Bourses bounce back in green zone in late afternoon session

Erasing all their initial losses, local bourses bounced back in green zone in late afternoon session ahead of monthly F&O expiry, both Sensex and Nifty were trading above their crucial 54,100 and 16,100 marks, respectively. Traders overlooked report that Moody’s Investors Service slashed India's economic growth projection to 8.8 percent for 2022 from 9.1 percent earlier, citing high inflation. it stated the rise in crude oil, food, and fertilizer prices will weigh on household finances and spending in the months ahead. Rate hike to prevent energy and food inflation from becoming more generalized will slow the demand recovery's momentum. On the global front, Asian markets were trading mostly in red amid worries that tightening global financial conditions will weigh on economic growth. European markets were trading mostly in green as investors reacted favorably to the latest Federal Reserve meeting minutes, indicating large rate hikes now while allowing Fed officials room for flexibility later in the year.

The BSE Sensex is currently trading at 54146.45, up by 397.19 points or 0.74% after trading in a range of 53425.25 and 54247.95. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.75%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Metal up by 2.99%, Bankex up by 1.79%, Basic Materials up by 1.25%, PSU up by 1.05% and IT was up by 1.04%, while Power down by 0.92%, Utilities down by 0.90%, Oil & Gas down by 0.71%, Energy down by 0.53% and FMCG was down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 5.68%, HDFC Bank up by 2.80%, Axis Bank up by 2.59%, SBI up by 2.54% and HDFC up by 2.32%. On the flip side, ITC down by 2.27%, Sun Pharma down by 1.16%, Larsen & Toubro down by 1.15%, Reliance Industries down by 0.92% and Hindustan Unilever down by 0.88% were the top losers.

Meanwhile, few days after the government’s policy decision to impose export duties on certain steel products, credit rating agency, India Rating and Research (Ind-Ra) in its latest report has said that the decision is likely to potentially impact steel players.

As per the report, with the imposition of the 15% export duty, the domestic price discount to international steel prices would be nullified and consequently, some of these sales volumes would be allocated to the domestic market. This would result in lower prices and thus margin compression. Alternatively, steel players may look to limit their output to maintain elevated price levels, which although is unlikely due to the negative impact of operating leverage.

Further, the rating agency said that the revocation of import duties on coking coal (previously 2.5%) would benefit blast furnace produces, although minimally given the high price levels. While most steel players have announced large capex plans due to the significant deleveraging over the past year and a half, they may defer them in view of the export duties, since it could lower capacity utilisations and thus fixed cost absorptions. However, it noted that import duties on iron ore and pellet (around 20% of steel making costs) are likely to provide some relief steel producers, especially for non-integrated producers.

The CNX Nifty is currently trading at 16132.05, up by 106.25 points or 0.66% after trading in a range of 15903.70 and 16164.55. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 5.38%, JSW Steel up by 4.06%, HDFC Bank up by 2.92%, SBI up by 2.83% and Axis Bank up by 2.62%. On the flip side, Divi's Lab down by 2.90%, UPL down by 2.73%, ITC down by 2.33%, Adani Ports down by 2.13% and Sun Pharma down by 1.41% were the top losers.

Asian markets were trading mostly in red, Taiwan Weighted dropped 135.20 points or 0.84% to 15,968.83, Nikkei 225 slipped 72.96 points or 0.27% to 26,604.84, Hang Seng decreased 55.07 points or 0.27% to 20,116.20, Jakarta Composite lost 30.64 points or 0.44% to 6,883.50 and KOSPI was down by 4.77 points or 0.18% to 2,612.45. On the flip side, Shanghai Composite gained 15.65 points or 0.5% to 3,123.11 and Straits Times was up by 28.65 points or 0.9% to 3,208.23.

European markets were trading mostly in green, France’s CAC increased 19.63 points or 0.31% to 6,318.27 and Germany’s DAX was up by 44.28 points or 0.32% to 14,052.21. On the flip side, UK’s FTSE 100 was down by 3.81 points or 0.05% to 7,518.94.