Benchmarks extend opening losses; trade with over 1% cut in early deals

Reversing previous session’s gains, Indian equity benchmarks made gap-down opening on Wednesday mirroring weakness in Asian peers. Markets fell sharply and extended their losses in early deals to trade with over a percent cut each. Selling in all the sector indices, led by Metal, Oil & Gas and Basic Materials, dragged the markets down. Continued foreign fund outflows also dampened the sentiments in domestic markets. Foreign institutional investors (FIIs) sold shares worth Rs 2,701 crore on June 21. FIIs have so far this year sold shares worth Rs 2,07,195 crore, data from NSDL showed. Adding more pessimism, RBI data showed that operating profit growth of listed private companies decelerated across broad sectors in the January-March quarter of 2021-22, on the back of rise in expenditure. Operating profit of manufacturing companies decelerated sharply to 7 per cent in the fourth quarter of last fiscal as against 70 per cent in the corresponding quarter of the preceding fiscal.

On the global front, all the Asian markets are trading lower despite the broadly positive cues overnight from global markets, as traders remain cautious ahead of the US Fed Chair Jerome Powell's key testimony before the Congress later in the day. Back home, the construction companies stocks were in focus as ICRA said the domestic metro rail projects will provide business opportunities worth Rs 80,000 crore for construction companies over the next five years. In stock specific movement, Jain Irrigation Systems surged amid reports that it is planning to merge its international irrigation business (worth Rs 4200 crore) with Rivulis, which is a part of Singapore's Temasek Group, to create a global irrigation and climate major and reduce the company's debt.

The BSE Sensex is currently trading at 51967.69, down by 564.38 points or 1.07% after trading in a range of 51912.94 and 52272.85. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index skidded 1.11%, while Small cap index was down by 0.77%.

The top losing sectoral indices on the BSE were Metal down by 3.50%, Oil & Gas down by 2.44%, Basic Materials down by 2.03%, Energy down by 1.99%, Utilities down by 1.82%, while there was no gainer on the BSE sectoral front.

The only gainers on the Sensex were Maruti Suzuki up by 0.50% and Hindustan Unilever up by 0.03%. On the flip side, Tata Steel down by 3.40%, Bajaj Finserv down by 2.56%, Bajaj Finance down by 2.38%, Tech Mahindra down by 2.37% and Indusind Bank down by 2.29% were the top losers.

Meanwhile, with rise in expenditure, the Reserve Bank of India (RBI) in its latest data has showed that operating profit growth of listed private companies decelerated across broad sectors in the January-March quarter of 2021-22 (Q4FY22). Operating profit of manufacturing companies decelerated sharply to 7 per cent in the fourth quarter of last fiscal as against 70 per cent in the corresponding quarter of the preceding fiscal. The RBI has released its data on the performance of the private corporate sector during the fourth quarter (Q4) of 2021-22 drawn from abridged quarterly financial results of 2,758 listed Non-Government Non-Financial (NGNF) companies.

The report said in case of companies in services sector (non-IT), the growth in operating profit slowed to 6.1 per cent in the fourth quarter of 2021-22 compared to 62.5 per cent in the year-ago period. The operating profit in case of IT firm slowed to 5.9 per cent from 19.7 per cent. The data further said sales of 2,758 listed private non-financial companies recorded a healthy growth of 22.3 per cent (year-on-year) in fourth quarter of 2021-22, compared to 22.8 per cent in the comparable quarter of previous year. It said ‘aggregate sales of 1,709 listed private manufacturing companies registered a steady growth (y-o-y) of 24.6 per cent in Q4, 2021-22, driven by high sales growth in petroleum, non-ferrous metals, iron and steel, chemicals and textiles industries’.

Information Technology (IT) companies continued their move on growth trajectory with 20.7 per cent growth in sales during fourth quarter of 2021-22. Sales of non-IT services companies expanded by 20.9 per cent (y-o-y) in January-March period 2021-22, led by steady growth in transport, trade, telecom, hotel and restaurant sectors. Despite rising expenditures, manufacturing companies maintained their operating and net profit margins in the fourth quarter of 2021-22 as compared to previous quarter. The RBI said net profit margin remained stable for IT companies, while for non-IT services companies it remained in negative terrain due to losses recorded by telecom and transport companies.

The CNX Nifty is currently trading at 15472.20, down by 166.60 points or 1.07% after trading in a range of 15445.50 and 15565.40. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 1.06%, Hero MotoCorp up by 0.79%, Maruti Suzuki up by 0.72%, Hindustan Unilever up by 0.45% and Britannia Industries up by 0.16%. On the flip side, JSW Steel down by 4.87%, Hindalco down by 4.86%, UPL down by 3.91%, ONGC down by 3.74% and Tata Steel down by 3.57% were the top losers.

All the Asian markets are trading in red; Nikkei 225 fell 35.41 points or 0.13% to 26,210.90, Straits Times lost 12.81 points or 0.41% to 3,104.67, Hang Seng plunged 269.55 points or 1.25% to 21,290.04, Taiwan Weighted declined 320.08 points or 2.04% to 15,408.56, KOSPI slipped 42.28 points or 1.76% to 2,366.65, Jakarta Composite weakened 21.24 points or 0.30% to 7,022.83 and Shanghai Composite was down by 10.77 points or 0.33% to 3,295.95.