Benchmarks continue sluggish trend in morning session

Key equity benchmarks continued their sluggish trend in morning session amid weakness in Asian counters. Traders remained cautious as India Ratings and Research (Ind-Ra) in its latest report 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. Some cautiousness also came as the United Nations said Foreign Direct Investment inflows to India declined $19 billion to $45 billion in 2021 but the country still remained among the top 10 global economies for FDI last year. Market participants overlooked Assocham’s statement that 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, Asian markets are trading mostly in red as investors awaited the release of all-important U.S. inflation data later in the day for clues on whether the Fed will continue its aggressive tightening in the second half of the year.

The BSE Sensex is currently trading at 54627.16, down by 693.12 points or 1.25% after trading in a range of 54531.95 and 54780.78. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.59%, while Small cap index was down by 0.40%.

The lone gaining sectoral index on the BSE was Telecom up by 0.10%, while IT down by 2.04%, TECK down by 1.75%, Metal down by 1.61%, Bankex down by 1.29% and Oil & Gas down by 1.04% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.16%, Titan Company up by 0.65%, Ultratech Cement up by 0.44%, Power Grid Corporation up by 0.24% and Dr. Reddy's Lab up by 0.03%. On the flip side, Wipro down by 3.62%, Bajaj Finance down by 3.21%, Kotak Mahindra Bank down by 2.88%, Tech Mahindra down by 2.83% and HDFC down by 2.55% were the top losers.

Meanwhile, Industry body Assocham President Sumant Sinha has said the Reserve Bank of India’s (RBI) 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. The central bank has raised the repo rate for the second time in five weeks. Earlier, it had raised the short term lending rate by 40 basis points (bps) on May 4.

Assocham President Sumant Sinha said through a clearly well-coordinated approach between the RBI and Finance Ministry, Indian government and monetary policymakers have managed the challenging global environment with foresight and calmness.  Further, he said that inflation, though a concern, is still within relatively manageable limits, especially when compared to many parts of the world. He mentioned ‘It is understandable that there is concern about the rate hikes resulting in higher EMIs, but, in the longer run, the resulting price stability will play a crucial role in supporting rising demand, which is key.’

Sinha said that RBI will have to continue to work closely with the government and other stakeholders such as India Inc. to ensure the robust pace of the economic recovery coming out of the pandemic's third wave is sustained, in a higher interest rate environment. He pointed out the taming of inflation is critical to sustain the economy's robust growth momentum, especially given the continued global challenges including high energy and food costs. He added all in all, the RBI's move is necessary and well-reasoned, given the current macro-economic currents.

The CNX Nifty is currently trading at 16278.90, down by 199.20 points or 1.21% after trading in a range of 16252.40 and 16324.70. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 1.08%, Titan Co up by 0.57%, Eicher Motors up by 0.52%, Tata Consumer Product up by 0.42% and Ultratech Cement up by 0.42%. On the flip side, Wipro down by 3.65%, Bajaj Finance down by 3.21%, Hindalco down by 3.01%, Kotak Mahindra Bank down by 2.83% and Tech Mahindra down by 2.83% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 401.67 points or 1.42% to 27,844.86, Jakarta Composite lost 65.27 points or 0.91% to 7,117.56, Straits Times trembled 27.57 points or 0.86% to 3,182.05, Hang Seng decreased 40.19 points or 0.18% to 21,828.86, KOSPI fell 37.47 points or 1.43% to 2,587.97 and Taiwan Weighted dropped 138.32 points or 0.83% to 16,483.02.

On the flip side, Shanghai Composite gained 18.64 points or 0.58% to 3,257.59.