Benchmarks close marginally in red

Snapping three days of gains, Indian equity benchmarks took a pause and closed marginally in red on Wednesday, dragged down by selling pressure in FMCG, Auto and Banking stocks. Markets opened on a positive note as traders took support with Moody's Ratings stating that the Indian economy is projected to expand 6.6 per cent in the current fiscal year and said strong credit demand fuelled by robust economic growth will support the NBFC sector's profitability. It added that the Indian economy is estimated to have expanded 8 per cent in the 2023-24 fiscal year. However, key gauges soon erased initial gains and slipped into red in morning deals due to uncertainty surrounding the general election results. Traders turned cautious with ICRA Chief Economist Aditi Nayar’s statement that the wholesale food inflation, which is at a four-month high, will continue to be a cause for concern in May and June as heatwave is likely to jack up prices of perishable commodities. Although the impact of high base of last year will play out in July and August, the impact of monsoon will determine the price conditions in the subsequent months. 

Sentiments remained dull in late afternoon deals with a private report that even as stocks have bounced back, foreign investors continue to remain aggressive sellers this month. On Tuesday, FIIs net sold stocks worth Rs 4,065 crore, taking the May month’s tally to Rs 33,540 crore. Some concern also came as India's merchandise trade deficit expanded to $19.1 billion in April. India's exports rose marginally by 1.06 per cent to $34.99 billion in April 2024, against $34.62 billion during the same period last year. However, losses remained capped as some optimism remained among traders with report by the Global Trade Research Initiative (GTRI) stating that the development of Chabahar Port will help India enhance its logistical capabilities and expand its trade routes to Central Asia and for that there is a need to ensure necessary infrastructure, and processes to effectively manage the cargo flow at the port.

On the global front, European markets were trading mostly in green as flash estimate from Eurostat showed the euro area economy recovered as estimated in the first quarter after contracting for two straight quarters. GDP grew 0.3 percent sequentially, reversing the 0.1 percent falls each in the third and fourth quarters of 2023. Asian markets settled mixed in thin trade on Wednesday as investors reacted to data showing an unexpected increase in U.S. producer prices and waited for the release of U.S. CPI report later in the day for clues on the Federal Reserve's next steps.

Finally, the BSE Sensex fell 117.58 points or 0.16% to 72,987.03, and the CNX Nifty was down by 17.30 points or 0.08% points to 22,200.55. 

The BSE Sensex touched high and low of 73,301.47 and 72,822.66 respectively. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.60%, while Small cap index was up by 0.96%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.13%, Power up by 2.01%, Industrials up by 1.76%, PSU up by 1.39% and Utilities up by 1.27%, while FMCG down by 0.75%, Auto down by 0.31% and Bankex down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.05%, Power Grid Corporation up by 1.62%, NTPC up by 1.55%, Mahindra & Mahindra up by 1.32% and HCL Technologies up by 0.97%. On the flip side, Asian Paints down by 1.84%, Tata Motors down by 1.81%, HDFC Bank down by 1.57%, JSW Steel down by 1.21% and Sun Pharma down by 1.10% were the top losers.

Meanwhile, ICRA Chief Economist Aditi Nayar has said the wholesale food inflation, which is at a four-month high, will continue to be a cause for concern in May and June as heatwave is likely to jack up prices of perishable commodities. Although the impact of high base of last year will play out in July and August, the impact of monsoon will determine the price conditions in the subsequent months.

The wholesale price index (WPI)-based food inflation was at a four-month high of 7.74 per cent in April. Retail food inflation also remained stubbornly high at 8.70 per cent in April 2024, as against 3.84 per cent in April 2023.

Nayar said weather is an important factor in determining the food inflation trajectory. Monsoon was not very favourable last year and this year there are heatwaves in parts of the country. She stated ‘With the onset of summer, prices of perishable items are charting upwards. For the next two months, we expect the food inflation to climb further and then as the base effect turns very supportive, we will end up with temporarily plunging readings in July-August this year’.

The CNX Nifty traded in a range of 22,297.55 and 22,151.75. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Coal India up by 4.19%, Cipla up by 3.55%, BPCL up by 3.42%, Bharti Airtel up by 2.47% and Power Grid Corporation up by 1.65%. On the flip side, Tata Motors down by 1.93%, Bajaj Auto down by 1.91%, Asian Paints down by 1.85%, Eicher Motors down by 1.75% and Britannia Industries down by 1.53% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 22.9 points or 0.27% to 8,451.03 and Germany’s DAX gained 81.94 points or 0.44% to 18,798.36, while France’s CAC fell 13.12 points or 0.16% to 8,212.68.

Asian markets settled mixed in thin trade on Wednesday amid Hong Kong and South Korean markets were closed for Buddha's birthday. Meanwhile, investors were cautiously awaiting key US CPI data due later in the day for clues on the US Federal Reserve's next steps. US Federal Reserve chairman Jerome Powell said that the US Federal Reserve is unlikely to raise its key interest rate in response to signs of stubborn inflation and underscored his view that price increases would soon start to cool again. Chinese shares declined as the US administration announced steep tariff increases on a wide range of Chinese imports and PBoC left a key policy rate unchanged when rolling over maturing medium-term lending facility loans. Japanese shares gained marginally with expectations for an interest-rate hike by the Bank of Japan by July and ahead of the release of the first estimate of the domestic GDP for the January-March period on Thursday.