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Indian equity benchmarks wiped out early gains and settled lower for the third day in a row on Wednesday, pulled down by HDFC twins amid persistent foreign fund outflows. Markets made optimistic start, as traders took some support with the government data showing that the factory output rose 1.7 per cent in February, mainly on account of rise in the mining sector and power generation. The Index of Industrial Production (IIP) had declined 3.2 per cent in February 2021. Mining output rose 4.5 percent year-on-year in February and electricity was up by 4.5 percent. Some optimism also came as Chief Economic Adviser V Anantha Nageswaran expressed hope that the private sector is expected to accelerate capital expenditure from the second half of the current fiscal and he also asserted that the economic situation is likely to improve during the year.

However, key gauges failed to hold on to opening gains and slipped into negative terrain in afternoon deals, as traders turned anxious with data showing that India's retail inflation jumped to a 17-month high of 6.95 percent in March from 6.07 percent in February. The Consumer Price Index (CPI) inflation print for March is well above the consensus estimate. This is the third consecutive month in which inflation has come in above the 6 percent upper bound of the Reserve Bank of India's (RBI) mandate, averaging 6.3 percent in January-March. Traders also got worried as the World Trade Organization (WTO) has downgraded its forecast for global GDP growth in 2022 to 2.8% from the previously expected 4.1%. Traders paid no heed towards data showing that country's exports in March 2022 rose 19.76 per cent to $42.22 billion as compared to the year-ago period. In March 2021, exports stood at $35.26 billion.

On the global front, Asian markets ended mostly higher on Wednesday after U.S. inflation data released overnight largely met analysts' estimates. The core inflation figure (excluding food and energy prices) showed a fall, helping ease fears around inflation and interest rate-rises. European markets were trading mostly in red after Russian President Vladimir Putin said peace talks with Ukraine are 'at a dead end' and vowed to continue stocks the invasion of Ukraine that began on Feb. 24. Back home, real estate industry stocks were in focus with a private report stating that institutional investments in real estate jumped over two-fold to $1.1 billion (Rs 8,375 crore) in the three months ended March 2022 with the opening up of the economy after the third COVID wave. Stocks related to textiles industry were in watch as Union Minister Piyush Goyal pitched for taking the textiles exports of the country to $100 billion by 2030 as the sector is recording a healthy growth. He noted that the textiles exports last fiscal year stood at $43 billion as against $33 billion in the previous year.

Finally, the BSE Sensex fell 237.44 points or 0.41% to 58,338.93 and the CNX Nifty was down by 54.65 points or 0.31% to 17,475.65.       

The BSE Sensex touched high and low of 59,003.82 and 58,291.23, respectively. There were 10 stocks advancing against 20 stocks declining on the index.   

The broader indices ended mixed; the BSE Mid cap index fell 0.21%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.87%, Capital Goods up by 0.80%, FMCG up by 0.69%, Energy up by 0.63%, Metal up by 0.60% while, Auto down by 0.85%, Finance down by 0.73%, Bankex down by 0.65%, Telecom down by 0.59% and Realty down by 0.58% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.87%, Sun Pharma up by 1.66%, Hindustan Unilever up by 0.99%, SBI up by 0.94% and NTPC up by 0.82%. On the flip side, HDFC down by 2.01%, HDFC Bank down by 1.90%, Maruti Suzuki down by 1.86%, Dr. Reddy's Lab down by 1.71% and Asian Paints down by 1.62% were the top losers.

Meanwhile, Chief Economic Adviser (CEA) V Anantha Nageswaran has stated that the economic situation is likely to improve in the current financial year. Nageswaran expressed hope that the private sector is expected to accelerate capital expenditure from the second half of the current fiscal (H2FY23). The investment from private sector has been muted for past many years despite several measures, including corporate tax cut, taken by the government to reinvigorate it.

He mentioned ‘Bank credit is beginning to pick up especially in MSME sector. Therefore, I think probably by the end of the second quarter or in the second half of the year, private sector picking up the baton of capital expenditure... sooner rather than later Indian private sector will pick up the capital expenditure baton and run with it.’ Further, he said an RBI survey has shown a jump in capacity utilisation by the industry from 68 per cent to 74 per cent. He added the top four firms in several sectors are already operating over 80 per cent capacity.

Besides, he said ‘The robust state of balance sheet within private sector would enable the Indian economy to weather the current twin storm -- geopolitical and Fed Reserve tightening. As we head toward the second half of 2022-23, blue sky will reappear and we can look ahead to a decade of India repeating in a more sustainable form, the kind of high growth we experienced between 2003-2012.’ Moreover, if the oil prices persist beyond USD 100 per barrel for a longer period, he said, probably GDP numbers may have to be revived downward.

The CNX Nifty traded in a range of 17,663.65 and 17,457.40. There were 22 stocks advancing against 28 stocks declining on the index.     

The top gainers on Nifty were ONGC up by 2.99%, Apollo Hospital up by 2.35%, UPL up by 1.72%, ITC up by 1.62% and Sun Pharma up by 1.51%.On the flip side, Maruti Suzuki down by 2.28%, HDFC down by 2.23%, HDFC Bank down by 1.98%, Dr. Reddy's Lab down by 1.61% and Tata Motors down by 1.55% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 21.21 points or 0.32% to 6,516.20 and Germany’s DAX decreased 104.10 points or 0.74% to 14,020.85, while UK’s FTSE 100 increased 7.63 points or 0.1% to 7,584.29.

Asian markets ended mostly higher on Wednesday after core US inflation data came in lower than expected and as the world's second largest economy China lifted some of its virus restrictions in Shanghai. Meanwhile, investors will be focusing on a slew of policy decisions from the European Central Bank, Monetary Authority of Singapore and Bank of Korea on Thursday. Japanese shares gained as investors shrugged off data showing Japan's core machinery orders fell for a second month in February. However, Chinese shares declined despite the release of strong exports data. Data showed that China's exports rose an annual 15.7% in March while imports came in flat amid disruption due to Covid outbreaks. Some gains were capped by signs that the Ukraine-Russia situation will not be de-escalating anytime soon. Russian President Vladimir Putin insisted last night the ongoing invasion in Ukraine was going as planned despite a major withdrawal and significant losses.

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