Markets trade in red in early deals on weak cues from global markets

Indian equity markets have made negative start and are trading marginally in red in early deals on Tuesday. Weakness across global markets, after data showing a slowing US manufacturing sector fuelled concerns about an economic slowdown around the world, dented the sentiment on Dalal Street. There was cautiousness in the markets as private report stated that the Reserve Bank of India will deliver two more rate increases with the first of 25-30 bps later this week. However, downside remained capped as finance minister Nirmala Sitharaman said India’s macroeconomic fundamentals are intact and there is no risk of the economy entering into recession or stagflation. She said the government is trying to keep inflation below 7%.

On the global front, all Asian markets are trading in red on Tuesday following the mildly negative cues from global markets overnight, with weakness in technology, financial and energy-linked shares. The US markets ended lower on Monday in a choppy first session of August trading as Wall Street struggled to sustain July’s momentum.

Back home, there was some buzz in cement industry stocks as rating agency Icra said that cement companies are expected to register a 7-8 per cent rise in their volumes in FY23 on strong demand, but operating profit margin may decline due to elevated input costs. On the BSE sectoral front, traders were seen piling up position in were FMCG, Power, Utilities, PSU and Consumer Durables, while selling was witnessed in Metal, Basic Materials, Auto, Realty and IT down. Stock specific development, Zomato traded higher after the food aggregator reported a consolidated loss of Rs 186 crore in the first quarter of 2022-23 (Q1FY23). The company's losses declined both on year-on-year (YoY) and sequential bases. The company’s consolidated loss was Rs 359 crore in Q1FY22 and Rs 359.7 crore in Q4FY22.

The BSE Sensex is currently trading at 58054.09, down by 61.41 points or 0.11% after trading in a range of 57910.46 and 58147.04. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.29%, while Small cap index up by 0.36%.

The gaining sectoral indices on the BSE were FMCG up by 1.05%, Power up by 0.90%, Utilities up by 0.73%, PSU up by 0.59% and Consumer Durables up by 0.56%, while Metal down by 1.14%, Basic Materials down by 0.60%, Auto down by 0.53%, Realty down by 0.48% and IT down by 0.47% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.84%, SBI up by 1.42%, Asian Paints up by 1.42%, ITC up by 1.38% and Hindustan Unilever up by 1.23%. On the flip side, Tata Steel down by 1.25%, HDFC down by 1.07%, Tech Mahindra down by 1.00%, Infosys down by 0.82% and ICICI Bank down by 0.79% were the top losers.

Meanwhile, highlighting Country’s robust economic health despite the COVID pandemic and geo-political situation, Union Finance Minister Nirmala Sitharaman has said there is no question of India getting into stagflation or recession like other major economies of the world. Sitharaman said, ‘We have never seen a pandemic of this kind. All of us were trying to make sure that people in our constituencies are given extra help. I recognise that everybody -MPs and state governments have played their role. Otherwise, India would not be where it is compared to the rest of the world.’

She also said ‘So, I fully credit the people of India for this. Even against adversity, we are able to stand up and be recognised as the fastest growing economy.’ She emphasized that due to the measures taken by the government, India is in a much better position than most countries. Besides, she said the Gross Domestic Product (GDP) of the US fell 0.9 per cent in the second quarter following a 1.6 per cent decline in the first quarter. They start it calling an unofficial recession.  She added ‘Pandemic, second wave, Omicron, Russia-Ukraine (war), even today largest supply components in China are under lockdown. In spite of that, we have held inflation well within 7 per cent or below. That has to be recognised.’

Moreover, she said 4,000 banks in China are reported to be going bankrupt. In India, the gross NPAs (Non-Performing Assets) of scheduled commercial banks is at a 5-years low of 5.9 per cent in 2022. So our NPAs are improving. The government debt to GDP Ratio of many countries is in triple digits including Japan, Greece, Bhutan, Singapore, the US, Portugal, Spain, France, Sri Lanka and Canada. But the central government very consciously controlled its debt and it is at 56.29 per cent of the GDP at the end of 2021-22 compared to the 59.9 per cent revised estimate that year.

The CNX Nifty is currently trading at 17306.95, down by 33.10 points or 0.19% after trading in a range of 17268.20 and 17331.35. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 1.93%, Asian Paints up by 1.46%, SBI up by 1.44%, ITC up by 1.43% and Coal India up by 1.39%. On the flip side, UPL down by 4.17%, Hindalco down by 3.08%, Hero MotoCorp down by 2.64%, Eicher Motors down by 2.38% and ONGC down by 1.77% were the top losers.

All Asian markets are trading lower; Shanghai Composite declined 93.37 points or 2.86% to 3,166.59, Straits Times trembled 5.62 points or 0.17% to 3,233.13, Nikkei 225 slipped 428.03 points or 1.53% to 27,565.32, Jakarta Composite lost 27.69 points or 0.4% to 6,941.09, KOSPI fell 19.63 points or 0.8% to 2,432.62, Hang Seng decreased 540.73 points or 2.68% to 19,625.11 and Taiwan Weighted was down by 285.15 points or 1.9% to 14,696.54.