Markets end marginally higher amid volatility

Indian equity benchmarks managed to end higher for the fourth straight session on Friday led by gains in Auto, Telecom and TECK stocks. The domestic indices swung between green and red terrain in a highly volatile session, as traders got anxious with a private brokerage firm sharply cut its India FY23 real GDP growth estimate to 7.9 per cent, mainly due to the impact of the Russia-Ukraine conflict on oil prices. Some cautiousness also came with Kristalina Georgieva, the Managing Director (MD) of the International Monetary Fund (IMF) stating that India has been very good at managing its finances but the surge in global energy prices is going to have a negative impact on its economy. She observed that the war has posed a challenge to economies around the world, including India. Adding to the pessimism, the Reserve Bank of India (RBI) in its data indicated that India Inc's direct overseas investment declined 67 per cent to $753.61 million in February 2022. The domestic investors had invested over $2.28 billion in overseas ventures as part of the outward foreign direct investment (OFDI) in February 2021.

However, key indices managed to end in green terrain, taking support from rating agency Crisil’s report that Indian economy is likely to grow by 7.8 per cent in 2022-23, mainly driven by the government’s drive to push infrastructure spending and likely increase in private capital expenditure. Some optimism also came with Fitch Ratings stating that strengthening economic recovery and stable financial metrics will help state-owned banks have stable earnings during the next financial year, aided by the gradual unwinding of regulatory forbearance through the year.  Separately, with an aim to promote and support untapped creativity of MSME sector, Union Minister for MSME Narayan Rane has launched the MSME Innovative Scheme (Incubation, Design and IPR) along with the MSME Idea Hackathon 2022. Rane further said that MSMEs have an important role to play in Atmanirbhar Bharat. He said these schemes will help entrepreneurs in developing new ventures.

On the global front, European markets were trading higher following ECB's hawkish surprise, as soaring inflation outweighs concerns about Russia's invasion of Ukraine. Asian markets ended mostly lower on Friday as inflation worries mounted and Russia's invasion of its neighbor Ukraine entered the 16th day, with little signs of progress on a potential cease-fire agreement. Back home, stocks related to jewellery industry were in focus as Gem Jewellery Export Promotion Council (GJEPC) said India’s gold imports bounced back to 1,067.72 tonnes in 2021 from 430.11 tonnes during 2020 when the demand was hit due to the COVID-19 pandemic. Banking stocks’ also were in watch with RBI data showing that bank credit grew by 7.9 per cent to Rs 116.27 lakh crore and deposits rose by 8.6 per cent to Rs 162.17 lakh crore in the fortnight ended February 25.

Finally, the BSE Sensex rose 85.91 points or 0.15% to 55,550.30 and the CNX Nifty was up by 35.55 points or 0.21% to 16,630.45.  

The BSE Sensex touched high and low of 55,833.95 and 55,049.95, respectively. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.45%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.07%, PSU up by 1.01%, Oil & Gas up by 0.96%, Basic Materials up by 0.84% and Metal up by 0.57%, while Auto down by 0.35%, Telecom down by 0.14%, TECK down by 0.12% and IT down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.82%, Dr. Reddy's Lab up by 2.07%, ITC up by 1.81%, Power Grid Corporation up by 1.70% and Titan Company up by 1.12%. On the flip side, Nestle down by 1.56%, Maruti Suzuki down by 1.38%, NTPC down by 0.75%, Axis Bank down by 0.56% and TCS down by 0.54% were the top losers.

Meanwhile, rating agency Crisil in its latest report ‘India Outlook, Fiscal 2023′ has said that Indian economy is likely to grow by 7.8 per cent in 2022-23, mainly driven by the government’s drive to push infrastructure spending and likely increase in private capital expenditure. Though, it also cautioned that the ongoing Russia Ukraine war and rising commodity prices do pose a downside risk to the growth. The country is expected to register a growth rate of 8.9 per cent in the current fiscal ending March 31. It said ‘any potential upside due to the early end of a mild third wave of COVID-19 infections will be offset by the ongoing geopolitical strife stemming from Russia’s invasion of Ukraine, which is creating a dampening effect on global growth and pushing up oil and commodity prices. The risks to growth are also tilted to the downside’.

Crisil Chief Economist Dharmakirti Joshi said private consumption remains the weak link, owing to reduced direct fiscal policy support. As for the average Consumer Price Index (CPI)-based inflation, he said, it will stay firm at 5.4 per cent next fiscal - if the price of crude oil averages $85-90/barrel - and takes into account the excise duty cuts announced last year. However, upside risks will build if the geopolitical strife prolongs, keeping oil and commodity prices higher for longer. He said ‘we believe the fiscal policy will need to be deployed more aggressively than envisaged in the Union Budget for next fiscal. This can be done by increasing allocation for employment-generating schemes and food subsidy, and cutting duty on petroleum products’. He noted that this can be a relief bridge for those most affected by the pandemic till such time the virtuous cycle of investment-led growth plays out in the labour market, and private consumption demand becomes self-sustaining.

As per the report, the higher price of crude oil will widen India’s current account deficit to 2.2 per cent in fiscal 2023, it added that typically, a $10 increase in the price of crude oil raises the current account deficit to GDP ratio by about 40 basis points. It also stated the near-term impact of high oil prices on inflation, assuming a significant passthrough, will be more pronounced than on growth, and added that all bets are off if oil stays around or above $100/barrel for a prolonged period. The report said ‘across consumption segments, recovery curves have been staggered and income sentiment will be the key driver. As things stand, we expect India Inc to see revenue growth of 10-14 per cent next fiscal’. It said India’s investment focus is now shifting towards green capital expenditure, with an expected spend of over Rs 2.85 lakh crore per annum over fiscals 2023 to 2030, accounting for nearly 15-20 per cent of total investments - into the infrastructure and industrial sectors - per annum. It noted that this will further help push a supply-driven recovery for the economy as a whole.

The CNX Nifty traded in a range of 16,694.40 and 16,470.90. There were 28 stocks advancing against 22 stocks declining on the index. 

The top gainers on Nifty were Cipla up by 5.87%, BPCL up by 4.07%, Sun Pharma up by 3.67%, JSW Steel up by 2.62% and Indian Oil Corporation up by 2.19%. On the flip side, Nestle down by 1.75%, Maruti Suzuki down by 1.56%, Tata Consumer Product down by 1.13%, Hindalco down by 0.91% and NTPC down by 0.79% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 78.22 points or 1.1% to 7,177.31, France’s CAC increased 37.83 points or 0.61% to 6,245.03 and Germany’s DAX increased 173.85 points or 1.29% to 13,615.95.

Asian markets ended mostly lower on Friday as inflation worries mounted and Russia's invasion of its neighbor Ukraine entered the 16th day. Sentiments were also weak as surging U.S. inflation drove bond yields higher and raised expectations that interest rate hikes will be steeper. Japanese shares slumped after the foreign ministers of Ukraine and Russia failed to reach peace during the highest-level meeting in three weeks of war Thursday. Meanwhile, Chinese and Hong Kong markets were in focus after Chinese stocks in the U.S. plummeted to around 14-year lows amid renewed regulatory concerns.