Post Session: Quick Review

Friday turned out to be a lackluster day for the Dalal Street, with both Sensex and Nifty ending in deep red. After a negative start, markets remained lower for the entire trading trade, 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.

Bears held a tight grip over the markets till the end of the trading day, 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. 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. Elevated crude oil prices and persistent capital outflows also weighted down on the domestic sentiments.
 
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. Market participants also 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, European markets were trading lower a day after the European Central Bank joined the growing number of central banks to cease easy-money policies. Asian markets settled in red on Friday, 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 ended at 54303.44, down by 1016.84 points or 1.84% after trading in a range of 54205.99 and 54780.78. There were 7 stocks advancing against 22 stocks declining, while 1 stock remained unchanged on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.64%, while Small cap index down by 0.70%. (Provisional)

The only gaining sectoral index on the BSE was Telecom up by 0.12%, while Oil & Gas down by 2.09%, IT down by 2.09%, Energy down by 2.01%, TECK down by 1.87% and Bankex down by 1.81% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Asian Paints up by 0.78%, Ultratech Cement up by 0.52%, Dr. Reddy's Lab up by 0.18%, Hindustan Unilever up by 0.14% and Titan Co up by 0.12%. On the flip side, Kotak Mahindra Bank down by 3.96%, Bajaj Finance down by 3.90%, HDFC down by 3.80%, Reliance Industries down by 3.02% and Wipro down by 2.99% were the top losers. (Provisional)

Meanwhile, keeping the rating unchanged at 'BBB-', credit rating agency, Fitch Ratings in its latest report has revised the outlook on India's sovereign rating to Stable from Negative as downside risks to medium-term growth have diminished due to India's rapid economic recovery and easing financial sector weaknesses, despite near-term headwinds from the global commodity price shock.

The rating agency, however, cut the economic growth forecast to 7.8 percent for the current fiscal (April 2022 to March 2023) from the 8.5 percent prediction it made in March due to the inflationary impact of the global commodity price shock.

Meanwhile, India’s economy grew by 4.1 per cent in the January-March quarter of 2021-22 (Q4FY22), pushing the annual growth rate to 8.7 per cent on account of better performance by manufacturing, mining and construction sectors. In the previous fiscal 2020-21, the economy had contracted by 6.6 per cent as the COVID-19 pandemic disrupted business activities.

The CNX Nifty ended at 16201.80, down by 276.30 points or 1.68% after trading in a range of 16172.60 and 16324.70. There were 16 stocks advancing against 34 stocks declining on the index. (Provisional)

The top gainers on Nifty were Grasim Industries up by 1.33%, Apollo Hospital Ent. up by 0.83%, Asian Paints up by 0.82%, Dr. Reddy's Lab up by 0.66% and Divi's Lab up by 0.59%. On the flip side, Kotak Mahindra Bank down by 3.94%, Bajaj Finance down by 3.92%, HDFC down by 3.78%, Hindalco down by 3.50% and Reliance Industries down by 3.02% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 decreased 78.95 points or 1.06% to 7,397.26, France’s CAC decreased 87.25 points or 1.37% to 6,271.21 and Germany’s DAX was down by 223.79 points or 1.58% to 13,975.01.

Most of the markets in Asia settled in red on Friday, tracking weakness in Wall Street overnight on concerns about slowing global growth and rising interest rates. Renewed Covid-19 lockdown restrictions in Beijing also weighed on market sentiments. Meanwhile, investors are cautiously awaiting for key US consumer inflation data due later in the day that would guide the US Federal Reserve's policy tightening path. Japanese shares declined after hawkish stance from the European Central Bank pushed global bond yields higher. However, Chinese shares gained sharply on hopes of policy loosening, and after inflation data for May came in largely in line with expectations. The Chinese producer price index for May jumped 6.4% as compared with a year earlier, marking the weakest pace since March 2021. Consumer inflation added 2.1%, unchanged from April.