Post Session: Quick Review

Indian equity benchmarks ended lower on Wednesday’s trading session. After a positive start, markets soon turned volatile, as the World Bank cut India's economic growth forecast for the current fiscal to 7.5 per cent as rising inflation, supply chain disruptions and geopolitical tensions taper recovery. This is the second time that the World Bank has revised its GDP growth forecast for India in the current fiscal 2022-23 (April 2022 to March 2023). In April, it had trimmed the forecast from 8.7 per cent to 8 per cent.

Despite volatility, markets managed to trade higher in late morning deals, after Reserve Bank of India's (RBI) Monetary Policy Committee has raised Repo Rate by 50 basis points (bps) to 4.90 per cent in its June bi-monthly meeting. Real GDP growth for FY 2022-23 is retained at 7.2%. Adding more relief among traders, the Reserve Bank of India (RBI) in its latest data has showed that Bank credit grew by 11.04 per cent to Rs 120.27 lakh crore and deposits up by 9.27 per cent to Rs 165.74 lakh crore in the fortnight ended May 20, 2022.

However, in the second half of the trading session, key indices turned red as RBI Governor Shaktikanta Das said the Ukraine-Russia war has led to globalisation of inflation and is posing new challenges, as the central bank upped the inflation projection to 6.7 per cent for current fiscal year. In April, RBI had projected retail inflation at 5.7 per cent for 2022-23. Traders failed to take support with Chief Economic Advisor (CEA) Anantha Nageswaran’s statement that the impact of structural reforms, like GST and IBC, will help boost India's growth once the cloud of the pandemic and geopolitical conflict recedes.

On the global front, European markets were trading lower as investors prepare for the latest reading of U.S. inflation on Friday. Asian markets settled mostly higher on Wednesday, after a measure of the public assessment of the Japanese economy advanced in May. The survey data from the Cabinet Office showed that the current conditions index of the Economy Watchers' Survey, which measures the present situation of the economy, rose to 54.0 in May from 50.4 in April.

Back home, on the sectoral front, coal sector remained in focus, after Moody's Investors Service has said that large coal-importing nations, including India, will look to ramp up the output of domestic coal to strengthen energy security and lessen dependence on the import of fossil fuels. The government has recently mandated Coal India (CIL) to import coal as an emergency measure to avoid a shortage of coal for the country's power utilities and build up buffer stock.

The BSE Sensex ended at 54892.49, down by 214.85 points or 0.39% after trading in a range of 54683.30 and 55423.97. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.15%, while Small cap index down by 0.33%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.88%, Metal up by 0.52%, PSU up by 0.45%, IT up by 0.20% and Healthcare up by 0.11%, while Telecom down by 1.62%, FMCG down by 0.95%, Energy down by 0.87%, Oil & Gas down by 0.69% and Industrials down by 0.49% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 1.70%, SBI up by 1.66%, Dr. Reddy's Lab up by 1.52%, Bajaj Finance up by 1.25% and TCS up by 1.22%. On the flip side, Bharti Airtel down by 3.31%, ITC down by 2.03%, Reliance Industries down by 1.74%, Asian Paints down by 1.44% and Axis Bank down by 1.03% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points (bps) to 4.90 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.65 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.15 per cent.

The RBI’s Monetary Policy Committee (MPC) also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the inflation front, inflation is now projected at 6.7 per cent in 2022-23, with Q1 at 7.5 per cent; Q2 at 7.4 per cent; Q3 at 6.2 per cent; and Q4 at 5.8 per cent, with risks evenly balanced, while the real GDP growth projection for 2022-23 is retained at 7.2 per cent, with Q1 at 16.2 per cent; Q2 at 6.2 per cent; Q3 at 4.1 per cent; and Q4 at 4.0 per cent, with risks broadly balanced.

The CNX Nifty ended at 16356.25, down by 60.10 points or 0.37% after trading in a range of 16293.35 and 16514.30. There were 22 stocks advancing against 28 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 1.71%, SBI up by 1.70%, Titan Co up by 1.34%, Dr. Reddy's Lab up by 1.33% and Bajaj Finance up by 1.29%. On the flip side, Bharti Airtel down by 3.21%, ITC down by 2.19%, Reliance Industries down by 1.76%, UPL down by 1.48% and Asian Paints down by 1.44% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 decreased 5.26 points or 0.07% to 7,593.67, France’s CAC decreased 15.57 points or 0.24% to 6,484.78 and Germany’s DAX was down by 42.27 points or 0.29% to 14,514.35.

Asian markets settled mostly higher on Wednesday, despite growing fears that aggressive central bank policy tightening would dent global growth. The US Federal Reserve is expected to hike its benchmark interest rates by 50 basis points next week and again in July, while the European Central Bank is expected to lay the groundwork for an interest rate rise next month. Japanese shares gained tracking gains in Wall Street overnight, with technology heavyweights leading the climb. However, Seoul shares end marginally down after Q1 GDP growth was revised slightly down to 0.6 percent.