Markets hover near day’s low; Realty plunges most

Key Indian benchmarks hovered near their intraday low in morning session, with Sensex falling more than 500 points, amid a negative trend in global markets and persistent foreign fund outflow. Heavy selling in Realty, Consumer Durables, Auto and Telecom stocks weighed on the sentiments. Some concerns also came with a private report stating that India's growth recovery has been led by capital expenditure push by the government so far, but fiscal constraints might prove to be a challenge going forward in terms of driving investments. Traders failed to get any sense of relief with a private report that advance tax collections in the third quarter of the fiscal year almost doubled from the year-earlier period, underscoring hopes of a sustained economic recovery amid the threat from the Omicron Covid-19 variant. Meanwhile, Union Finance Minister Nirmala Sitharaman will chair pre-budget consultations with stakeholders from various sectors in two sessions in the national capital in connection with the forthcoming general budget 2022-23 on Friday.

On the global front, Asian markets were trading mostly in red as investors fretted over Omicron, more aggressive monetary tightening by central banks and geopolitical tensions following the U.S. sanctions on China over human rights issues. Back home, on the sectoral front, stocks related to cement industry remained in focus with ratings agency ICRA’s statement that rise in input costs for cement manufacturers is expected to hit the sector's overall operating margins by 200-230 basis points (bps) in current financial year (FY22).  The major inputs required in the production of cement are coal, petcoke and diesel. Elevated freight cost also added to the production cost.

The BSE Sensex is currently trading at 57360.12, down by 541.02 points or 0.93% after trading in a range of 57252.49 and 58062.28. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.77%, while Small cap index was down by 1.65%.

The few gaining sectoral indices on the BSE were IT up by 1.81% and TECK up by 1.26%, while Realty down by 2.79%, Consumer Durables down by 2.49%, Auto down by 2.34%, Telecom down by 2.22% and Metal down by 2.06% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 3.11%, HCL Technologies up by 1.28%, TCS up by 1.15% and Tech Mahindra up by 0.52%. On the flip side, Titan Company down by 3.97%, Indusind Bank down by 2.69%, Axis Bank down by 2.47%, Tata Steel down by 2.46% and Bharti Airtel down by 2.34% were the top losers.

Meanwhile, Ratings agency ICRA has said rise in input costs for cement manufacturers is expected to hit the sector's overall operating margins by 200-230 basis points (bps) in current financial year (FY22).  The major inputs required in the production of cement are coal, petcoke and diesel. Elevated freight cost also added to the production cost.

Notably, the projected decline in operational margins is despite a rise in production of the commodity and offtake by the infrastructure industry and rural housing sector. It mentioned ‘In terms of recent trends, the all-India cement production reported an increase by 22 per cent YoY in Q2FY22 and by 10 per cent as compared to Q2FY20, supported by the strong demand from the housing segment and pick-up in infrastructure activities.’ Faced with rising input costs, several cement manufacturers went for a price hike in 2021.

Besides, Anupama Reddy, Assistant Vice President and Sector Head, Corporate Ratings, at ICRA, said while the capacity additions are expected to increase in FY22 when compared to previous year, the reliance on debt is likely to be lower owing to the healthy cash generation and strong liquidity of the cement companies. The debt coverage metrics are expected to remain strong in FY22.

The CNX Nifty is currently trading at 17064.10, down by 184.30 points or 1.07% after trading in a range of 17042.65 and 17298.15. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.15%, Wipro up by 2.36%, HCL Technologies up by 1.35%, TCS up by 1.13% and Tech Mahindra up by 0.51%. On the flip side, Tata Motors down by 4.00%, Titan Company down by 3.79%, Indusind Bank down by 2.65%, Axis Bank down by 2.44% and Adani Ports &SEZ down by 2.42% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 467.41 points or 1.61% to 28,598.91, Hang Seng decreased 300.31 points or 1.28% to 23,175.19, Shanghai Composite declined 33.25 points or 0.9% to 3,641.77, Jakarta Composite lost 27.59 points or 0.42% to 6,567.21, Taiwan Weighted dropped 16.00 points or 0.09% to 17,769.74 and Straits Times trembled 8.70 points or 0.28% to 3,120.10.

On the global front, KOSPI rose 0.75 points or 0.02% to 3,007.16.