Domestic markets trade deeply in red in early deals; Sensex tumbles over 700 points

Indian equity benchmarks after a day’s halt once again continued their bearish trend with gap-down opening on Friday mirroring weak global cues. Domestic indices are trading deeply in red with cut of over a percent each in early deals due to board based selling in all the sector indices led by Metal, IT and TECK. Traders were concerned as External Affairs Minister S Jaishankar said the Russia-Ukraine war has thrown up a crisis of fuel, food and fertiliser that will lead to hunger situations and have a very significant inflationary impact. Adding more pessimism, India Ratings stated that the country’s current account deficit is likely to hit a three-year high of 1.8 per cent or $43.81 billion in FY22, as against a surplus of 0.9 per cent or $23.91 billion in FY21. Elevated crude oil prices and persistent capital outflows also weighted down on the domestic sentiments. Foreign Institutional Investors (FII) continued to be net sellers of domestic equities, pulling out Rs 1,512 crore from stocks on Thursday. Meanwhile, industry body Assocham said the Reserve Bank's decision to raise the benchmark lending rate by 50 basis points to 4.9 per cent will help the Indian economy in the medium term.

On the global front, most of the Asian markets are trading lower following the broadly negative cues from the global markets overnight, amid rising concerns about inflation, potential interest rate hikes and slowing economic growth. Investors also looked ahead to the crucial inflation data from the U.S. due later in the day. Back home, Indian Tea Exporters Association Chairman Anshuman Kanoria said buoyed by the encouraging demand scenario in overseas markets, Indian tea exporters are hoping to ship out 220-225 million kg in 2022, and are keen on filling up the vacuum left by crisis-hit Sri Lanka. In stock specific developments, Bajaj Auto rose amid reports of share buyback. HFCL rallied on winning new orders worth Rs 73.39 crore.

The BSE Sensex is currently trading at 54608.96, down by 711.32 points or 1.29% after trading in a range of 54551.81 and 54780.78. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.96%, while Small cap index was down by 0.66%.

The top losing sectoral indices on the BSE were Metal down by 1.99%, IT down by 1.98%, TECK down by 1.72%, Bankex down by 1.33%, Oil & Gas down by 1.24%, while there was no gainer on BSE sectoral front.

The top gainers on the Sensex were Maruti Suzuki up by 0.31%, Dr. Reddy's Lab up by 0.30%, Titan Company up by 0.14% and Power Grid up by 0.09%. On the flip side, Wipro down by 3.56%, Bajaj Finance down by 3.15%, Tata Steel down by 2.90%, Tech Mahindra down by 2.60% and Kotak Mahindra Bank down by 2.58% were the top losers.

Meanwhile, expressing optimism over government’s tax collection, Revenue Secretary Tarun Bajaj has said tax revenue collections in ongoing fiscal year (FY23) are expected to be far better than the budget estimates. Last fiscal year, indirect taxes grew at 20 per cent and direct taxes at 49 per cent. The tax-to-GDP ratio in 2021-22 jumped to 11.7 per cent - the highest since 1999. In 2020-21, the ratio was 10.3 per cent. The country’s tax collections soared to a record high of Rs 27.07 lakh crore last year, compared to budget estimate of Rs 22.17 lakh crore.

Bajaj said the government was able to collect Rs 5 lakh crore more in taxes than what was anticipated in the budget estimates for 2021-22. He said ‘while we are starting the new financial year and are in the month of June, I would need another one month to be sure as to how we are going ahead with the revenue figures’. ‘But whatever indicators I have at the moment, I feel very optimistic, and think this year again, we will be able to do far better than we thought initially when we were making the budget as to how we will do’. He added that this is in spite of the fact that there have been some concessions on the customs duty, more so on the excise duty on the indirect taxes.

On the Goods and Services Tax (GST) front, he said there has been a healthy growth of revenues. He said ‘I am very hopeful that in the current year, the average revenues would be close to between Rs 1.40-1.50 lakh crore for the year as a whole as far as GST is concerned’. He noted that even on the direct taxes front, the initial indicators are good and there should be a healthy growth of tax revenues out there also.

On the economy, he said currently, the country is facing some challenges on inflation, rising current account deficit, fiscal deficit and currency valuation. He said ‘I think at this point of time, in our desire to control inflation both RBI and the government have taken a few steps and I hope these steps will bear fruit, and we will be able to see stability in our macro indicators in the times to come’.

The CNX Nifty is currently trading at 16282.65, down by 195.45 points or 1.19% after trading in a range of 16257.80 and 16324.70. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Tata Consumer Products up by 1.68%, Dr. Reddy's Lab up by 0.46%, Titan Company up by 0.33%, Maruti Suzuki up by 0.32% and Power Grid up by 0.07%. On the flip side, Wipro down by 3.41%, Bajaj Finance down by 3.30%, Hindalco down by 2.81%, Tata Steel down by 2.76% and Kotak Mahindra Bank down by 2.62% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 plunged 387.04 points or 1.37% to 27,859.49, Straits Times fell 32.49 points or 1.01% to 3,177.13, Hang Seng inched down by 26.17 points or 0.12% to 21,842.88, Taiwan Weighted declined 120.08 points or 0.72% to 16,501.26, KOSPI lost 32.64 points or 1.24% to 2,592.80 and Jakarta Composite slipped 71.86 points or 1.00% to 7,110.97, while Shanghai Composite was up by 18.64 points or 0.58% to 3,257.59.