609.35 crore on May 11, 2022 whereas domestic investors bought Rs 4,181.2 crore worth of equities. Further, a weaker rupee erodes FPI returns for Indian equities. Meanwhile, to strengthen the regulatory framework for collective investment schemes, markets regulator SEBI has enhanced the net worth criteria and track record requirements for entities managing such schemes.

On the global front, Asian markets settled lower on Thursday after the latest U.S. inflation data suggested that Fed officials are likely to stick with their approach of raising rates by a half point at each of their next two-three meetings to tame high-flying inflation. European markets were trading lower as data released by the Office for National Statistics showed U.K. GDP advanced 0.8 percent sequentially in the first quarter, slower than the 1.3 percent increase in the fourth quarter and the economists' forecast of +1.0 percent. Nonetheless, monthly GDP was now 1.2 percent above its pre-coronavirus pandemic level. Back home, auto industry stocks were in focus as industry body SIAM said passenger vehicle dispatches from factories to dealers in the domestic market declined by 4 per cent in April as supply side challenges continued for the automotive industry. Total passenger vehicle domestic wholesales stood at 251,581 units last month as compared to 261,633 units in April 20.

Finally, the BSE Sensex fell 1158.08 points or 2.14% to 52,930.31 and the CNX Nifty was down by 359.10 points or 2.22% to 15,808.00.  

The BSE Sensex touched high and low of 53,632.55 and 52,702.30, respectively. There were 1 stocks advancing against 29 stocks declining on the index.        

The broader indices ended in red; the BSE Mid cap index fell 2.24%, while Small cap index was down by 1.96%.

The top losing sectoral indices on the BSE were Power down by 4.11%, Utilities down by 3.90%, Metal down by 3.75%, Bankex down by 3.14% and Telecom down by 2.81%, while there were no gaining sectoral indices on the BSE.

The lone gainer on the Sensex was Wipro up by 0.91%. On the flip side, Indusind Bank down by 5.82%, Tata Steel down by 4.13%, Bajaj Finance down by 3.76%, Bajaj Finserv down by 3.53% and Axis Bank down by 3.44% were the top losers.

Meanwhile, the British government said that the free trade agreement (FTA) negotiations between India and the UK have resulted in the draft treaty text advancing across the majority of chapters at the end of the third round of talks. The Department for International Trade (DIT) issued a ‘joint outcome statement’ at the end of the latest round of technical talks between the negotiators on both sides.

The experts held 60 separate sessions in-person and virtually to cover 23 policy areas, with the fourth round of talks now scheduled to be hosted by the UK next month. On May 06, 2022, the Republic of India and the United Kingdom concluded the third round of talks for an India-UK FTA. For this round of negotiations, the draft treaty text was advanced across the majority of chapters.

Indian High Commissioner to the UK Gaitri Issar Kumar has said officials have been working round-the-clock towards the deadline and Minister of Commerce and Industry Piyush Goyal is also scheduled for a UK visit at the end of this month to hold discussions with stakeholders to move things along.

The CNX Nifty traded in a range of 16,041.95 and 15,735.75. There were 5 stocks advancing against 45 stocks declining on the index.         

The top gainers on Nifty were Wipro up by 0.76%, Eicher Motors up by 0.24%, HCL Technologies up by 0.10%, TCS up by 0.04% and Dr. Reddy's Laboratories up by 0.02%.  Adani Ports &Special down by 5.82%, Indusind Bank down by 5.67%, Tata Motors down by 4.19%, Tata Steel down by 4.01% and JSW Steel down by 3.75% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 169.09 points or 2.3% to 7,178.57, France’s CAC decreased 147.05 points or 2.35% to 6,122.68 and Germany’s DAX decreased 282.31 points or 2.04% to 13,546.33.

Asian markets settled lower on Thursday, tracking weakness in Wall Street overnight as data showed US inflation in April rose more than expected to 8.3 percent, which raised expectations for aggressive policy tightening and fuelled concerns over a possible recession. Chinese shares declined slightly amid tightening Covid rules and extended lockdowns, while Chinese developer Sunac China Holdings failed to meet its final deadline for coupon payments on a $742 million offshore bond. Moreover, Hong Kong shares dropped following the arrests of several prominent democracy advocates, including a retired Roman Catholic cardinal.

Above views are of the author and not of the website kindly read disclaimer