Bears hold grip over Dalal Street

Bears were holding a grip over the Dalal Street in late morning session, with both Sensex and Nifty trading in red, on the back of negative cues from other Asian markets. Domestic sentiments remained negative, amid report stating that a sharp rise in prices of essential commodities over the past few months coupled with the latest burden of steep hike in fuel rates have made life difficult for almost every section of the society across the country, with people finding it hard to manage their household budget. Adding more worries among traders, the World Trade Organization projected that Russia's war in Ukraine could almost halve world trade growth this year and drag down global GDP growth too.

On the global front, Asian markets were trading in red, after Malaysia's industrial production grew at a softer pace in February, mainly due to the rise in manufacturing and electricity output. The data from the Department of Statistics showed that industrial production rose 3.9 percent year-on-year in February, after a 4.3 percent increase in January.

The BSE Sensex is currently trading at 58553.83, down by 410.74 points or 0.70% after trading in a range of 58338.13 and 58743.50. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.29%, while Small cap index was down by 1.26%.

The only gaining sectoral indices on the BSE were Utilities up by 0.61% and Power up by 0.58%, while Metal down by 3.94%, Realty down by 2.68%, Basic Materials down by 2.12%, Energy down by 1.85% and Capital Goods down by 1.75% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 0.94%, Kotak Mahindra Bank up by 0.84%, Maruti Suzuki up by 0.61% and HCL Tech. up by 0.58%. On the flip side, Tata Steel down by 3.67%, Larsen & Toubro down by 2.03%, Infosys down by 1.51%, Bajaj Finserv down by 1.44% and Ultratech Cement down by 1.41% were the top losers.

Meanwhile, the research wing of rating agency Crisil in its latest report has said that companies are not able to pass on the pressure from rising input costs to buyers, and this is likely to result in a compression in corporate profit margins for the March quarter (Q4FY22). It said operating profit margins for companies are set to fall by as much as 3 percentage points compared to the year-ago period, and up to 0.60 per cent as compared to the preceding December quarter. The report comes ahead of the earnings season when major companies start reporting their profits. It said this will be only the second quarter in the last three years when profit margins have narrowed against the year-ago period.

According to the report, for the entire fiscal (FY22), Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) or operating profits are likely to shrink by up to 0.40 per cent to 21-23 per cent. It noted that companies were unable to fully pass on soaring input cost, especially prices of key metals and energy and added that given the Russia-Ukraine conflict and its impact on commodity prices, there will be a further 1 percentage point shrinkage in the profit margins in FY23.  It stated that in March quarter, margins in construction-linked sectors are likely to have fallen the most at up to 6 percentage points, followed by export-linked and industrial commodities sectors where margins are likely to have eroded by 4 percentage points.

The report further said there is likely to be a moderate expansion in the profit margins in the consumer discretionary services sector, on the back of tariff hikes by telcos, and in the consumer staples services where the hospital sector's show is set to be helpful. In absolute terms, it said revenue of most sectors and segments rose above their pre-pandemic levels last fiscal, adding that construction, consumer staple services and agriculture sectors have recovered the fastest.

The CNX Nifty is currently trading at 17520.85, down by 154.10 points or 0.87% after trading in a range of 17462.30 and 17594.40. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were TCS up by 1.02%, Kotak Mahindra Bank up by 0.76%, Maruti Suzuki up by 0.53%, HCL Tech. up by 0.53% and Shree Cement up by 0.28%. On the flip side, Hindalco down by 5.70%, Coal India down by 4.51%, Tata Steel down by 3.74%, JSW Steel down by 3.08% and Tata Motors down by 3.03% were the top losers.

Asian markets were trading in red; Hang Seng decreased 106.09 points or 0.5% to 21,102.21, Straits Times trembled 29.28 points or 0.87% to 3,334.28, KOSPI fell 28.66 points or 1.06% to 2,664.44, Shanghai Composite declined 21.02 points or 0.66% to 3,146.11, Nikkei 225 slipped 463.72 points or 1.73% to 26,357.80, Jakarta Composite lost 47.22 points or 0.66% to 7,156.57 and Taiwan Weighted dropped 61.69 points or 0.36% to 16,986.68.