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Indian equity benchmarks settled lower for a second straight session on Wednesday tracking weakness across global markets against the backdrop of hawkish comments from US Federal Reserve officials and further sanctions against Russia. Key gauges made a gap-down opening and stayed in red for whole day, as traders got anxious with a private report stating that the Reserve Bank of India will delay its first interest rate rise by at least four months to August at the earliest, as the central bank must now start worrying about inflation. Besides, continuous rise in petrol and diesel prices weighed down on the market sentiments. Oil companies increased the price of petrol and diesel in Delhi by 80 paise each, marking the 14th such hike in two weeks. Petrol costs Rs 105.41 and diesel Rs 96.67 per litre after the hike. Some concern also came with private report stated that foreign portfolio investors dumped Indian shares worth record Rs 1.4 lakh crore in the financial year 2021-22, after pumping in whopping Rs 2.7 lakh crore in the preceding fiscal, mainly on account of sharp surge in coronavirus cases, concerns over the risk to economic recovery and global turmoil triggered by Russia-Ukraine war.

Traders failed to get any sense of relief with a private survey showed India's services sector expanded at its fastest pace so far this year in March as an easing of COVID-19 restrictions boosted demand, but elevated inflationary pressures clouded business confidence. The S&P Global India Services Purchasing Managers' Index rose to 53.6 in March from 51.8 in February. The index remained above the 50-mark separating growth from contraction for an eighth straight month, input costs rose at the sharpest pace in 11 years.  Market participants overlooked report Asian Development Bank projected a 7% collective growth for South Asian economies in 2022 with the subregion's largest economy India growing by 7.5% in the current fiscal year before picking up to 8% the next year.

On the global front, European markets were trading lower, with weak German data, uncertainty ahead of Sunday's first round presidential vote in France and hawkish comments from Fed Governor Lael Brainard weighing on sentiment. Asian markets settled mostly lower on Wednesday as investors pondered the possibility of aggressive monetary tightening by the U.S. Federal Reserve to fight inflation. Rate hike worries took center stage after Fed Governor Lael Brainard signaled the U.S. central bank would take a hawkish stance to combat inflation. She expects a combination of interest rate rises and a rapid balance sheet runoff to take U.S. monetary policy to a more neutral position later this year. Disappointing service sector data from China, the threat of new sanctions on Russia and a worsening Covid-19 situation in China also dented investor sentiment.

Back home, auto industry stocks were in watch as automobile dealers' body FADA said domestic passenger vehicle retail sales in March declined by 4.87 per cent to 2,71,358 units, as compared to the same month last year. Banking stocks were under pressure despite rating agency ICRA in its latest report said that the outlook for banks is expected to be stable amid improvement in credit growth of 8.9-10.2 per cent and decline in provisions in the current fiscal (FY23). There were some reaction in real estate industry stocks with a private report stating that the residential housing industry showed robust growth in January-March 2022 as demand rose 4.6 per cent quarter-on-quarter (QoQ) across 13 Indian cities.

Finally, the BSE Sensex fell 566.09 points or 0.94% to 59,610.41 and the CNX Nifty was down by 149.75 points or 0.83% to 17,807.65.       

The BSE Sensex touched high and low of 59,941.57 and 59,509.84, respectively. There were 10 stocks advancing against 20 stocks declining on the index.  

The broader indices ended in green; the BSE Mid cap index rose 0.41%, while Small cap index was up by 0.38%.

The top gaining sectoral indices on the BSE were Utilities up by 1.91%, Power up by 1.84%, Telecom up by 1.65%, Metal up by 1.54%, PSU up by 1.51% while, IT down by 1.40%, Finance down by 1.25%, TECK down by 1.22%, Bankex down by 1.04% and Healthcare down by 0.44% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.61%, Tata Steel up by 1.94%, Power Grid Corporation up by 1.52%, Bharti Airtel up by 1.17% and Nestle up by 1.10%. On the flip side, HDFC Bank down by 3.51%, HDFC down by 3.26%, HCL Technologies down by 2.07%, Tech Mahindra down by 1.97% and Infosys down by 1.75% were the top losers.

Meanwhile, Asian Development Bank (ADB) in its flagship Asian Development Outlook (ADO) 2022 has projected a 7% collective growth for South Asian economies in 2022 before picking up to 7.4% in 2023, with the sub-region's largest economy India growing by 7.5% in the current fiscal year (FY23) and 8% in next fiscal year (FY24).

It said the sub-region's growth dynamics are largely driven by India and Pakistan. Pakistan's growth is forecast to moderate to 4% in 2022 on weaker domestic demand from monetary tightening and fiscal consolidation before picking up to 4.5%in 2023. It said developing Asia's economies are predicted to grow by 5.2% this year and 5.3% in 2023, thanks to a robust recovery in domestic demand and continued expansion in exports.

However, it stated  uncertainties stemming from the Russian invasion of Ukraine, the continuing coronavirus disease (COVID-19) pandemic, and tightening by the United States Federal Reserve pose risks to the outlook’. Developing Asia comprises 46 member countries of ADB by geographic group: the Caucasus and Central Asia, East Asia, South Asia, Southeast Asia and the Pacific. South Asia comprises Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

The CNX Nifty traded in a range of 17,901.00 and 17,779.85. There were 20 stocks advancing against 30 stocks declining on the index.     

The top gainers on Nifty were Coal India up by 3.14%, NTPC up by 2.62%, Tata Steel up by 1.87%, Power Grid Corporation up by 1.57% and BPCL up by 1.50%. On the flip side, HDFC Bank down by 3.59%, HDFC down by 3.30%, HDFC Life Insurance down by 2.40%, HCL Technologies down by 1.97% and Tech Mahindra down by 1.96% were the top losers. 

European markets were trading lower; UK’s FTSE 100 decreased 28.42 points or 0.37% to 7,585.30, France’s CAC decreased 95.41 points or 1.44% to 6,550.10 and Germany’s DAX decreased 212.46 points or 1.47% to 14,211.90.

Asian markets settled mostly lower on Wednesday following hawkish comments by the US Federal Reserve. Further, threat of new sanctions on Russia and a worsening Covid situation in China also dented investors' sentiment. Furthermore, strength of US dollar and surging bond yields with expectations of rate hikes by the Fed to cool inflationary pressures also influencing market sentiments. Japanese shares declined ahead of the announcement of fresh sanctions against Russia later today. Investors caution over domestic corporate outlook also weighed on Japanese trade. However, Chinese shares gained marginally despite an extended lockdown in Shanghai and weak data showing activity in China's services sector contracted at the steepest pace in two years in March.

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