Benchmarks continue to trade under pressure in morning deals

Indian equity benchmarks continued to trade under pressure in morning deals, dragged by Consumer Durables, Healthcare and IT stocks. Traders remained cautious with ratings and research firm Acuite Ratings & Research’s report that the expectation of the expansion of the current account deficit is not just driven by elevated global commodity prices, but is also linked to the unlocking of the economy reviving pent-up demand and improved vaccination cover aiding an organic recovery in the economy. Traders overlooked Finance minister Nirmala Sitharaman’s statement that the country's growth will be driven by fiscal spending. She said BRICS should continue to serve as a platform to engage in dialogues and facilitate exchange of experiences, concerns and ideas for rebuilding a sustainable and inclusive growth trajectory.

On the global front, Asian markets are trading mostly in red, as traders remain cautious ahead of this week's key inflation report from the U.S. which will offer cues on the interest rate outlook. Market participants also await a European Central Bank (ECB) policy meeting on Thursday for confirmation whether the central bank will raise rates at the July 21 policy meeting. Back home, infrastructure industry’s stocks remained in watch as Union Road Transport and Highways Minister Nitin Gadkari said his target is to construct 60 kilometres of highway per day. India's national highway construction slowed to 28.64 km a day in 2021-22 due to COVID-19 pandemic related disruptions and a longer-than-usual monsoon in some parts of the country.

The BSE Sensex is currently trading at 55188.05, down by 487.27 points or 0.88% after trading in a range of 55031.83 and 55387.77. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.66%, while Small cap index was down by 0.42%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.81%, Energy up by 1.60%, Utilities up by 0.98%, Power up by 0.93% and PSU up by 0.86%, while Consumer Durables down by 2.40%, Healthcare down by 1.34%, IT down by 1.30%, TECK down by 1.27% and FMCG down by 1.18% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 0.77%, Reliance Industries up by 0.46%, SBI up by 0.35% and Power Grid Corp up by 0.11%. On the flip side, Titan Company down by 4.09%, Dr. Reddy's Lab down by 3.95%, Asian Paints down by 2.59%, Hindustan Unilever down by 2.56% and Ultratech Cement down by 2.06% were the top losers.

Meanwhile, Automobile dealers' body Federation of Automobile Dealers Associations (FADA) has said retail sales of passenger vehicles grew last month of current year (May 2022) but the sales of two-wheeler and commercial vehicles remained low compared to the pre-COVID month of May 2019. It highlighted that overall auto retails stood at 16,46,773 units in May, down from 18,22,900 units in May 2019. FADA President Vinkesh Gulati said May 2022 retails when compared to May 2019 reveal that sales are still not on growth trajectory as overall retails were down by 10 per cent. He stated ‘while PV and tractors continued its positive run... two-wheeler, three-wheeler and CV sales are yet to show any signs of healthy run-rate. While Year-on-Year (Y-o-Y) comparison with May 2021 shows exceptionally healthy growth rate across all categories, it is important to note that both May 2021 and May 2020 were affected by nationwide lockdown due to the COVID pandemic.’ According to him, a better comparison will be with May 2019 which was a normal pre-COVID month.

Last month, the Passenger Vehicle (PV) retail sales stood at 2,63,152 units. This was 11 per cent higher compared to 2,36,215 units sold in May 2019. The retails in COVID-hit May 2021 and May 2020 stood at 86,479 units and 31,951 units, respectively. The PV segment which has already surpassed May 2019 numbers is witnessing huge demand. Dealers are not able to fulfil the same due to supply side issues, he said, adding that this has led to an increase in waiting period ranging from three months to two years. He noted healthy booking and single digit cancellation shows that demand may stay put even when normal supply resumes in months to come. Last month, two-wheeler sales stood at 12,22,994 units. It was at 4,10,871 units in May last year. In May 2019, the two-wheeler retails stood at 14,20,563 units. He said the two wheeler segment has seen slight improvement in overall sales when compared with April this year. It stated while the electric two-wheeler sales were growing rapidly, the fire incidents across almost all brands, has created a fear in the mind of the customer. This coupled with supply chain issues, has decreased two-wheeler EV sales drastically from last month.

The commercial vehicle sales stood at 66,632 units last month, up from 17,607 units in May last year. It, however, remained low as compared to 75,238 units in May 2019. Similarly, three-wheeler sales remained muted last month at 41,508 compared with 51,446 units in May 2019. In May last year, the retail sales stood at 5,215 units. However, tractor sales were up last month at 52,487 units from 39,438 units in May 2019. On the sales outlook, he  said while the Russia-Ukraine war continues to create demand supply mismatch thus delaying the availability of PVs, RBI has warned of more inflation as the increase in wholesale prices will get passed on to the end consumers. This will result in a lower disposable income which will ultimately hamper auto sales. Hence, he noted, FADA continues to remain cautious for any further recovery in auto sales in the near term.

The CNX Nifty is currently trading at 16440.65, down by 128.90 points or 0.78% after trading in a range of 16382.85 and 16487.25. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were ONGC up by 5.36%, Coal India up by 1.82%, BPCL up by 0.96%, NTPC up by 0.81% and Reliance Industries up by 0.41%. On the flip side, Dr. Reddy's Lab down by 4.15%, Titan Company down by 4.14%, Hindustan Unilever down by 2.60%, Asian Paints down by 2.45% and Ultratech Cement down by 2.12% were the top losers.

Asian markets are trading mostly n red; Straits Times trembled 7.10 points or 0.22% to 3,219.53, Hang Seng decreased 25.53 points or 0.12% to 21,628.37, KOSPI fell 35.83 points or 1.34% to 2,634.82 and Taiwan Weighted dropped 92.37 points or 0.56% to 16,513.59.

On the flip side, Nikkei 225 surged 80.14 points or 0.29% to 27,996.03, Jakarta Composite soared 33.64 points or 0.47% to 7,130.22 and Shanghai Composite gained 15.63 points or 0.48% to 3,252.00.