Selling pressure continues over Dalal Street

Selling pressure continued over the Dalal Street, with both Sensex and Nifty trading in deep red, on the back of negative cues from other Asian markets. Domestic sentiments remained pessimistic, as Reserve Bank of India (RBI) Deputy Governor Michael Debabrata Patra has said that in the near-term, inflation trajectory continues to be ‘heavily contingent’ upon the evolving geopolitical developments, international commodity prices and global financial sector developments.

Adding more worries among traders, the Ministry of Statistics and Programme Implementation in its latest report for July 2022 has said that as many as 386 infrastructure projects, each entailing an investment of Rs 150 crore or more, have been hit by cost overruns of more than Rs 4.7 lakh crore. According to the Ministry, which monitors infrastructure projects of Rs 150 crore and above, out of 1,505 projects, 386 reported cost overruns and as many as 661 projects were delayed.

On the global front, all Asian markets were trading in red, even after Japan's leading index declined less than initially estimated in June. The final data from the Cabinet Office showed that the leading index, which measures future economic activity, fell to 100.9 in June from 101.2 in May. In the initial estimate, the reading was 100.6. The coincident index that measures the current economic situation rose to 98.6 in June from 94.9 in the previous month. According to the initial estimate, the reading was 99.0.

The BSE Sensex is currently trading at 58015.83, down by 818.04 points or 1.39% after trading in a range of 57367.47 and 58092.31. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.12%, while Small cap index was down by 0.81%.

The only gaining sectoral indices on the BSE were FMCG up by 0.41% and Energy up by 0.02%, while IT down by 3.48%, TECK down by 3.23%, Metal down by 2.18%, Bankex down by 1.92% and Realty down by 1.51% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 0.90%, Nestle up by 0.88%, Maruti Suzuki up by 0.58%, Ultratech Cement up by 0.26% and Reliance Industries up by 0.05%. On the flip side, Tech Mahindra down by 4.85%, Infosys down by 4.23%, Wipro down by 3.06%, HCL Tech. down by 3.03% and TCS down by 2.66% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Deputy Governor Michael Debabrata Patra has said that in the near-term, inflation trajectory continues to be ‘heavily contingent’ upon the evolving geopolitical developments, international commodity prices and global financial sector developments. He said the RBI on its part has front-loaded monetary policy response, with a cumulative 140 basis points increase in the benchmark rate so far with an aim to check high inflation which is ruling above its comfort zone of 6 per cent for the past seven months.

Patra said ‘although inflation appears to be moderating from its peak of 7.8 per cent in April this year, we would prefer to await more incoming data before we are convinced that this a durable trend’. He said while some easing of international commodity prices and supply chain pressures, both globally and domestically, are positive developments, upside risks remain in the form of potential second order effects and the transmission of input cost pressures to the sticky core component of inflation.

RBI Deputy Governor stated that for the financial year 2022-23 (April-March) as a whole, the RBI has projected that headline CPI inflation would average 6.7 per cent. He further said the RBI has taken several initiatives to strengthen inflation monitoring and improve the accuracy of forecasting. Besides widening the ambit and depth of a suite of forward-looking surveys, a data science lab has been set up to explore alternative forecasting techniques and models, including artificial intelligence and machine learning (AI/ML). He also informed that the RBI has stepped up the gathering of market-based intelligence from trade bodies, traders, domain experts and regional units.

The CNX Nifty is currently trading at 17325.40, down by 233.50 points or 1.33% after trading in a range of 17166.20 and 17343.20. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Nestle up by 1.02%, Britannia up by 1.01%, Hindustan Unilever up by 0.93%, Tata Consumer Products up by 0.88% and Maruti Suzuki up by 0.63%. On the flip side, Tech Mahindra down by 4.84%, Infosys down by 4.22%, Wipro down by 3.07%, JSW Steel down by 3.06% and HCL Tech. down by 3.03% were the top losers.

All Asian markets were trading in red; Nikkei 225 slipped 762.42 points or 2.66% to 27,878.96, Hang Seng decreased 125.90 points or 0.62% to 20,044.14, Taiwan Weighted dropped 319.12 points or 2.09% to 14,959.32, Straits Times trembled 30.35 points or 0.93% to 3,219.18, KOSPI fell 53.38 points or 2.15% to 2,427.65, Shanghai Composite declined 7.92 points or 0.24% to 3,228.30 and Jakarta Composite lost 49.14 points or 0.69% to 7,086.11.