Weak trade persist in morning session

Indian equity benchmarks continued their weak trade in morning session on account of selling in frontline blue chip counters taking cues from global counterparts. Persistent foreign fund outflows and a spurt in crude oil prices also dampened sentiment. Traders remained concerned as India Ratings and Research said the average headline inflation is set to accelerate to a nine-year high at 6.9 per cent in FY23, and the Reserve Bank may go for more rate hikes during the fiscal. It added that the RBI will hike rates by another 75 basis points and possibly up to 125 basis points (1.25 percentage point) as well if the turn of events and data are very adverse. Traders overlooked Chief Economic Adviser (CEA) V Anantha Nageswaran’s statement that amid global uncertainties caused by the ongoing Russia-Ukraine war, India is still better placed among the large economies because of an improved financial system and a robust corporate health. He said India has already taken a host of reforms in banking and other sectors and is now focussing on stepping up public investment.

On the global front, Asian markets are trading mostly in red following the broadly negative cues from Wall Street, as investors fretted over rising global inflation, China's zero-COVID policy and the Ukraine war, while the safe-haven dollar held most of its strong overnight gains. Back home, telecom industry stocks remained in watch with a private report that telecom gear makers say that if all goes well, they are ready to roll out the first phase of 5G services from October this year and cover the country’s top 30-50 cities (in limited areas) by March 2023.

The BSE Sensex is currently trading at 53192.55, down by 1015.98 points or 1.87% after trading in a range of 53053.75 and 53356.04. There were 1 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.91%, while Small cap index was down by 1.72%.

The top losing sectoral indices on the BSE were IT down by 3.61%, TECK down by 3.47%, Metal down by 2.94%, Telecom down by 2.33% and Power down by 2.16%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were ITC up by 2.89%. On the flip side, Tech Mahindra down by 4.16%, Infosys down by 3.82%, HCL Technologies down by 3.79%, Wipro down by 3.71% and TCS down by 3.42% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has said the average headline inflation is set to accelerate to a nine-year high at 6.9 per cent in current fiscal (FY23), and the Reserve Bank of India (RBI) may go for more rate hikes during the fiscal. It stated the RBI will hike rates by another 75 basis points and possibly up to 125 basis points (1.25 percentage point) as well if the turn of events and data are very adverse.

It mentioned the first rate increase by the RBI could be of the order of 0.50 per cent in the June 2022 policy and another 0.25 per cent in the October 2022 policy. The cash reserve ratio could also be hiked by another 0.50 per cent to 5 per cent by the end of the fiscal. Further, it said that retail inflation averaged 4.1 per cent between FY16-FY19 crossed the 6 per cent tolerance number for the first time in December 2019, just at the cusp of the COVID-19 pandemic. Despite the collapse of demand in the pandemic, the monthly retail inflation mostly remained in excess of 6.0 per cent till November 2020 because of supply-side disruption. Thereafter, the monthly retail inflation till December 2021 had mostly remained below 6 per cent but again breached the mark in January 2022, and continued being higher till April.

Besides, referring to RBI Governor Shaktikanta Das' oft-repeated phrase of the ongoing geopolitical events being a tectonic shift, it said this means that the future inflation trajectory is going to be heavily contingent upon the evolving geopolitical situation which is in a flux. It also said that the rupee also remains under pressure as a result of the fund outflows as rates tighten globally, and imports keep rising due to hardening of oil prices. The rupee will depreciate by nearly 5 per cent and average at Rs 78.19 against the dollar in FY23.

The CNX Nifty is currently trading at 15940.45, down by 299.85 points or 1.85% after trading in a range of 15903.80 and 15984.75. There were 2 stocks advancing against 48 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.07% and Eicher Motors up by 0.75%. On the flip side, Tech Mahindra down by 4.00%, HCL Technologies down by 3.72%, Infosys down by 3.71%, Wipro down by 3.66% and Indusind Bank down by 3.33% were the top losers.

Asian markets are trading mostly in red; Shanghai Composite declined 2.59 points or 0.08% to 3,083.39, Straits Times trembled 11.18 points or 0.35% to 3,214.17, KOSPI fell 29.63 points or 1.13% to 2,596.35, Taiwan Weighted dropped 300.80 points or 1.85% to 15,996.06, Nikkei 225 slipped 463.20 points or 1.72% to 26,448.00 and Hang Seng decreased 464.98 points or 2.25% to 20,179.30.

On the flip side, Jakarta Composite soared 23.59 points or 0.35% to 6,817.00.