IGI Logo

Indian equity benchmarks ended the session on a negative note for the third consecutive session on Thursday amid downbeat global sentiment and heightened fears in anticipation of interest rate hikes by the US Federal Reserve. Markets started the session in red as traders got anxious with rating agency Icra’s statement that while there is some evidence of the economic recovery becoming broad-based in the third quarter of fiscal 2022, it is yet to attain the durability being sought by the Monetary Policy Committee (MPC) as a precursor to policy transmission. The agency expects the real GDP to expand 6-6.5 per cent year-on-year in the third quarter of FY2022 (+8.4 per cent in Q2 FY2022. Some cautiousness also came with the UN Conference on Trade and Development (UNCTAD) in its latest report stated that Foreign Direct Investment (FDI) flows to India in 2021 were 26 percent lower, mainly because large M&A deals recorded in 2020 were not repeated. It also said that the second wave of the COVID-19 outbreak in India weighed heavily on the country’s overall economic activities.

Key indices extended fall in afternoon deals, even as India Ratings & Research expects India’s real gross domestic product to grow 7.6 per cent in fiscal year 2022-23, helped partly by a continued government spending and favourable global trade outlook. However, a rebound in the final hour trimmed some losses as some support came with the Reserve Bank of India’s (RBI) digital payments index (DPI), which was launched in January 2021 to indicate the extent of digitisation of payments across the country, shows that the index for September 2021 stood at 304.06 against 270.59 in March. This indicates the rapid adoption and deepening of digital payments across the country. Traders took note of report that India will push for a waiver of certain provisions of the global intellectual property rights agreement for Covid-19 medicines and products at a mini ministerial meeting called by the World Trade Organization to firm up its pandemic response.

On the global front, European markets were trading lower amid concerns over the pace of recent prices increases and the prospect of higher interest rates. Asian markets settled mostly higher on Thursday as the upward pressure on yields eased and China underscored its diverging monetary and economic picture by cutting benchmark mortgage rates. However, inflation concerns on the back of climbing oil prices along with a greater risk of a conflict flare-up between Russia and Ukraine kept underlying sentiment cautious to some extent. Back home, on the sectoral front, textile industry stocks were in focus as a joint report by global consulting firm Kearney and The Confederation of Indian Industry (CII) said Indian textile exports can hit $65 billion if industry majors take the right steps and there is proper execution of government schemes. Aviation industry’s stocks too were in watch as DGCA data showed that domestic airlines flew 83.8 million passengers in 2021 registering a growth of 33 per cent over the previous year. In 2020 airlines had transported 63 million passengers.

Finally, the BSE Sensex fell 634.20 points or 1.06% to 59,464.62 and the CNX Nifty was down by 181.40 points or 1.01% to 17,757.00.

The BSE Sensex touched high and low of 60,045.48 and 59,068.31, respectively and there were 7 stocks advancing against 23 stocks declining on the index.         

The broader indices ended mixed; the BSE Mid cap index fell 0.07%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Power up by 1.30%, Utilities up by 1.16%, Metal up by 0.41%, Basic Materials up by 0.33% and Realty up by 0.26%, while IT down by 1.69%, TECK down by 1.45%, Energy down by 1.34%, Healthcare down by 1.11% and FMCG down by 1.00% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 4.86%, Bharti Airtel up by 1.60%, Asian Paints up by 0.81%, Maruti Suzuki up by 0.35% and Ultratech Cement up by 0.28%. On the flip side, Bajaj Finserv down by 4.57%, Infosys down by 2.33%, TCS down by 2.25%, Sun Pharma down by 2.20% and Hindustan Unilever down by 2.13% were the top losers.

Meanwhile, Rating agency ICRA has said while there is some evidence of the economic recovery becoming broad-based in the third quarter of fiscal 2022, it is yet to attain the durability being sought by the Monetary Policy Committee (MPC) as a precursor to policy transmission. The agency expects the real GDP to expand 6-6.5 per cent year-on-year in the third quarter of FY2022 (+8.4 per cent in Q2 FY2022). It also sees the RBI maintaining the status quo in the upcoming monetary policy review to be held in February.

It said economic activity rebounded in December 2021, even as many sectors continued to trail the performance recorded in October 2021. Encouragingly, the quarterly data suggests a modest broad-basing of the recovery in Q3 FY2022, relative to Q2 FY2022, when compared to respective pre-COVID-19 volumes. However, the onset of the third wave of COVID-19 has triggered state-wise restrictions, which have expectedly interrupted the momentum in the ongoing month, reiterating that the recovery is yet to attain durability.

The agency said the y-o-y performance of 10 of the 15 high-frequency indicators improved in December 2021 compared to November 2021. These include generation of GST e-way bills, non-oil merchandise exports, electricity generation, two-wheeler output as well as aggregate deposits and non-food credit of scheduled commercial banks. The report further said the y-o-y performance of nine of the 15 high-frequency indicators in December 2021 trailed the growth seen in October 2021.

ICRA said that with the fresh uncertainty triggered by Omicron and the associated restrictions, it expects a status quo on the stance of the monetary policy as well as the reverse repo rate in the upcoming RBI policy meeting, in spite of the rise in the retail inflation in December 2021. The Consumer Price Index (CPI) accelerated to a six-month high of 5.59 per cent in December 2021, close to the RBI's upper tolerance band of six per cent.

The CNX Nifty traded in a range of 17,943.70 and 17,648.45 and there was 15 stocks advancing against 35 stocks declining on the index. 

The top gainers on Nifty were Power Grid Corporation up by 4.81%, Bharti Airtel up by 2.17%, Grasim Industries up by 1.66%, JSW Steel up by 1.34% and Tata Consumer Products up by 1.17%. On the flip side, Bajaj Finserv down by 4.58%, Bajaj Auto down by 3.70%, Divi's Lab down by 2.93%, Infosys down by 2.24% and TCS down by 2.08% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 13.35 points or 0.18% to 7,576.31, France’s CAC decreased 41.94 points or 0.58% to 7,131.04 and Germany’s DAX decreased 30.00 points or 0.19% to 15,779.72.

Asian markets settled mostly higher on Thursday, shrugging off drops in Europe and on Wall Street overnight as China underscored its diverging monetary and economic picture by cutting benchmark mortgage rates. Upward pressure on US yields eased as investors took advantage of higher yields resulting from the recent sell-off to buy the debt and as the Treasury saw strong demand for a sale of 20-year bonds. Hong Kong shares ended higher after China's interest rate cut to prop up a slowing economy, with investors pinning hopes on further easing in policies by Beijing. Japanese shares rebounded as bargain-hunting kicked in following selloffs in yesterday's trade. However, concerns over inflation on the back of climbing oil prices along with spreading of Omicron variant kept the market sentiments cautious to some extent.

Above views are of the author and not of the website kindly read disclaimer