Weak trade persists on Dalal Street

Indian equity benchmarks remained weak in morning session, tracking dismal cues from the global markets amid a surge in the US headline inflation. Besides, heavy selling in all the sectors along with losses led by major industry losers like Bajaj Finserv, Indusind Bank and Bajaj Finance, kept the markets down. Anxiety remained among traders 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. Investors also remained on sidelines ahead of India’s retail inflation figures for May to be out later in the day. Market participants overlooked Chief Economic Advisor (CEA) Anantha Nageswaran’s statement that 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.

On the global front, Asian markets are trading in red as red-hot US inflation reignited worries about even more aggressive Federal Reserve policy tightening, and Beijing's renewed COVID-19-led lockdowns added to concerns about global growth. Back home, Defence stocks remained in focus with a private report that the Indian Air Force plans to acquire 114 fighter jets of which 96 would be built in India and rest 18 would be imported from a foreign vendor chosen for the project, giving impetus to India’s Make in India initiative.

The BSE Sensex is currently trading at 52805.89, down by 1497.55 points or 2.76% after trading in a range of 52734.98 and 53207.54. There were 1 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 2.29%, while Small cap index was down by 2.54%.

The top losing sectoral indices on the BSE were Bankex down by 3.44%, IT down by 3.14%, Capital Goods down by 2.95%, TECK down by 2.94% and Realty down by 2.90%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Nestle up by 0.19%. On the flip side, Bajaj Finserv down by 5.05%, Indusind Bank down by 4.78%, Bajaj Finance down by 4.61%, ICICI Bank down by 4.59% and Larsen & Toubro down by 3.95% were the top losers.

Meanwhile, Indian Steel Association (ISA) has sought the government's immediate intervention to check coking coal price, which has grown three-fold to around USD 450 a tonne. Alok Sahay, Secretary-General of Indian Steel Association, said coking coal prices is something, which is impacting the industry drastically and the production cost is impacted, affecting the steel prices. He said the price of coking coal used to be in the range of USD 120-130 per tonne around a year back.

He added in March 2022, coking coal prices had peaked at about USD 670 per tonne. He said at the current price range the cost of coking coal alone in steel making is around Rs 28,000 to Rs 30,000 per tonne, which works to about 40-45 per cent of the production cost. Besides, there are other input materials like iron ore, ferroalloys, logistics, fuel costs and other fixed costs.

Further, he noted that when crude oil prices go up, prices of petrol and diesel also go up, impacting the entire supply chain. Similarly, steel prices also rise in line with increasing coking coal rates. Coking coal and iron ore are the two key raw materials used in steel making. While iron ore is domestically available, for coking coal, India needs to remain dependent on imports. The country meets 85 per cent of its coking coal requirement through imports, mainly from Australia.

The CNX Nifty is currently trading at 15773.90, down by 427.90 points or 2.64% after trading in a range of 15749.90 and 15886.15. There were 2 stocks advancing against 48 stocks declining on the index.

The top gainers on Nifty were Nestle up by 0.15% and Cipla up by 0.06%. On the flip side, Bajaj Finserv down by 4.98%, Indusind Bank down by 4.68%, ICICI Bank down by 4.61%, Bajaj Finance down by 4.56% and Hindalco down by 4.15% were the top losers.

All the Asian markets are trading in red; Nikkei 225 slipped 856.67 points or 3.08% to 26,967.62, Jakarta Composite lost 141.25 points or 1.99% to 6,945.40, Shanghai Composite declined 36.32 points or 1.11% to 3,248.51, Straits Times trembled 19.61 points or 0.62% to 3,162.12, Hang Seng decreased 612.23 points or 2.81% to 21,193.95, KOSPI fell 87.13 points or 3.36% to 2,508.74 and Taiwan Weighted dropped 349.78 points or 2.13% to 16,110.34.