Domestic markets trade lower in early deals

Indian equity benchmarks made gap-down opening on Wednesday, after rallying in previous session, as an uptick in oil prices and the Russia-Ukraine conflict continued to weigh on market sentiment. Markets are trading lower with around 0.80% cut in early deals due to profit booking after recent gains. There was some cautiousness as India reports 2,927 fresh cases and 2,252 recoveries, in the last 24 hours. Traders took note of Acting Director of the IMF's Asia and Pacific Department stating that the surge in oil prices due to the Ukrainian war has pushed up inflation in India, which needs monetary tightening and measures to address structural weaknesses to improve growth potential. Market participants largely overlooked CBDT Chairman J B Mohapatra’s statement that the net direct tax collection has registered a whopping 49.02 per cent growth to over Rs 14.09 lakh crore in the 2021-22 fiscal as the country’s economy ‘bounced back’ after being hit by the COVID-19 pandemic.

Global cues remained subdued with most of the Asian markets trading lower following the broadly negative cues overnight from Wall Street, on concerns of elevated inflation and the potential economic impact from the widely expected U.S. monetary tightening continued to weigh on investors as they digest the latest earnings news. Lingering worries also remain about the Covid-19 lockdowns in China and the ongoing war in Ukraine.

Back home, edible oil industry stocks were in focus with private report stating that India's palm oil imports in May are set to rise above 600,000 tonnes despite the restriction imposed by Indonesia on exports as most of the contracted quantity will be loaded before Jakarta's ban becomes effective. In scrip specific development, Mahindra Logistics traded higher as it reported a revenue of Rs 1,073 crore in Q4FY22 as against Rs 974 crore in Q4FY21, up by 10.16% yoy. In the primary market, Multispecialty pediatric hospital chain Rainbow Children's Medicare initial public offering (IPO) will open for public subscription today.

The BSE Sensex is currently trading at 56866.44, down by 490.17 points or 0.85% after trading in a range of 56860.84 and 57079.03. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.97%, while Small cap index was down by 1.23%.

The top losing sectoral indices on the BSE were IT down by 1.41%, TECK down by 1.30%, Telecom down by 1.23%, Auto down by 1.17%, Basic Materials down by 1.17%, while there was no gainer on the BSE sectoral front.

The few gainers on the Sensex were NTPC up by 1.27%, Reliance Industries up by 0.80% and Kotak Mahindra Bank up by 0.10%. On the flip side, Bajaj Finance down by 4.95%, Bajaj Finserv down by 2.70%, Wipro down by 1.79%, Ultratech Cement down by 1.67% and Maruti Suzuki down by 1.66% were the top losers.

Meanwhile, the International Monetary Fund’s (IMF) Asia and Pacific Department’s Acting Director Anne-Marie Gulde-Wolf said that the surge in oil prices due to the Ukrainian war has pushed up inflation in India, which needs monetary tightening and measures to address structural weaknesses to improve growth potential. She said according to estimates, the country's economy is likely to grow at 8.2 per cent in 2022-23, down 0.8 per percentage points. She added ‘So while still strong, it is a significant downgrade. We really see the difficult policy tradeoff for policymakers supporting the worldwide controlling of inflation, which has already started going up’.

She said ‘the reason why inflation has gone up is really the spillovers from the war in Ukraine, where India is particularly dependent on oil and commodity imports’. She added ‘in the short run, we think a commodity fiscal stance is appropriate, supporting vulnerable households and putting focus on infrastructure investment’. She recommended monetary tightening and measures to check structural weaknesses. She also said ‘well-communicated monetary policy actions are needed but probably some monetary tightening’.

She further said ‘to enhance India's growth potential, it is important to address structural weaknesses of the Indian economy that provide bottlenecks to achieve longer-lasting growth. These bottlenecks are in the labour market, land market, better educational outcomes, and very much also getting higher share of females into the labour force’. She said ‘so, in sum, the potential is definitely there but it will require policy actions’.

The CNX Nifty is currently trading at 17069.40, down by 131.40 points or 0.76% after trading in a range of 17039.90 and 17110.70. There were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were Reliance Industries up by 1.13%, NTPC up by 0.80% and Kotak Mahindra Bank up by 0.42%. On the flip side, Bajaj Finance down by 4.57%, UPL down by 2.06%, Bajaj Finserv down by 2.05%, Hindalco down by 1.89% and Maruti Suzuki down by 1.86% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 365.88 points or 1.37% to 26,334.23, Straits Times lost 3.81 points or 0.11% to 3,318.24, Taiwan Weighted tumbled 277.57 points or 1.67% to 16,367.22, KOSPI fell 34.34 points or 1.29% to 2,633.97 and Jakarta Composite plunged 35.12 points or 0.49% to 7,197.03. On the other hand, Hang Seng added 18.19 points or 0.09% to 19,952.90 and Shanghai Composite was up by 10.98 points or 0.38% to 2,897.41.