Benchmarks end at day’s low

Indian benchmark indices halted a two-day rally and ended the Wednesday’s session on negative note, with Sensex and Nifty breaching their crucial psychological 51,900 and 15,450 levels, respectively. Markets traded in red since the beginning, on the back of heavy selling pressure coupled with weak Asian cues. The market participants remained worried with 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. Unabated foreign fund outflows also played spoilsport for the markets. As per exchange data, foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold shares worth Rs 2,701.21 crore on Tuesday.

Further, in the late afternoon deals, the markets extended their fall to close near day’s low point, as sentiments on the street weakened further after the CBDT said that the Income Tax department has detected unaccounted income of over Rs 100 crore after it recently raided a diversified business group engaged in the export of handicraft and real estate among others. Some pessimism also came after private report stated that oil prices rose $2 per barrel on June 21, 2022 on high summer fuel demand while supplies remain tight because of sanctions on Russian oil after its invasion of Ukraine. The street overlooked Minister for commerce and industry and textiles -- Piyush Goyal expressed hope that the free trade agreement (FTA) between India and the United Kingdom will be concluded by Diwali. Total trade between India and the UK stood at $16 billion in FY22 (Apr-Feb).

On the global front, European markets were trading lower, as risk-off sentiment prevailed ahead of speeches by a couple of European Central Bank policy-makers and U.S. Federal Reserve Chair Jerome Powell later in the day. Surging U.K. inflation also revived fears about aggressive monetary tightening and slowing growth. U.K. consumer price inflation rose further in May at the fastest pace in 40 years on rising energy and food prices, deepening the cost of living crisis. Asian markets settled mostly down on Wednesday, as inflation and interest-rate concerns took center stage ahead of congressional testimony by Federal Reserve Chair Jerome Powell. Investors looked for further clues about whether there would be another 75-basis-point (bps) rate hike at the Fed's next meeting in July.

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. Power industry stocks were in watch as Crisil Ratings in its latest report has said that new equated monthly instalment scheme introduced by power ministry can help electricity distribution companies (discoms) save a quarter of their additional payouts and clear around Rs 20,000 crore payments to generation firms (gencos) this fiscal (FY23).

Finally, the BSE Sensex fell 709.54 points or 1.35% to 51,822.53 and the CNX Nifty was down by 225.50 points or 1.44% to 15,413.30.

The BSE Sensex touched high and low of 52,272.85 and 51,739.98, respectively. There were 4 stock advancing against 26 stocks declining on the index.  

The broader indices ended in red; the BSE Mid cap index fell 1.53%, while Small cap index was down by 1.11%.

The top losing sectoral indices on the BSE were Metal down by 4.96%, Basic Materials down by 2.67%, Realty down by 2.24%, Energy down by 2.24% and Power down by 2.11%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were TCS up by 0.31%, Hindustan Unilever up by 0.18%, Power Grid Corporation up by 0.05% and Maruti Suzuki up by 0.01%. On the flip side, Tata Steel down by 5.24%, Wipro down by 3.29%, Reliance Industries down by 3.07%, Indusind Bank down by 2.67% and HCL Technologies down by 2.61% 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 traded in a range of 15,565.40 and 15,385.95. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were BPCL up by 1.26%, Hero MotoCorp up by 0.87%, Divi's Laboratories up by 0.43%, TCS up by 0.42% and Power Grid Corporation up by 0.12%. On the flip side, UPL down by 6.30%, Hindalco down by 5.90%, Tata Steel down by 5.42%, JSW Steel down by 4.30% and ONGC down by 3.24% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 107.73 points or 1.51% to 7,044.32, France’s CAC decreased 109.71 points or 1.84% to 5,854.95 and Germany’s DAX decreased 273.18 points or 2.06% to 13,019.22.

Asian markets settled mostly down on Wednesday as markets shrugged off overnight gains on Wall Street and ahead of congressional testimony by US Federal Reserve Chair Jerome Powell. Investors looked for further clues about whether another 75 basis point interest rate hike at the Fed's next meeting in July. Japanese shares ended lower on recession worries, while the yen hit a fresh 24-year low against the dollar on Bank of Japan’s ultra-loose monetary policy. Meanwhile, Chinese healthcare-related stocks declined in Hong Kong on speculation that authorities are turning to online pharmaceutical platforms as the next focus of regulatory crackdown.