Markets trade deeply in red in early deals; Nifty below 17,650 mark

Indian equity benchmarks made negative start of F&O series expiry week tailing the weakness in other global markets. Domestic indices are trading deeply in red in early deals on Monday with cut of around 0.80% each. Broad-based selling in Realty, Auto and Bankex stocks dragged the markets down. Market participants were concerned as the Reserve Bank of India (RBI) data showed that the country’s foreign exchange reserves fell $2.238 billion to $570.74 billion in the week ended August 12. Some cautiousness also came in as retail inflation for farm and rural workers increased to 6.60 per cent and 6.82 per cent, respectively, in July mainly due to higher prices of certain food items. In June retail inflation for farm and rural workers stood at 6.43 per cent and 6.76 per cent respectively. Traders overlooked the finance ministry's monthly economic review stating that India is better placed on the growth-inflation-external balance triangle for 2022-23 than it was two months ago, on the back of government policy response and the RBI’s monetary policy actions. Meanwhile, foreign investors have shown tremendous enthusiasm for Indian equities and have infused close to Rs 44,500 crore in August so far amid softening of inflation in US and falling dollar index.

On the global front, Asian markets are trading mixed following the mostly negative cues from global markets on Friday, amid concerns about slowing economic growth, soaring inflation and prospects of more interest rate hikes by central banks in the coming months. Traders also react to hawkish comments from US Fed officials ahead of annual Jackson Hole economic symposium in Wyoming this week. Back home, gold and jewelry industry related stocks were in focus as the government data showed that India's gold imports rose 6.4 per cent to $12.9 billion during April-July this fiscal due to healthy demand. In stock specific development, Adani Power hits 52-week high after it acquired DB Power for around Rs 7,000 crore. On the other hand, Wockhardt shed after plant closure in US.

The BSE Sensex is currently trading at 59147.67, down by 498.48 points or 0.84% after trading in a range of 59137.61 and 59402.50. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 1.40%, while Small cap index was down by 1.12%.

The few gaining sectoral indices on the BSE were Power up by 0.32%, FMCG up by 0.22%, Utilities up by 0.17%, while Realty down by 1.95%, Auto down by 1.74%, Bankex down by 1.65%, Consumer Discretionary down by 1.59%, Basic Materials down by 1.56% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 0.99%, ITC up by 0.50%, Reliance Industries up by 0.43%, Power Grid up by 0.35% and Nestle up by 0.02%. On the flip side, Kotak Mahindra Bank down by 2.65%, Bajaj Finserv down by 2.24%, Axis Bank down by 2.00%, Bajaj Finance down by 2.00% and Tata Steel down by 1.91% were the top losers.

Meanwhile, expressing optimism over the country’s overall position, the finance ministry's monthly economic review said India is better placed on the growth-inflation-external balance triangle for 2022-23 than it was two months ago, on the back of government policy response and the Reserve Bank's monetary policy actions. On the price situation, the review said in absence of any further shocks, the downward movement of global commodity prices along with the RBI's monetary measures and the government's fiscal policies are expected to cap inflationary pressures in the coming months. It noted that softening of inflationary pressures in India is further on the anvil as the prices of important raw materials such as iron ore, copper and tin that feed into the domestic manufacturing process, globally trended downwards in July 2022. Headline retail inflation eased to 6.7 per cent in July 2022 from 7.01 per cent in the previous month.

It further said the Index of Industrial Production (IIP) and eight core industries points towards strengthening of industrial activity, while PMI Manufacturing touched an 8-month high in July with marked gains in growth of new business and output. On the external front, it said, post the outbreak of the Russia-Ukraine conflict, an increase in uncertainty among investors has led to capital outflows, not just from India alone but from the group of emerging market economies (EMEs) as a whole. Thus, apart from India, the currencies of several EMEs also depreciated against the US dollar. Between January and July of 2022, foreign portfolio investors pulled out $48.0 billion from EMEs.

It added that global investor confidence in India's economic landscape is further endorsed by net foreign direct investment (FDI) inflows remaining robust at $13.6 billion in Q1 of 2022-23, as compared to $11.6 billion during the corresponding period of the last year. It said India's growth outlook for 2022-23, though lower than projections made before the outbreak of the conflict in Europe which resulted in sharply higher price for crude oil and other essential commodities, is still comfortably high and confirms the recovery of animal spirits and economic growth from the pandemic-induced contraction in 2021-22. Observing that private sector and banking sector balance sheets are healthy and there is appetite to borrow and to lend respectively, the report said barring further adverse shocks to commodity prices and thus India's terms of trade, economic growth will consolidate and retain its momentum into 2023- 24.

The CNX Nifty is currently trading at 17606.10, down by 152.35 points or 0.86% after trading in a range of 17593.75 and 17690.05. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Britannia Industries up by 1.29%, Hindustan Unilever up by 0.96%, ITC up by 0.69%, Reliance Industries up by 0.46% and Tata Consumer Products up by 0.37%. On the flip side, ONGC down by 3.08%, Kotak Mahindra Bank down by 2.65%, Apollo Hospital down by 2.48%, Eicher Motors down by 2.43% and Bajaj Finserv down by 2.31% were the top losers.

Asian markets are trading mixed; Nikkei 225 slipped 163.73 points or 0.57% to 28,766.60, Taiwan Weighted dropped 128.80 points or 0.84% to 15,279.98, KOSPI fell 24.27 points or 0.97% to 2,468.42 and Jakarta Composite was down by 95.78 points or 1.34% to 7,076.65. On the other hand, Straits Times rose 21.31 points or 0.66% to 3,267.82, Hang Seng added 37.59 points or 0.19% to 19,810.62 and Shanghai Composite was up by 18.46 points or 0.57% to 3,276.54.