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. Sentiments were downbeat, as the United Nations significantly lowered its forecast for global economic growth this year from 4% to 3.1%, saying the war in Ukraine has triggered increasing global food and commodity prices and exacerbated inflationary pressures, upending the fragile recovery from the COVID-19 pandemic. Adding more worries among traders, a private report stated that equity investors became poorer by over Rs 5 lakh crore in early trade on Thursday as domestic benchmark indices tumbled mirroring weak trends in global equities.

On the global front, Asian markets were trading mostly in red, after Japan posted a merchandise trade deficit of 839.2 billion yen in April, the Ministry of Finance said on Thursday. That beat expectations for a shortfall of 1,150 billion yen following the downwardly revised 414.1 billion yen deficit in March (originally a 412.4 billion yen deficit). Exports were up 12.5 percent on year to 8.076 trillion yen, shy of forecasts for an increase of 13.8 percent and slowing from 14.7 percent in the previous month.

The BSE Sensex is currently trading at 53008.12, down by 1200.41 points or 2.21% after trading in a range of 52986.54 and 53356.04. There was 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.42%, while Small cap index was down by 2.02%.

The top losing sectoral indices on the BSE were IT down by 4.00%, Metal down by 3.86%, TECK down by 3.82%, Telecom down by 2.70% and Basic Materials down by 2.60%, while there were no gaining sectoral indices on the BSE.

The only gainer on the Sensex was ITC up by 2.95%. On the flip side, Tech Mahindra down by 4.69%, Indusind Bank down by 4.47%, Infosys down by 4.39%, HCL Tech. down by 4.23% and Wipro down by 4.19% were the top losers.

Meanwhile, Chief Economic Adviser (CEA) V Anantha Nageswaran has said 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. Besides, he said, Indian corporates are in good financial health as they have trimmed their balance sheet.

CEA said ‘so we are entering into this decade and this conflict (Russia-Ukraine) with a much better financial system and a much robust corporate financial health. So that gives us a lot of cushion and the Reserve Bank of India has ample foreign exchange reserves and with its recent monetary policy move, it has also signalled its determination to combat the inflationary pressures.’ India has entered this period with a fairly reasonable comfortable degree of macro economic and policy stability, he said, adding, the government has taken several steps, including raising capital expenditure.

Talking about the fallout of the ongoing war, Nageswaran said prices of commodities especially fuel and some foodgrains, have increased, stoking global inflation. It also led to wheat shortage and as a result many countries are facing rising prices. He said ‘while inflation is one aspect of it, food security is another aspect. Thankfully in India we are relatively far more comfortably placed than others. But there are several countries where the availability of food is more important than even the price’.

The CNX Nifty is currently trading at 15874.90, down by 365.40 points or 2.25% after trading in a range of 15868.00 and 15984.75. There were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.02%, Dr. Reddy's Lab up by 0.36% and Eicher Motors up by 0.16%. On the flip side, Tech Mahindra down by 4.78%, Indusind Bank down by 4.61%, JSW Steel down by 4.50%, Infosys down by 4.47% and HCL Tech. down by 4.36% were the top losers.

Asian markets were 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.