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Indian equity benchmarks traded under pressure and lost nearly a percent on Tuesday weighed by IT, TECK and Metal stocks amid weakness across global markets. After the weak start, the benchmarks drifted further lower and settled around the day’s low ahead of the industrial growth data for May and retail inflation figures for June to be out later in the day. There are expectations that India's retail inflation likely held steady in June, but well above the Reserve Bank of India's tolerance limit for a sixth month as lower fuel and cooking oil prices offset higher services and food costs. Sentiments remained down-beat as Crisil Research said that India Inc is staring at the third consecutive quarter of a year-on-year drop in profit margins for the April-June 2022 period. Some pessimism also came with a private report stated that private equity investments into domestic companies fell 17 per cent to $6.72 billion on an annual basis in the June quarter.

Benchmarks extended fall in final hour of trade, amid a private report stating that though there are signs of easing commodity prices, the economic outlook for the current financial year 2022-23 remains quite uncertain and will ride completely on the wheels of private consumption and investment demand. Some concern also came as exchange data showed foreign institutional investors (FIIs) remained net sellers on Monday as they offloaded shares worth Rs 170.51 crore. Market participants overlooked Commerce and Industry Minister Piyush Goyal’s statement that the country's exports are likely to register a reasonable level of growth in the current financial year despite the global uncertainties on the trade front. Meanwhile, the Reserve Bank asked banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency.

On the global front, European markets were trading lower as rising COVID case counts in several regions fueled talks of another round of painful lockdowns in China, especially in Shanghai or Beijing. Investors also fretted about a worsening energy crisis in Europe. A major gas pipeline from Russia to Western Europe shut down for annual maintenance on Monday and is scheduled to be out of action until July 21. Asian markets settled mostly lower on Tuesday as an energy crisis loomed over the euro zone economy and a fresh COVID-19 outbreak in China added to worries about a global economic slowdown. Investors also braced for a big week of data and earnings for directional cues. U.S. consumer price index data for June is due on Wednesday and June retail sales data is scheduled for Friday.

Finally, the BSE Sensex fell 508.62 points or 0.94% to 53,886.61 and the CNX Nifty was down by 157.70 points or 0.97% to 16,058.30.

The BSE Sensex touched high and low of 54,236.49 and 53,824.97, respectively. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.51%, while Small cap index was down by 0.52%.

The top gaining sectoral indices on the BSE were Utilities up by 1.27%, Telecom up by 1.22%, Power up by 1.15% and Realty up by 0.04%, while IT down by 1.29%, TECK down by 1.21%, Metal down by 1.16%, Auto down by 1.13% and FMCG down by 1.03% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.87%, Bharti Airtel up by 0.33% and Bajaj Finance up by 0.21%. On the flip side, Infosys down by 2.33%, Nestle down by 1.87%, Power Grid Corporation down by 1.66%, Hindustan Unilever down by 1.64% and Mahindra & Mahindra down by 1.64% were the top losers.

Meanwhile, Crisil Ratings’ arm -- Crisil Research has said that India Inc is staring at the third consecutive quarter of a year-on-year (Y-o-Y) drop in profit margins for the April-June (Q1) 2022 period. After analysing 300 companies excluding those from financial services and oil and gas sectors, it said operating profit margins have likely fallen by 2-3 percentage points for the June quarter as compared to the year-ago period. It added that almost half of the 47 sectors it tracks are likely to show a contraction in margins. It noted that corporate revenues are likely to have logged a healthy growth of 30 per cent on-year in the first quarter, largely supported by price hikes and moderately rising volumes.

The agency said operating profit margins in construction-linked sectors are likely to have fallen the most, at over 9.90 per cent, followed by the investment-linked segment, which saw an on-year margin erosion of over 2.60 per cent. It said among construction-linked sectors, steel products saw a sharp margin contraction of around 15 per cent on-year as input cost escalation both coking coal and iron ore prices have risen was higher than the rise in steel prices, and added that the petrochemicals sector saw a steep contraction in margins to the extent of 15 per cent. In contrast, the margins of consumer discretionary services and products, as well as consumer staples services, will report an expansion of up to 3 percentage points in the operating profit margin for the quarter, it said, attributing it to airlines services (which rebounded to a healthy level after the operating loss of last fiscal), followed by telecom services (due to tariff hikes), and the media and entertainment segment.

It said margins of consumer staple services are estimated to have been driven by a rise in profitability in the sugar sector. For the quarter, it said automobile revenue is estimated to have risen a sharp 64-67 per cent on-year due to a lower base of last fiscal, an estimated 22-27 per cent increase in realisations and a 30-35 per cent increase in volume. Similarly, cement revenue is estimated to have grown 20-22 per cent year-on-year for the June quarter, on a very low base of last fiscal, as the year-ago quarter was hit by the second wave of Covid pandemic. It said volume is also expected to have risen on a low base, though on a sequential basis, both volume and revenue are estimated to have dwindled.

The CNX Nifty traded in a range of 16,158.75 and 16,031.15. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were NTPC up by 1.42%, Coal India up by 0.23%, Shree Cement up by 0.18%, Bharti Airtel up by 0.15% and Bajaj Finance up by 0.13%. On the flip side, Eicher Motors down by 3.34%, Hindalco down by 2.78%, Infosys down by 2.45%, BPCL down by 2.33% and Grasim Industries down by 1.99% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 23.92 points or 0.33% to 7,172.67, France’s CAC decreased 16.78 points or 0.28% to 5,979.52 and Germany’s DAX decreased 91.51 points or 0.71% to 12,740.93.

Asian markets settled mostly lower on Tuesday due to worries about global economic slowdown following fresh Covid-19 outbreak in China, while energy and cost-of-living crisis loomed over the eurozone economy. Further, markets also declined by tracking overnight fall in Wall Street as investors awaited corporate earnings, a slew of economic data and key inflation figures due this week that could influence the Federal Reserve's path for interest-rate increases. Seoul shares dropped ahead of the Bank of Korea's interest-rate decision slated for Wednesday. Chinese shares fell sharply as fears of new lockdowns in Shanghai undermined the broader China market, while a renewed regulatory offensive against big tech companies also sapped investor confidence.

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