Weak trade continues over Dalal Street in late morning session

Weak trade continued over the Dalal Street in late morning session, with both Sensex and Nifty trading in deep red, on the back of negative cues from other Asian markets. Domestic sentiments remained negative, as the government is not considering extending the last date for filing income tax returns as it expects most returns to come in by the due date of July 31. Revenue Secretary Tarun Bajaj said over 2.3 crore income returns were filed by July 20 for fiscal 2021-22 and the numbers are picking up. Adding more concerns, a private report stated that the consumer IT spending in the Asia-Pacific region, already taking the brunt in the ongoing tight market conditions, is set to further slide in 2023, depending on the severity of the economic slowdown. The risk of recession worldwide has continued to rise amid increasing inflation and the expectation of a tightening monetary policy.

On the global front, Asian markets were trading mostly in red, even after Taiwan's unemployment rate held steady in June after rising in the previous month. The Directorate General of Budget Accounting & Statistics showed that the seasonally adjusted jobless rate came in at 3.73 percent in June, the same rate as in May. In the corresponding month last year, the unemployment rate was 4.76 percent. On an unadjusted basis, the jobless rate increased to 3.74 percent in June from 3.68 percent a month ago.

Back home, sugar industry stocks were in focus, as India's sugar production may fall slightly to 355 lakh tonnes in the 2022-23 marketing year starting October, due to diversion of sugarcane towards ethanol manufacturing.

The BSE Sensex is currently trading at 55684.46, down by 387.77 points or 0.69% after trading in a range of 55537.08 and 56018.09. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.19%, while Small cap index was down by 0.20%.

The top gaining sectoral indices on the BSE were Metal up by 0.86%, Capital Goods up by 0.49%, Utilities up by 0.36%, Power up by 0.23% and Industrials up by 0.22%, while Energy down by 1.42%, Auto down by 1.22%, Oil & Gas down by 0.95%, Realty down by 0.73% and Healthcare down by 0.63% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.39%, Indusind Bank up by 1.25%, Asian Paints up by 1.00%, Bharti Airtel up by 0.80% and Larsen & Toubro up by 0.55%. On the flip side, Reliance Industries down by 3.03%, Ultratech Cement down by 2.89%, Mahindra & Mahindra down by 2.00%, Kotak Mahindra Bank down by 1.94% and Maruti Suzuki down by 1.43% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das said the central bank will ensure that the economy has a soft landing wherein inflation is closer to 4 percent, with minimal impact on growth. He said retail inflation appears to have peaked and the Monetary Policy Committee (MPC) in its upcoming meeting in August will review the inflation projection of 6.7 percent for fiscal 2022-23.

Das said the country had reached a kind of soft landing till the war broke out in Europe. This has resulted in new challenges such as a rise in commodities, and crude prices and their impact on the country; monetary policy tightening by other central banks and their spillovers; capital outflows, and currency depreciation, which are beyond RBI's control.  He also said any decision of RBI about liquidity and policy rates always takes into consideration the kind of impact it is going to have on growth and revival of economic activity. However, in a sequence of priorities, he said RBI's focus currently is on inflation followed by growth, Das said.

Talking on the flexible inflation targeting framework, the governor said the regime has worked very well for the country. Under the flexible inflation targeting framework, RBI is expected to maintain retail inflation at 4 percent (+/- 2 percent). He said ‘so far as India is concerned, the framework has worked well before the pandemic, during the pandemic and even now, I would say that we are very much in line with the requirements of time in terms of steps that need to be taken’.

The CNX Nifty is currently trading at 16599.00, down by 120.45 points or 0.72% after trading in a range of 16564.25 and 16706.05. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.40%, Indusind Bank up by 1.33%, Apollo Hospital Ent. up by 1.19%, Hindalco up by 1.01% and Asian Paints up by 0.83%. On the flip side, Reliance Industries down by 3.22%, Ultratech Cement down by 2.81%, ONGC down by 2.64%, Grasim Industries down by 2.29% and Mahindra & Mahindra down by 2.25% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 214.23 points or 0.77% to 27,700.43, Hang Seng decreased 154.45 points or 0.75% to 20,454.69, Shanghai Composite declined 23.27 points or 0.71% to 3,246.70, Jakarta Composite lost 14.56 points or 0.21% to 6,872.40 and Taiwan Weighted dropped 0.03 points or 0% to 14,949.33. On the flip side, Straits Times advanced 10.30 points or 0.32% to 3,191.64 and KOSPI rose 17.76 points or 0.74% to 2,410.90.