Continuous selling drags markets near day’s low points

Continuous selling dragged Indian equity markets near their day’s low points in late morning session, with both Sensex and Nifty trading in deep red, on the back of negative cues from other Asian markets. Traders got cautious, as a report said that operating profit margins of information technology companies can moderate by up to 1.50 per cent in the near term as wage cost inflation coming on the back of high attrition hits players in the over USD 200 billion industry.

Adding more concerns, a private report stated that India lost almost $1.5 billion in 2020 and $4.9 billion in 2017-20 in revenue by not taxing electronic transmissions. Traders failed to get any sense of relief with reports that Fitch Ratings said it has revised the outlook on India's sovereign rating to Stable from Negative as downside risks to medium-term growth have diminished on rapid economic recovery.

On the global front, Asian markets were trading mostly in red, after consumer prices in China were up 2.1 percent on year in May. That was shy of expectations for 2.2 percent and was unchanged from the April reading. On a monthly basis, inflation was down 0.2 percent versus expectations for a decline of 0.3 percent following the 0.4 percent increase in April.

The BSE Sensex is currently trading at 54482.95, down by 837.33 points or 1.51% after trading in a range of 54455.96 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 was down by 0.88%, while Small cap index was down by 0.72%.

The only gaining sectoral index on the BSE was Telecom up by 0.29%, while Metal down by 1.93%, IT down by 1.91%, TECK down by 1.59%, Bankex down by 1.53% and Oil & Gas down by 1.41% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 0.79%, Ultratech Cement up by 0.43%, Power Grid up by 0.36%, Titan Co up by 0.30% and Maruti Suzuki up by 0.14%. On the flip side, Bajaj Finance down by 3.66%, Wipro down by 3.28%, Kotak Mahindra Bank down by 3.28%, HDFC down by 2.94% and Tata Steel down by 2.63% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said 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. According to an assessment by India Ratings, the Current Account Deficit (CAD) has moderated to $17.3 billion or 1.96 per cent of GDP in the fourth quarter of FY22 as against $8.2 billion or 1.03 per cent in the year-ago period, and massively down from $23.02 billion or 2.74 per cent in Q3, which was a 13-quarter high.

According to the report, the improvement in the key numbers is due to the remarkable improvement in merchandise exports in FY22 when it grew 42.4 per cent against a negative 7.5 per cent in the pandemic-hit FY121. But, it said exports could face significant headwinds from rising uncertainty and volatility in the global economy primarily because of the spike in commodity prices, especially crude oil after Russia invaded Ukraine and pointed to the lower forecast of global growth by the World Trade Organisation (WTO) which sees the global economy clipping at just about 3 per cent in 2022, down from 4.7 per cent forecast earlier.

On the other hand, it said India's merchandise imports are expected to accelerate on the back of escalated commodity prices and rupee depreciation in FY23. It expects merchandise exports to come in at $112.5 billion, growing by 17.7 per cent in the first quarter of FY23, up 85.7 per cent over the same quarter last fiscal. Merchandise imports grew 44.1 per cent during April-May 2022 to $120.9 billion and are expected to stand at $182.9 billion.

The CNX Nifty is currently trading at 16241.45, down by 236.65 points or 1.44% after trading in a range of 16232.90 and 16324.70. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 0.92%, Ultratech Cement up by 0.45%, Power Grid up by 0.42%, Titan Co up by 0.36% and Grasim Industries up by 0.21%. On the flip side, Hindalco down by 3.91%, Bajaj Finance down by 3.64%, Wipro down by 3.35%, Kotak Mahindra Bank down by 3.27% and HDFC down by 2.93% were the top losers.

Asian markets were 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.