Key indices add losses in morning deals

Indian equity benchmarks added losses in morning deals, taking cues from subdued trading in other Asian markets. Traders remained cautious as global forecasting firm Oxford Economics said retail inflation spike in May might cause the RBI to revisit its focus on growth risks, adding that a rate hike is still unlikely this year. It stated that the underlying dynamics of the May inflation print augur caution and the recovery remains on uncertain ground and with fiscal support in retreat, the RBI will likely be hesitant to remove policy accommodation anytime soon. Traders overlooked a private report stated that financial wealth in India grew 11% to $3.4 trillion in 2020 despite the coronavirus pandemic. The 11% growth in financial wealth was at par with the compounded annual growth rate for the five years to 2020. On the sectoral front, pharma stocks’ remained in watch with Fitch Ratings’ report that Indian pharmaceutical companies' sales will grow robustly in the financial year ending March 2022 (FY22) as sales normalise in categories affected by the pandemic in previous year.

On the global front, Asian markets were trading mostly in red with investors wary of any hint of hawkishness from the U.S. Federal Reserve given lofty asset valuations rely so heavily on an endless supply of super-cheap money.  Meanwhile, Japan posted a merchandise trade deficit of 187.1 billion yen in May, the Ministry of Finance said on Wednesday. That missed expectations for a shortfall of 91.2 billion following the downwardly revised 253.1 billion yen surplus in April (originally 255.3 billion yen). Exports skyrocketed 49.6 percent on year, missing forecasts for a jump of 51.3 percent following the 38.0 percent spike in the previous month. Imports climbed an annual 27.9 percent versus expectations for 26.6 percent and up from 12.8 percent a month earlier.

The BSE Sensex is currently trading at 52617.08, down by 155.97 points or 0.30% after trading in a range of 52580.79 and 52816.31. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.64%, while Small cap index was down by 0.67%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.22% and FMCG up by 0.03%, while Metal down by 2.46%, Power down by 1.57%, Utilities down by 1.24%, Basic Materials down by 1.09% and Telecom down by 0.96% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.64%, Sun Pharma up by 0.52%, ITC up by 0.46%, Mahindra & Mahindra up by 0.43% and Axis Bank up by 0.41%. On the flip side, Power Grid down by 1.88%, Bajaj Finance down by 1.10%, Reliance Industries down by 0.88%, Maruti Suzuki down by 0.80% and Bharti Airtel down by 0.78% were the top losers.

Meanwhile, Global forecasting firm Oxford Economics has said retail inflation spike in May might cause the RBI to revisit its focus on growth risks, adding that a rate hike is still unlikely this year. It stated that the underlying dynamics of the May inflation print augur caution and the recovery remains on uncertain ground and with fiscal support in retreat, the RBI will likely be hesitant to remove policy accommodation anytime soon.

It said that given the evidence from last year, when supply side disruptions had led to an unanticipated spike in inflation, such developments may partly be attributed for the inflation pick-up in May. However, it said ‘as we have highlighted, the 2021 lockdowns are not as stringent; and have allowed for greater movement of people, goods and vehicles. This suggests that other factors, such as the passthrough from WPI (Wholesale Price Index) to CPI (Consumer Price Index) and demand-side pressures, are at play as well.’

It mentioned the April industrial production growth print surprised to the upside. It said positive base effects notwithstanding, industrial production grew 1.1 per cent month-on-month seasonally adjusted in April after rising 2.2 per cent in March. This was led by continued expansion of manufacturing output.

The CNX Nifty is currently trading at 15803.75, down by 65.50 points or 0.41% after trading in a range of 15792.55 and 15880.85. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.44%, Tata Consumer Product up by 0.99%, UPL up by 0.68%, Sun Pharma up by 0.66% and ITC up by 0.51%. On the flip side, Adani Ports &SEZ down by 3.71%, Tata Steel down by 2.92%, Hindalco down by 2.78%, JSW Steel down by 2.58% and Power Grid down by 1.96% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 65.18 points or 0.23% to 28,573.35, Taiwan Weighted dropped 76.90 points or 0.44% to 17,294.39, Straits Times trembled 22.20 points or 0.7% to 3,152.67, Shanghai Composite declined 27.45 points or 0.77% to 3,529.11, Jakarta Composite lost 1.11 points or 0.02% to 6,087.93 and Nikkei 225 slipped 146.91 points or 0.5% to 29,294.39.

On the flip side, KOSPI rose 20.10 points or 0.62% to 3,278.73.