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Indian equity benchmarks reversed early gains and ended the day with marginal losses on Friday on late selling pressure in Metal, Utilities & Telecom stocks. With this, the markets ended lower for the sixth straight day despite upbeat global mood. Key gauges made gap-up opening, as traders took support with the finance ministry stated that measures taken by the RBI and government will squeeze the duration of high inflation fuelled by global factors. It also said evidence on consumption patterns further suggests that inflation in India has a lesser impact on low-income strata than on high-income groups. Traders also found some solace after commerce ministry said India's merchandise exports surged 30.7 per cent to $40.19 billion in April on account of healthy performance by sectors like petroleum products, electronic goods and chemicals, even as trade deficit widened to $20.11 billion during the month.

However, key indices came under fag-end selling pressure to close in the red as risk-off sentiment prevailed amid unabated selling by foreign institutional investors and concerns over inflation. Traders also got anxious with data showing that India's retail inflation surged to an eight-year high of 7.79 percent in April, raising the prospect of another interest rate hike from the RBI in the next policy meeting in June. Besides, Industrial production growth remained subdued at 1.9 per cent in March compared to a year ago, mainly due to poor performance by the manufacturing sector which showed staggered impact of the third wave of the pandemic. Some concern also came as the country's foreign exchange reserves declined by $28.05 billion to $607.31 billion at the end of March this year from $635.36 billion at the end of September 2021. Sentiment was also weighed down by higher oil prices, which pressure the trade and current account deficits of India - the world's third-largest importer and consumer of oil.

On the global front, European markets were trading higher even as Russia's decision to restrict gas supplies to Europe renewed fears about an economic slowdown in the euro zone. Besides, Eurostat data showed Industrial output in the euro zone fell an annualized 0.8 percent in March versus a -0.6 percent decline expected. Asian markets ended mostly higher on Friday after the latest U.S. consumer and producer price inflation data confirmed a slowdown in inflation. There is a broad sense among market participants that larger 75-bps U.S. rate hikes are off the table for now. 

Finally, the BSE Sensex fell 136.69 points or 0.26% to 52,793.62 and the CNX Nifty was down by 25.85 points or 0.16% to 15,782.15.  

The BSE Sensex touched high and low of 53,785.71 and 52,654.89, respectively. There were 15 stocks advancing against 15 stocks declining on the index.        

The broader indices ended in green; the BSE Mid cap index rose 0.79%, while Small cap index was up by 1.28%.

The top gaining sectoral indices on the BSE were Auto up by 2.47%, Industrials up by 1.73%, FMCG up by 1.64%, Healthcare up by 1.47% and Consumer Durables up by 1.42%, while Metal down by 2.46%, Utilities down by 2.36%, Telecom down by 2.28%, Power down by 2.20% and Bankex down by 1.29% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.76%, Mahindra & Mahindra up by 2.78%, Hindustan Unilever up by 2.49%, ITC up by 2.25% and Titan Company up by 2.08%. On the flip side, SBI down by 3.76%, ICICI Bank down by 2.65%, NTPC down by 2.56%, Bharti Airtel down by 2.32% and Maruti Suzuki down by 2.07% were the top losers.

Meanwhile, with headline inflation accelerating to an eight-year high of 7.79 per cent in April, ratings agency Crisil said price rise is getting broad-based, and the Reserve Bank is likely to respond with rate hikes of up to 1 percentage point in FY23. It mentioned ‘Inflation is set to become broad-based this fiscal, rising across food, fuel and core inflation....we expect the RBI to raise repo rates by another 0.75 per cent to 1 per cent in the rest of this fiscal.’

The RBI hiked its key rate by 0.40 per cent in a surprise move last week while keeping an accommodative stance. Crisil said it now expects the average consumer price inflation for FY23 to come at 6.3 per cent -- above the RBI's tolerance of 6 per cent -- as against 5.5 per cent recorded in FY22.

The agency made it clear that the rate hikes will be ineffective in bringing down food or fuel inflation, but can help check a generalisation in inflation by curbing the second-round effects. The government will need to pull its weight to control price rise, admitting that it is a tradeoff where reducing taxes and subsidies will lead to added fiscal pressure.

The CNX Nifty traded in a range of 16,083.60 and 15,740.85. There were 25 stocks advancing against 25 stocks declining on the index.         

The top gainers on Nifty were Tata Motors up by 8.51%, Sun Pharma up by 3.76%, Mahindra & Mahindra up by 3.03%, Hindustan Unilever up by 2.35% and Titan Company up by 2.32%. On the flip side, Hindalco down by 4.84%, SBI down by 4.79%, JSW Steel down by 4.36%, ICICI Bank down by 2.79% and Bharti Airtel down by 2.77% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 119.42 points or 1.65% to 7,352.76, France’s CAC increased 107.21 points or 1.73% to 6,313.47 and Germany’s DAX increased 194.21 points or 1.41% to 13,933.85.

Asian markets ended mostly higher on Friday despite concerns about high inflation and the impact of rising interest rates. Data showed US wholesale prices soared 11 percent in April from a year earlier. US Federal Reserve Chair Jerome Powell reaffirmed that the US central bank is likely to raise interest rates by a half point at each of its next two meetings and isn’t actively considering a 75 basis-point move. Chinese shares jumped as Shanghai said it aimed to reach the Zero-Covid level in areas outside its tightly regulated quarantine zones this month, with sentiment aided by authorities’ frequent pledges to support the second largest economy. Japan's Nikkei benchmark stock index rose 2.64% to 26,427.65.

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