Benchmarks end lower for second straight session

Indian equity benchmarks closed a percent lower each for the second straight session on Wednesday as rising bond yields and negative global cues spooked investors. The benchmark indices opened lower, as traders were concerned with a private report that the third wave of the COVID-19 pandemic is likely to peak in India on January 23 when the country will record nearly 7.2 lakh cases per day. Some cautiousness also came in as the SBI Business Activity Index declined to 101 as on January 17 from 109 in the week ended January 10. The latest reading, even as the country is in the midst of the third wave of the pandemic, is the lowest since November 15. Besides, stock exchange data showed that foreign investors remained net sellers in the Indian equity markets as they offloaded stocks worth Rs 1,254.95 crore on Tuesday.

Key gauges continued to reel under selling pressure in second half of trading session, as traders were worried with a top WHO official said that it is not possible to end the COVID-19 virus as such viruses never go away and end up becoming part of the ecosystem, but asserted that it is possible to end this year the public health emergency caused by COVID-19 with a collaborative approach to fix inherent inequities in the system. Sentiments remained down-beat with ratings agency ICRA’s report that states are shelling out more for debt funds, with the weighted average cost for their debt auctions hardening by 9 basis points (bps) to touch 7.24 per cent, the highest level so far this fiscal, during the auctions on January 18, 2022. Adding more pessimism, Crisil Ratings said disruptions due to the third COVID wave could shave off as much as 200 basis points from the growth in assets under management of housing finance companies in the current and next financial years.

On the global front, Asian markets settled mostly lower on Wednesday after a tech selloff on the Nasdaq overnight amid heightened expectations of a rate hike by the Federal Reserve. Traders expect the Fed to deliver a half-point interest rate hike in March despite some negative economic data. Lingering worries about the surge in cases of the Omicron variant of the coronavirus in several countries contribute as well to the bearish mood in the market. European markets were trading higher even after official data showed U.K. consumer price inflation accelerated more-than-expected in December to the highest since records began in 1997.  Back home, on the sectoral front, Power industry’s stocks too were in watch as the power ministry said that as many as 20 states have evinced interest for getting additional borrowing space for the power sector under a central scheme. There was some reaction in fashion retail industry's stocks as ICRA said renewed restrictions on operating hours of malls, non-essential stores and curtailment of mobility amid the third Covid wave is expected to shave-off 8 per cent of fashion retailer's revenues in FY22. 

Finally, the BSE Sensex fell 656.04 points or 1.08% to 60,098.82 and the CNX Nifty was down by 174.65 points or 0.96% to 17,938.40.

The BSE Sensex touched high and low of 60,870.17 and 59,949.22, respectively and there were 8 stocks advancing against 22 stocks declining on the index.        

The broader indices ended mixed; the BSE Mid cap index fell 0.34%, while Small cap index was up by 0.03%.

The top gaining sectoral indices on the BSE were PSU up by 1.22%, Utilities up by 1.01%, Power up by 0.99%, Metal up by 0.89%, Oil & Gas up by 0.71% while, IT down by 1.95%, TECK down by 1.79%, Telecom down by 0.97%, FMCG down by 0.89%, Bankex down by 0.52% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.83%, Tata Steel up by 1.19%, Maruti Suzuki up by 1.17%, Axis Bank up by 0.55% and Tech Mahindra up by 0.51%. On the flip side, Infosys down by 2.77%, Asian Paints down by 2.71%, Nestle down by 2.41%, Hindustan Unilever down by 2.41% and Bajaj Finance down by 2.28% were the top losers.

Meanwhile, Ratings agency ICRA in its latest report has said that States are shelling out more for debt funds, with the weighted average cost for their debt auctions hardening by 9 basis points (bps) to touch 7.24 per cent, the highest level so far this fiscal, during the auctions on January 18, 2022. Compared to the previous week, the cost has gone up by 9 bps. From the first auctions in January, the cut-offs have been trending over 7 per cent.

According to the report, while 12 states raised Rs 21,200 crore on January 18, 6 per cent higher than the indicated level for this week, six of them borrowed Rs 6,700 crore more than indicated led by Uttar Pradesh. It borrowed Rs 900 crore more than the amount indicated. The share of longer tenor and 10-year debt has risen to 48 per cent so far in Q4 from 42 per cent and 29 per cent, respectively, in Q3 and Q2 of FY22. At the latest auctions, Rs 11,500 crore or 54 per cent of the total issuance was in longer tenor debt, Rs 7,200 crore or 34 per cent was in 10-year instruments and the balance Rs 2,500 crore or 12 per cent was in shorter tenor.

The report said in line with global trends, domestic yields have hardened since last week, reflecting the imminent rate hikes by the US Fed, increase in crude oil prices, firming of the domestic CPI inflation as well as the magnitude of supply expected in FY23.

The CNX Nifty traded in a range of 18,129.20 and 17,884.90 and there was 15 stocks advancing against 35 stocks declining on the index. 

The top gainers on Nifty were ONGC up by 3.45%, Tata Motors up by 1.92%, UPL up by 1.86%, Coal India up by 1.77% and Maruti Suzuki up by 1.77%.  On the flip side, Infosys down by 2.90%, Shree Cement down by 2.80%, Asian Paints down by 2.69%, Adani ports & SEZ down by 2.54%, Hindustan Unilever down by 2.43% were the top losers.

European markets were trading higher;  UK’s FTSE 100 increased 4.85 points or 0.06% to 7,568.40, France’s CAC increased 48.14 points or 0.67% to 7,181.97 and Germany’s DAX increased 27.27 points or 0.17% to 15,799.83.

Asian markets settled mostly lower on Wednesday following Wall Street's overnight sell-off on concerns about surging inflation and higher interest rates by the US Federal Reserve. Traders are expecting the US Fed to deliver a half-point interest rate hike in March. Japanese shares hit a five-month low, pressured by rising US Treasury yields. Sony Group and Toyota Motors shares are, meanwhile, leading losses in Japan. Chinese shares ended lower, dragged down by profit booking in electric vehicle makers and healthcare firms.