Domestic indices trade lower in early deals

Indian equity benchmarks made negative start on Monday tracking weakness in Asian peers. Markets are trading lower with losses of around half a percent each in early deals due to profit booking after three sessions of continued gains. Some cautiousness came in with a private report stating that India's headline retail inflation rate is expected to be 7 percent in June, largely unchanged from 7.04 percent in May, with a sharp pick-up in vegetable prices likely nullifying the impact of the decline in prices of other food items. More pessimism came in as foreign investors continued to desert Indian equity markets and have pulled out over Rs 4,000 crore this month so far amid steady appreciation of the dollar and rising interest rates in the US. Though, downside remained capped as RBI Governor Shaktikanta Das exuded confidence that the price situation will gradually improve in the second half of the current fiscal, and the central bank would continue to take monetary measures to anchor inflation with a view to achieving strong and sustainable growth.

Most of the Asian markets are trading lower, following the mixed cues from Wall Street on Friday, as the dollar strengthened to its highest level in two years and China edged towards potential lockdowns after a surge in COVID-19 cases, which ignited concerns about slowing growth. Besides, the value of core machine orders in Japan was down a seasonally adjusted 5.6 percent on month in May, the Cabinet Office said on Monday - coming in at 908.8 billion yen. Meanwhile, market in Singapore is closed for Eid-ul-Adha holiday.

Back home, sugar industry stocks were in focus as the government said India has extended by two weeks a deadline for the export of 800,000 tonnes of sugar as annual monsoon rains make it tough for many producers to move stocks from factories to ports. In stock specific movements, Tata Consultancy Services (TCS) fell after it reported 185 basis points (bps) sequential decline in earnings before interest and tax (EBIT) EBIT margins to 23.1 per cent for the quarter ended June 2022 (Q1FY23). However, Avenue Supermarts rose after it reported an over 6-fold jump in its consolidated net profit to Rs 642.89 crore in Q1FY23.

The BSE Sensex is currently trading at 54214.10, down by 267.74 points or 0.49% after trading in a range of 54090.53 and 54278.77. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.33%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Power up by 2.68%, Utilities up by 2.58%, Auto up by 0.71%, Consumer Durables up by 0.64%, PSU up by 0.59%, while TECK down by 2.73%, IT down by 2.58%, Telecom down by 0.22%, Healthcare down by 0.12%, Capital Goods down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.51%, NTPC up by 2.13%, Titan Company up by 1.12%, ICICI Bank up by 0.93% and ITC up by 0.90%. On the flip side, Bharti Airtel down by 4.37%, TCS down by 3.95%, HCL Technologies down by 2.62%, Infosys down by 2.25% and Wipro down by 2.19% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) Governor Shaktikanta Das has exuded confidence that the price situation will gradually improve in the second half of the current fiscal, and said that the central bank would continue to take monetary measures to anchor inflation with a view to achieving strong and sustainable growth. He added that inflation is a measure of the trust and confidence that the public reposes in the economic institutions of the country. He said ‘overall, at this point of time, with the supply outlook appearing favourable and several high frequency indicators pointing to resilience of the recovery in the first quarter (April-June) of 2022-23, our current assessment is that inflation may ease gradually in the second half of 2022-23, precluding the chances of a hard landing in India’.

Noting that price stability is key to maintaining macroeconomic and financial stability, he said the central bank will undertake measures for preserving and fostering macroeconomic stability. He also said ‘while factors beyond our control may affect inflation in the short run, its trajectory over the medium-term is determined by monetary policy. Therefore, monetary policy must take timely actions to anchor inflation and inflation expectations so as to place the economy on a strong and sustainable growth pedestal. We will continue to calibrate our policies with the overarching goal of preserving and fostering macroeconomic stability.’

Das noted that the Monetary Policy Committee (MPC) in its April and June meetings revised the projection of inflation for 2022-23 in two stages to 6.7 per cent, taking stock of the evolving developments and with inflation pressures getting generalised. He said about three-fourths of the revision in June was on account of geopolitical spillovers to food prices, and added that the MPC also decided to increase the policy repo rate by 40 bps and 50 bps in May and June, respectively. This was on top of the 40 basis points (bps) effective rate hike through the introduction of the Standing Deposit Facility (SDF) at 3.75 per cent. During this period (April to June 2022), the MPC also changed its stance to withdrawal of accommodation.

The CNX Nifty is currently trading at 16146.10, down by 74.50 points or 0.46% after trading in a range of 16115.50 and 16167.05. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 2.61%, NTPC up by 1.84%, ONGC up by 1.81%, Coal India up by 1.61% and Eicher Motors up by 1.30%. On the flip side, TCS down by 4.37%, Bharti Airtel down by 4.29%, HCL Technologies down by 2.62%, Infosys down by 2.50% and Tech Mahindra down by 2.48% were the top losers.

Asian markets are trading mostly in red; Hang Seng slipped 608.92 points or 2.80% to 21,116.86, Taiwan Weighted lost 88.37 points or 0.61% to 14,376.16, KOSPI fell 6.15 points or 0.26% to 2,344.46, Jakarta Composite declined 18.51 points or 0.27% to 6,721.71 and Shanghai Composite was down by 48.85 points or 1.46% to 3,307.23. On the other hand, Nikkei 225 rose 303.46 points or 1.14% to 26,820.65.