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Friday turned out to be a horrendous day of trade for Indian equity benchmarks with frontline gauges shaved off over one and a half percent each as traders were worried that aggressive interest rate hikes to tame surging inflation may dent global economic growth in the coming time. Markets started the day on pessimistic note as India Ratings said inflation, supply chain disruptions and a weak consumption demand could upset the revival in credit growth in the medium term. It said the reversal of the interest rate cycle--marked by the Reserve Bank of India’s 40 basis points increase in policy repo rate -- would weigh down credit growth as borrowings become costlier. Sentiments also remained dampened as consequent to the 40 basis point hike in the repo rate announced by the Reserve Bank of India (RBI), large banks such as ICICI Bank and Bank of Baroda have raised their lending rates by an equal amount on loans linked to the external benchmark. Market participants overlooked commerce and industry minister Piyush Goyal’s statement that all the key indicators such as jump in exports and high GST collection in April reflect that the country's economy is on the growth path.

Sentiments continued to remain dampened throughout the day as traders remain concerned amid a private report stating that India’s central bank hiked its key lending rate in a surprise move fearing ‘shocker’ inflation numbers for April, adding the ultimate aim is to reverse its pandemic-era ultra-loose rate regime. Adding some more worries, India has raised concerns at the World Trade Organization (WTO) over a host of trade barriers built in by Indonesia, including export restrictions on palm oil and import curbs on bovine meat and automotive (auto) parts, holding that such measures have adversely impacted India. Continuous foreign fund outflows and mixed corporate earnings results also impacted traders’ sentiments. So far this week, foreign investors have net sold Indian equities worth $635 million, compared with $881 million offloaded in the same period last week.

Weak opening in European counters too dampened sentiments with all the European counters were trading in red, following a rout on Wall Street fuelled by worries that aggressive rate hikes by central banks to check inflation could hurt global growth. Asian markets settled mostly lower, after Hong Kong's retail sales declined for the second straight month in March. The figures from the Census and Statistics Department showed that the retail sales volume decreased 16.8 percent year-on-year in March, following a 17.6 percent fall in February. The value of retail sales declined 13.8 percent annually in March, following a 14.6 percent drop in the preceding month.

Back home, sugar industry stocks were in focus as industry body Indian Sugar Mills Association (ISMA) said India has exported 7 million tonnes of the sweetener so far in the ongoing 2021-22 marketing year, and exports from the country may touch a new record of 9 million tonnes. Meanwhile, Telecom Regulatory Authority of India (Trai) in latest report has said that telecom service providers' gross revenue declined by 2.64 per cent to Rs 69,695 crore in December 2021 quarter. The gross revenue of the telecom service providers (TSPs) was Rs 71,588 crore in the same period a year ago.

Finally, the BSE Sensex fell 866.65 points or 1.56% to 54,835.58 and the CNX Nifty was down by 271.40 points or 1.63% to 16,411.25.          

The BSE Sensex touched high and low of 55,070.12 and 54,586.75, respectively. There were 6 stocks advancing against 24 stocks declining on the index.       

The broader indices ended in red; the BSE Mid cap index fell 2.06%, while Small cap index was down by 2.10%.

The only gaining sectoral indices on the BSE were Utilities up by 0.57% and Power up by 0.57%, while Realty down by 3.53%, Metal down by 3.10%, Basic Materials down by 2.80%, Consumer Durables down by 2.41% and IT down by 2.27% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.21%, Power Grid up by 1.88%, ITC up by 1.83%, SBI up by 0.92% and NTPC up by 0.60%. On the flip side, Bajaj Finance down by 4.91%, Axis Bank down by 4.11%, Bajaj Finserv down by 3.49%, Nestle down by 3.34% and Wipro down by 3.12% were the top losers.

Meanwhile, expressing optimism over economic growth, commerce and industry minister Piyush Goyal has said all the key indicators such as jump in exports and high GST collection in April reflect that the country's economy is on the growth path. He said that goods and services exports have touched $675 billion in 2021-22, while the GST (Goods and Services Tax) collection in April touched the highest ever level of about Rs 1.68 lakh crore, up 20 per cent from the year-ago period.

He also asked project exporters to diversify and foray into markets of the developed world and urged them not to restrict themselves to government's line of credit projects and projects in the developing world. He outlined the challenges that the global economy has been facing such as the Omicron wave, global supply chain disruptions, soaring raw material costs, container shortages, financial market volatility and geopolitical tensions.

About the country's target of $1 trillion worth of goods and services export each by 2030, he said that the target would be achieved through the participation of all stakeholders. Further, he urged the banking sector to abandon the mindset of conservatism that has set in the sector and be open to taking some risks. He said India has all the necessary ingredients to become a global player in project exports, added that the world has realised that it is absolutely essential to invest in infrastructure.

The CNX Nifty traded in a range of 16,340.90 and 16,484.20. There were 11 stocks advancing against 39 stocks declining on the index.       

The top gainers on Nifty were Hero MotoCorp up by 2.47%, Tech Mahindra up by 2.17%, Power Grid up by 1.99%, ITC up by 1.76% and ONGC up by 1.27%. On the flip side, Bajaj Finance down by 4.90%, Divi’s Lab down by 4.58%, Shree Cement down by 4.44%, UPL down by 4.42% and Tata Motors down by 4.16% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 54.83 points or 0.73% to 7,448.44, France’s CAC decreased 74.57 points or 1.17% to 6,293.83 and Germany’s DAX decreased 141.62 points or 1.02% to 13,760.90.

Asian markets settled mostly lower on Friday following a sell off on Wall Street overnight. Market sentiments weakened further as China's pledge to stick to its zero Covid policy stoked concerns about the world's second largest economy. Traders are continued to react to the Federal Reserve's monetary policy announcement on interest rate hikes by 50 basis points this week. However, Japanese shares gained slightly, lifted by export-oriented shares that advanced on the yen's retreat against the US dollar. Meanwhile, Indonesia remains closed for Eid-ul-Fitr holiday.

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