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Butchery continues in markets amid inflation fear

May-19-2022   12:44 Hrs IST

Markets continued their trade in deep trade in afternoon session amid rising inflation concerns, coupled with fears of aggressive rate hikes by global central banks. Traders were worried with continues selling by foreign institutional investors (FIIs). FIIs have been net sellers for eight straight months, and have dumped equities worth nearly Rs 38,000 crore in the month of May so far. In-line with other global central banks, the RBI, too, has turned hawkish and is mulling steep rate hikes also weighed investors’ sentiments. According to the minutes of the surprise meeting held on May 4, most members of the monetary policy committee (MPC) argued for front-loading interest rate hikes in view of rapidly rising inflation during the off-cycle monetary policy review earlier this month. On the global front, Asian markets were trading mostly lower triggered by dismal results from major retailer Target that renewed worries over the impact of high inflation.

Back home, the butchery was far more brutal in broader markets where the indices got pounded by over two percent each, underperforming their larger peers. Amid bearish market sentiment, index heavyweights such as HDFC Bank, Nestle India, and Wipro made fresh 52-week lows on S&P BSE Sensex. The market breadth on BSE was dominantly in favor of declines in the ratio of 2449:734, while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 52963.61, down by 1244.92 points or 2.30% after trading in a range of 52959.48 and 53356.04. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 2.44%, while Small cap index was down by 2.03%.

The top losing sectoral indices on the BSE were IT down by 4.32%, TECK down by 4.13%, Metal down by 3.97%, Telecom down by 2.71% and Basic Materials was down by 2.66%, while there were no gaining sectoral indices on the BSE.`

The top gainers on the Sensex were ITC up by 2.72% and Dr. Reddy's Lab was up by 0.97%. On the flip side, Infosys down by 4.84%, Wipro down by 4.73%, HCL Tech down by 4.69%, Tech Mahindra down by 4.67% and Indusind Bank was down by 4.40% were the top losers.

Meanwhile, UN Department of Economic and Social Affairs in its World Economic Situation and Prospects (WESP) report has said that as the Ukraine conflict impacts the global GDP, India is projected to grow by 6.4 percent in 2022, well below the 8.8% growth in 2021, but still the fastest-growing major economy, with higher inflationary pressures and uneven recovery of the labor market curbing private consumption and investment. For the fiscal year 2023, India's growth is forecast to be 6 percent.

According to the report, the war in Ukraine has upended the fragile economic recovery from the pandemic, triggering a devastating humanitarian crisis in Europe, increasing food and commodity prices and globally exacerbating inflationary pressures. Besides, it said that higher prices and shortages of farming inputs including fertilizers are likely to persist in the region, negatively impacting the agricultural sector in Bangladesh, India, Pakistan, and Sri Lanka. This will probably result in weaker harvests and exert further upward pressures on food prices in the near term.

The report further said that along with higher energy prices, elevated prices of food will likely increase food insecurity across the region. Consumer price inflation in the region is expected to accelerate to 9.5 percent in 2022, from 8.9 percent in 2021. It also said that tighter external financial conditions will adversely affect regional growth prospects, especially for countries with high exposure to global capital markets facing debt distress or risks of debt default.

The CNX Nifty is currently trading at 15861.10, down by 379.20 points or 2.33% after trading in a range of 15860.25 and 15984.75. There were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were ITC up by 2.66%, Dr. Reddy's Lab up by 1.05% and Eicher Motors was up by 0.18%. On the flip side, Infosys down by 4.86%, Wipro down by 4.83%, Tech Mahindra down by 4.80%, HCL Tech. down by 4.76% and JSW Steel was down by 4.55% were the top losers.

Asian markets were trading mostly lower; Hang Seng decreased 481.21 points or 2.33% to 20,163.07, Nikkei 225 slipped 508.36 points or 1.89% to 26,402.84, Straits Times trembled 13.58 points or 0.42% to 3,211.77, Taiwan Weighted dropped 276.54 points or 1.7% to 16,020.32 and KOSPI was down by 33.65 points or 1.28% to 2,592.33. On the flip side, Jakarta Composite soared 23.59 points or 0.35% to 6,817.00 and Shanghai Composite was up by 1.04 points or 0.03% to 3,087.02.

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