Markets crash in early deals ahead of inflation data; Sensex breaches 53K mark

Indian equity benchmarks extended their previous session’s losses with gap-down opening on Monday ahead of inflation data to be out later in the day amid weak global cues. Markets witnessed bloodbath in early deals and are trading lower with deep cut of over two and half a percent each due to board based selling. Persistent selling by foreign portfolio investors (FPIs) dampened investors’ sentiment. FPIs have been net sellers for eight consecutive month, offloading Rs 13,888 crore worth of equities so far in June. With this, the FPIs have sold Rs 1,81,043 worth of equities so far this year. Some cautiousness came in as RBI data showed that after rising for two consecutive weeks, the country’s foreign exchange reserves declined by $306 million to $601.057 billion in the week ended June 3. Besides, the rupee fell to a new record low of 78.15 against the greenback. Market participants largely overlooked report that the National Statistical Office said India’s factory output growth accelerated to an eight-month high at 7.1 per cent in April on the back of a lower base.

Sell-off in the global markets weighted on the domestic indices with all the Asian markets trading in red following the broadly negative cues from Wall Street on Friday, as data showing a bigger than expected surge in U.S. inflation in May raised concerns about growth and the outlook for interest rates to trigger a sell-off in the markets. The imposition of fresh lockdown measures in several parts of Shanghai also weighed on sentiment. Back home, power stocks were in focus as Power Minister RK Singh said India's power demand this year has jumped by a record 40,000-45,000 MW per day as an intense heat wave sweeps through northern parts of the country, the economy expands, and electricity reaches millions of unelectrified homes.

The BSE Sensex is currently trading at 52837.33, down by 1466.11 points or 2.70% after trading in a range of 52791.44 and 53207.54. All the 30 stocks were declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 2.39%, while Small cap index was down by 2.51%.

The top losing sectoral indices on the BSE were Bankex down by 3.24%, Realty down by 3.03%, Capital Goods down by 2.95%, IT down by 2.92%, Industrials down by 2.87%, while there was no gainer on the BSE sectoral front.

The top losers on the Sensex were Bajaj Finserv down by 4.60%, Bajaj Finance down by 4.05%, ICICI Bank down by 4.01%, Larsen & Toubro down by 3.88% and SBI down by 3.71%.

Meanwhile, Chief Economic Advisor (CEA) Anantha Nageswaran said India has shown exemplary resilience in recovery from the COVID-19 pandemic crisis. He added all major activities and parameters of the economy have crossed their pre-COVID levels, and it is now enjoying macroeconomic tailwinds.

Nageswaran said quick and precise steps have been taken by the government at the policy level, which was supported by the Reserve Bank of India’s timely interventions. He said compared to developing and developed countries, the Indian economy is firm and stable in terms of various fundamentals. He also said ‘the developed world is moving from low inflation to high inflation and it is in such times that we have managed to keep inflationary pressure under check’.

The CEA said he is hopeful that as per the projections of the International Monetary Fund, India is heading towards achieving a GDP size of $5 trillion by 2027. He added ‘today, we have a strong revival of private investment, and the country has comfortable forex reserves to withstand turbulence in the international currency market. The exponential growth of digital payments in India during the last few years is an indication enough of fast changes in the informal sector.’

The CNX Nifty is currently trading at 15785.35, down by 416.45 points or 2.57% after trading in a range of 15768.45 and 15886.15. There were 1 stock advancing against 49 stocks declining on the index.

The only gainer on Nifty was Cipla up by 0.43%, while Bajaj Finserv down by 4.65%, Hindalco down by 4.23%, ICICI Bank down by 3.99%, Bajaj Finance down by 3.94% and Tata Motors down by 3.81% were the top losers.

All the Asian markets are trading in red; Nikkei 225 slipped 783.59 points or 2.82% to 27,040.70, Straits Times declined 17.96 points or 0.56% to 3,163.77, Hang Seng plunged 593.84 points or 2.72% to 21,212.34, Taiwan Weighted lost 395.58 points or 2.40% to 16,064.54, KOSPI fell 79.23 points or 3.05% to 2,516.64, Jakarta Composite dropped 154.98 points or 2.19% to 6,931.67 and Shanghai Composite was down by 36.32 points or 1.11% to 3,248.51.