Benchmarks trade lower in early deals; Realty index leads losers

Indian equity benchmarks made cautious start on Tuesday amid a sharp rally in oil prices again. Investors are continuing watching out for developments on the Russia-Ukraine conflict. Markets are trading lower with cut of 0.28% each in early deals due to selling in Realty and Consumer Durables stocks. Traders were worried as rating agency Fitch in its Global economic Outlook-March 2022 has slashed India's growth forecast for the next fiscal to 8.5 per cent from 10.3 per cent.  The agency slashed India's growth forecast on account of sharply higher energy prices. However, downside remained capped with Reserve Bank Governor Shaktikanta Das’ statement that the RBI will continue to ensure adequate liquidity to support the economy, which is facing many headwinds in the form of soaring crude oil and key commodity prices following the Russian invasion of Ukraine.

On the global front, most of the Asian markets are trading higher despite the negative cues from Wall Street overnight, as higher commodity prices triggered strong buying in energy and materials sectors, despite rising concerns about the impact of the ongoing war in Ukraine. Traders took note of report that the Japanese government has fully lifted its COVID-19 quasi-emergency measures that would be boost to the economy.

Back home, insurance companies stocks were in focus with a private report stating that the government is soon likely to announce a plan to strengthen state-run general insurance firms, including details of the capital infusion of about Rs 5,000 crore that it has already approved. Besides, state-run oil marketing companies BPCL, HPCL and IOC climbed after fuel prices were hiked in their first revision since December.

The BSE Sensex is currently trading at 57132.74, down by 159.75 points or 0.28% after trading in a range of 57042.03 and 57340.42. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.71%, while Small cap index was down by 0.32%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.47%, Energy up by 1.39%, Metal up by 1.34%, TECK up by 0.36%, IT up by 0.33%, while Realty down by 1.63%, Consumer Durables down by 1.54%, FMCG down by 1.24%, Consumer discretionary down by 1.01%, Bankex down by 0.96% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.36%, Reliance Industries up by 1.01%, TCS up by 0.86%, Power Grid up by 0.68% and Sun Pharma up by 0.52%. On the flip side, Hindustan Unilever down by 2.44%, Asian Paints down by 1.99%, Axis Bank down by 1.88%, Nestle down by 1.80% and Ultratech Cement down by 1.78% were the top losers.

Meanwhile, notwithstanding fears of imported inflation given the massive spike in commodity prices, especially crude oil, after Russia invaded Ukraine last month, Reserve Bank of India (RBI) Governor Shaktikanta Das has said there is no prospect of the economy falling into a stagflation vortex and retail inflation is expected to moderate going forward. Stagflation or recession-inflation is a situation in which prices rise too high but the economy slows or falls into a recession like situation and also unemployment jumps.

Under the agreement with the government the Reserve Bank has to ensure that CPI inflation remains at 4 per cent with a margin of 2 per cent on either side. Already retail inflation has risen to 6.07 per cent in February, crossing the upper band of the Parliamentary mandate. This is the second consecutive month in 2022 when retail inflation has crossed the 6 per cent mark having hit 6.01 per cent in January. The previous high was 6.26 per cent in June 2021. Similarly wholesale price inflation in February rose to 13.11 per cent on hardening of prices of crude and non-food items, even though food articles softened.

The governor also expects the rupee to remain stable. The rupee has been the worst performer among the emerging market peers since Russia’s invasion of Ukraine and plunged to a low of 77.27 early this month. According to the latest RBI data, the central bank defended the rupee vigorously earlier this month by selling close to $10 billion from the reserves, making it the highest forex intervention by the monetary authority in a decade.

The CNX Nifty is currently trading at 17068.95, down by 48.65 points or 0.28% after trading in a range of 17051.60 and 17143.15. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were ONGC up by 3.97%, IOC up by 1.69%, Reliance Industries up by 1.44%, Hindalco up by 1.20% and UPL up by 1.14%. On the flip side, Hindustan Unilever down by 2.68%, Britannia Industries down by 2.16%, Asian Paints down by 2.06%, Axis Bank down by 2.05% and Nestle down by 2.04% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 410.18 points or 1.53% to 27,237.61, Hang Seng jumped 265.52 points or 1.25% to 21,486.86, KOSPI added 20.45 points or 0.76% to 2,706.50, Jakarta Composite rose 30.84 points or 0.44% to 6,986.02 and Shanghai Composite was up by 4.41 points or 0.14% to 3,258.10. On the other hand, Straits Times fell 4.68 points or 0.14% to 3,350.83 and Taiwan Weighted lost 47.46 points or 0.27% to 17,512.90.