Benchmarks witness bloodbath in early deals amid geopolitical tensions

Indian equity benchmarks made gap-down opening on Monday tacking sell-off in the global markets due to rising geopolitical tensions. Domestic indices are trading under pressure with cut of over 2% each in early deals due to selling in all the sector indices led by Metal, Telecom and Capital Goods counters. Broader indices are also following larger peers with losses of over 2%. Traders were concerned as India’s industrial production growth slowed down for a fourth straight month in December to 0.4 per cent mainly due to a poor performance by the manufacturing sector. According to the data released by the National Statistical Office (NSO), the manufacturing sector, which constitutes 77.63 per cent of the Index of Industrial Production (IIP), contracted by 0.1 per cent in December. Now, investors are eyeing on retail inflation and wholesale inflation data to be out later in the day.

On the global front, all the Asian markets are trading lower following the broadly negative cues from Wall Street on Friday, as traders continue to react to U.S. inflation data and heightened geopolitical tensions between Russia and Ukraine. Worries about the fast spreading coronavirus Omicron variant's impact on global economic growth also continues to impact market sentiment.

Back home, edible oil industry stocks were in focus as India cut its tax on crude palm oil (CPO) imports to 5% from 7.5%, as the world's biggest edible oil importer tries to rein in local prices of the commodity and help domestic refiners and consumers. In scrip specific development, Oil and Natural Gas Corporation (ONGC) touched a 52-week high after company reported its December quarter earnings. The company reported a consolidated profit (PAT) of Rs 11,637 crore for the third quarter ended December 2021, up from the profit of Rs 3,637 crore reported in the corresponding quarter a year ago.

The BSE Sensex is currently trading at 56763.81, down by 1389.11 points or 2.39% after trading in a range of 56612.07 and 57140.46. There were 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 2.39%, while Small cap index was down by 2.84%.

The top losing sectoral indices on the BSE were Metal down by 3.65%, Telecom down by 3.47%, Capital Goods down by 3.20%, Industrials down by 3.18%, Bankex down by 3.13%, while there was no gainers on the BSE sectoral front.

The sole gainer on the Sensex was TCS up by 1.95%. On the flip side, ITC down by 4.33%, SBI down by 4.17%, Tata Steel down by 4.04%, HDFC down by 3.67% and ICICI Bank down by 3.64% were the top losers.

Meanwhile, industry body CII in its latest report has stated that India needs to adopt a multidimensional approach to take the country's merchandise exports to $1 trillion by 2030. The report recommends finalising free trade agreements with large markets, extending RoDTEP to all exports, attracting global firms and addressing domestic manufacturing issues to achieve the target. CII President T V Narendran said ‘With a holistic and aggressive approach, the aim to achieve $1 trillion in merchandise exports by 2030 is indeed achievable if India undertakes a strategic mission’.

In its report 'Achieving $1 trillion in merchandise exports: A Roadmap', the CII has outlined products and destination markets that India should focus on and highlights a range of policy actions towards meeting the target. According to industry body, the need of the hour is for India to integrate closely with global value chains and to attract FDI inflows in its key sectors. Based on the potential to gain global share, 14 products have been identified in the CII report as those which can contribute the most to the increase in exports. These include vehicles, textiles, electrical machinery and equipment, machinery, apparel, chemical products, plastics, pharmaceuticals, etc. The report also identifies 41 countries that offer opportunities to expand exports which must be given special attention.

It said ‘Currently, more than 20 trade deals are under negotiation including those with the UK, Canada, European Union (EU), Australia, United Arab Emirates, and the GCC countries which must be expedited’. Further, non-tariff barriers in existing trade agreements need to be resolved to open market access. It also highlights the need for investment agreements to be well linked to trade arrangements. It said as investment-led exports are a key feature of export capabilities, multinational companies must be encouraged to set up production base in India to enhance the country's presence in global value chains. The rates under the scheme of Remission of Duties and Taxes on Exported Products (RoDTEP) need to be extended to all sectors and aligned to taxes and additional costs that are present in the manufacturing ecosystem. It added that exports of SEZs and EOUs should be included in the scheme.

The CNX Nifty is currently trading at 16975.35, down by 399.40 points or 2.30% after trading in a range of 16916.55 and 17099.50. There were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were TCS up by 2.22%, ONGC up by 0.39% and Divi's Lab up by 0.33%. On the flip side, JSW Steel down by 5.41%, ITC down by 4.45%, SBI down by 4.14%, Bharti Airtel down by 4.07% and HDFC Life Insurance down by 4.03% were the top losers.

All the Asian markets are trading in red; Nikkei 225 slipped 588.39 points or 2.12% to 27,107.69, Straits Times fell 2.13 points or 0.06% to 3,426.82, Hang Seng declined 328.28 points or 1.32% to 24,578.38, Taiwan Weighted plunged 338.34 points or 1.85% to 17,972.60, KOSPI lost 42.15 points or 1.53% to 2,705.56, Jakarta Composite dropped 78.65 points or 1.15% to 6,736.96 and Shanghai Composite was down by 21.72 points or 0.63% to 3,441.23.