Bears hold tight grip over Dalal Street

Bears were holding a tight grip over the Dalal Street in late morning session, with both Sensex and Nifty trading in deep red, on the back of negative cues from other Asian markets. Domestic sentiments were pessimistic, amid a private report stating that India Inc stares at a further decline in operating margins and profitability in the coming quarters owing to the twin blows of a depreciation in the value of the rupee against major currencies and a rise in interest rates after a surprise intervention by the Reserve Bank of India (RBI) last week. Adding more worries, another private report stated that with inflation remaining at elevated levels, central banks around the world, including the Reserve Bank of India (RBI), will kill excess demand in economy over the next six to eight months.

On the global front, Asian markets were trading mostly in red, even after Japan posted a current account surplus of 2,549.3 billion yen in March, the Ministry of Finance said on Thursday - up 2.8 percent on year. That beat forecasts for a surplus of 1,752.3 billion yen and was up from 1,648.3 billion yen in February. Exports were up 15.7 percent on year to 8,456.1 billion yen and imports surged 36.6 percent to 8,622.1 billion yen for a trade deficit of 166.1 billion yen.

The BSE Sensex is currently trading at 53067.39, down by 1021.00 points or 1.89% after trading in a range of 52994.75 and 53632.55. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.90%, while Small cap index was down by 1.61%.

The top losing sectoral indices on the BSE were Metal down by 3.16%, Power down by 2.93%, Utilities down by 2.83%, Bankex down by 2.68% and Consumer Durables down by 2.61%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were HCL Tech up by 0.54%, TCS up by 0.31% and Asian Paints up by 0.19%. On the flip side, Indusind Bank down by 5.36%, Bajaj Finance down by 3.56%, Tata Steel down by 3.43%, SBI down by 3.31% and Axis Bank down by 3.15% were the top losers.

Meanwhile, Credit rating agency CRISIL in its latest report has said that the capital expenditure of tyre makers is expected to increase to around Rs 5,000 crore this fiscal (FY23) as against around Rs 3,700 crore annually in the preceding two fiscals on the back of improving demand. It said the demand is likely to be driven by segments such as replacement, commercial, and passenger vehicles (CVs and PVs), along with exports, and added that credit profiles of tire makers are expected to remain ‘stable’.

However, the report said with capacity utilization still below 70-75 percent, Capex this fiscal will be lower than the annual average of around Rs 6,200 crore between 2018 and 2020. It said the moderation will be on account of growth last fiscal benefiting disproportionately from the low-base effect created by the preceding two fiscals, when volume had contracted due to economic slowdown and the COVID-19 pandemic. It noted that demand from the replacement market is expected to normalize to around 4 percent this fiscal from around 12 percent last fiscal. Original equipment manufacturer (OEM) demand should grow around 12 percent, driven by CVs owing to higher government spending on infrastructure and improving fleet utilization.

The report stated that OEM demand from PVs should be healthy given the rise in personal incomes and strong consumer preference for personal mobility. However, demand from the two-wheeler and tractor OEM segments will continue to be modest. According to CRISIL, exports are seen growing at 13-15 percent on a high base of over 45 percent growth last fiscal, owing to factors such as cost-competitiveness, benefits of the China+1 strategy of global OEMs, and buoyant demand for off-road tires in the US and Europe.

The CNX Nifty is currently trading at 15848.05, down by 319.05 points or 1.97% after trading in a range of 15824.40 and 16041.95. There were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were HCL Tech. up by 0.57%, TCS up by 0.40% and Asian Paints up by 0.31%. On the flip side, Hindalco down by 5.60%, Indusind Bank down by 5.55%, Adani Ports & SEZ down by 5.38%, Tata Motors down by 4.11% and Bajaj Finance down by 3.56% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 394.37 points or 1.5% to 25,819.27, Taiwan Weighted dropped 274.78 points or 1.72% to 15,731.47, Hang Seng decreased 208.80 points or 1.05% to 19,615.77, Jakarta Composite lost 144.68 points or 2.12% to 6,671.52, KOSPI fell 27.17 points or 1.05% to 2,565.10 and Straits Times trembled 24.24 points or 0.75% to 3,201.83. On the flip side, Shanghai Composite gained 5.08 points or 0.17% to 3,063.78.