Markets trade flat with negative bias in early deals

Indian equity benchmarks made cautious start on Wednesday following weakness in global peers ahead of the Federal Reserve’s monetary policy announcement. Markets are trading flat with negative bias in early deals as selling in Metal, Basic Materials and Bankex stocks weighted on indices. Sentiments were dulled as the International Monetary Fund (IMF) slashed India’s growth forecast for 2022-23 (FY23) by 80 basis points to 7.4 per cent, citing less favourable external conditions and rapid policy tightening by the central bank. Meanwhile, traders took note of report that Finance Minister Nirmala Sitharaman said the Indian rupee has strengthened against the British Pound in 2022 though it has depreciated against the US dollar.

On the global front, Asian markets are trading mixed following the broadly negative cues from the global markets overnight, as traders looked ahead to the US Federal Reserve's monetary policy decision and accompanying statement later in the day. The bank's accompanying statement is likely to provide clues about future rate hikes.

Back home, telecom stocks were in focus after the government received Rs 1.45 lakh crore bids on Day 1 of 5G spectrum auction. Auto stocks were in focus as auto majors Maruti Suzuki (India) and Tata Motors are slated to report their June quarter results (Q1FY23) later in the day. In stock specific development, Shoppers Stop surged after the company was back in black in Q1FY23, reporting a consolidated net profit of Rs 22.83 crore vs a net loss of Rs 104.89 crore a year ago.

The BSE Sensex is currently trading at 55228.34, down by 40.15 points or 0.07% after trading in a range of 55157.99 and 55388.03. There were 13 stocks advancing against 14 stocks declining, while 3 stocks remain unchanged on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.06%, while Small cap index was down by 0.10%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.89%, Industrials up by 0.86%, Realty up by 0.41%, Power up by 0.31%, Oil & Gas up by 0.20%, while Metal down by 0.42%, Basic Materials down by 0.28%, Bankex down by 0.26%, Telecom down by 0.26%, Auto down by 0.25% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.10%, Sun Pharma up by 1.22%, HCL Technologies up by 0.46%, Power Grid up by 0.43% and Titan Company up by 0.41%. On the flip side, Kotak Mahindra Bank down by 1.41%, Bharti Airtel down by 1.02%, Bajaj Finserv down by 0.94%, Tech Mahindra down by 0.62% and Reliance Industries down by 0.60% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its World Economic Outlook update July 2022 has cut India's growth rate by 0.8 percentage point to 7.4 per cent for fiscal year 2022, reflecting ‘mainly less favourable external conditions and more rapid policy tightening’. In April, the IMF had projected a ‘fairly robust’ growth of 8.2 per cent for India in 2022. The report said India’s 7.4 per cent GDP growth for fiscal year 2022 is the second highest growth projection after Saudi Arabia’s 7.6 per cent. India, whose GDP was projected at 8.7 per cent in 2021, will see economic growth slow down to 6.1 per cent in fiscal year 2023.

It said that the global economy, which is still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook. The IMF projects the global economy to slow further to 3.2 per cent in 2022 from last year’s 6.1 per cent. Global growth at 3.2 per cent in 2022 and moderating to 2.9 per cent in 2023 is lower than projected in the April 2022 World Economic Outlook by 0.4 and 0.7 percentage point, respectively.

Besides, United States’ growth projected to slow down to 2.3 per cent in 2022 from 5.7 per cent last year. In China, further lockdowns and the deepening real estate crisis have led growth to be revised down by 1.1 percentage points to 3.3 per cent growth in 2022, with major global spillovers. In Europe, significant downgrades reflect spillovers from the war in Ukraine and tighter monetary policy.

It added that downgrades for China and the United States, as well as for India, are driving the downward revisions to global growth during 2022-23. This reflects the materialisation of downside risks highlighted in the April 2022 World Economic Outlook: a sharper slowdown in China due to extended lockdowns, tightening global financial conditions associated with expectations of steeper interest rate hikes by major central banks to ease inflation pressure, and spillovers from the war in Ukraine.

The CNX Nifty is currently trading at 16468.25, down by 15.60 points or 0.09% after trading in a range of 16438.75 and 16512.10. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.88%, HDFC Life Insurance up by 1.11%, Sun Pharma up by 1.05%, Cipla up by 0.58% and HCL Technologies up by 0.55%. On the flip side, Hero MotoCorp down by 2.35%, Apollo Hospital down by 1.95%, Kotak Mahindra Bank down by 1.42%, Bharti Airtel down by 1.07% and UPL down by 1.01% were the top losers.

Asian markets are trading mixed; Straits Times fell 7.65 points or 0.24% to 3,184.47, Hang Seng slipped 316.62 points or 1.51% to 20,589.26, KOSPI lost 13.24 points or 0.55% to 2,399.72 and Shanghai Composite was down by 3.07 points or 0.09% to 3,274.37. On the other hand, Nikkei 225 rose 45.82 points or 0.17% to 27,701.03, Taiwan Weighted added 25.79 points or 0.17% to 14,832.57 and Jakarta Composite was up by 6.98 points or 0.10% to 6,878.52.