Benchmarks end lower on Wednesday

Indian equity benchmarks pared most of their initial losses but ended lower on Wednesday, led by losses in IT, TECK and Oil & Gas stocks. Key gauges made a gap-down opening as traders remained cautious with OECD said India’s gross domestic product (GDP) in the June quarter contracted 1.4 per cent quarter-on-quarter, when adjusted for seasonality, and was the second worst performance among the G20 countries - the first being China. Some cautiousness also came as a private report stated that investments by private equity and venture capital funds plummeted 80 per cent to $2.2 billion in August, a 19-month low.  Sentiments remained down-beat amid a report stating that investors' wealth eroded by more than Rs 2.21 lakh crore in early trade on Wednesday, with the market witnessing a selling-off amid prospects of aggressive rate hikes by the US Federal Reserve to tackle high inflation, and sluggish global trends.

However, key indices managed to trim some of their initial losses in the afternoon session taking support from data showing that India’s inflation based on wholesale price index (WPI) eased to 12.41% in the month of August 2022 as against 13.93% in July 2022. Inflation in August is primarily contributed by rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, chemicals & chemical products, electricity, food products etc. as compared to the corresponding month of the previous year. Besides, foreign institutional investors (FIIs) stood as net buyer in Indian equities and bought worth Rs 1,956.98 crore on September 13, as per data available on the NSE.

On the global front, Asian markets settled lower on Wednesday after hotter-than-expected U.S. inflation data raised concerns the Fed will even more aggressively hike interest rate at its upcoming policy meeting next week and triggered heavy selling at several counters from across various sectors. European markets were trading lower as Eurozone industrial production fell more than expected in July, raising worries about slowing growth.

Back home, fertilizer industry stocks were in focus as Union Chemicals and Fertilisers Minister Mansukh Mandaviya said there is no shortage of crop nutrients in the country and asserted that there will be no hike in the prices of non-urea products. The minister also said that Nutrient Based Policy (NBS) for Phosphatic and Potassic (P&K) fertilisers for the Rabi season (October 2022 to March 2023) will be announced shortly. There were some reactions in insurance companies stocks as easing compliance burden for insurers, regulator Irdai rationalised health insurance business returns reporting norm by reducing the number of returns that need to be filed in a year.

Finally, the BSE Sensex fell 224.11 points or 0.37% to 60,346.97 and the CNX Nifty was down by 66.30 points or 0.37% to 18,003.75.

The BSE Sensex touched high and low of 60,649.04 and 59,417.12, respectively. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.10%, while Small cap index was down by 0.01%.

The top gaining sectoral indices on the BSE were Metal up by 1.91%, Bankex up by 1.28%, Basic Materials up by 1.18%, Finance up by 0.93% and Telecom up by 0.34%, while IT down by 3.28%, TECK down by 2.85%, Oil & Gas down by 0.90%, Capital Goods down by 0.83% and Energy down by 0.76% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 4.48%, Power Grid Corporation up by 2.58%, NTPC up by 2.57%, SBI up by 2.39% and Kotak Mahindra Bank up by 1.70%. On the flip side, Infosys down by 4.53%, TCS down by 3.36%, Tech Mahindra down by 2.61%, HCL Technologies down by 2.44% and Larsen & Toubro down by 1.83% were the top losers.

Meanwhile, expressing optimism over bilateral trade in the rupee, Finance Minister Nirmala Sitharaman has said many countries have evinced interest for bilateral trade in the rupee after the RBI announced a mechanism recently. She said this along with other steps taken by the government is towards full capital account convertibility. On India is ready for capital account convertibility, she said ‘It isn't the ruble-rupee which was in the old format. Now this (bilateral rupee trade) formulation, which I am glad the RBI has come up at a time which was so critical’.

Highlighting that many countries have evinced interest in trade in the rupee, she said, in a way it is opening the Indian economy more than what can be imagined. She said ‘Post-pandemic, India is coming up with so many out-of-the-box solutions...I would like to highlight the fact that we are a lot more open with the Indian economy, a lot more open in the way we are talking to countries, we are willing to have our digital platform become interoperable between countries to enable cross-border transactions’.

The RBI in July issued a detailed circular asking banks to put in place additional arrangements for export and import transactions in the rupee in view of increasing interest of the global trading community in the domestic currency. The announcement by the Reserve Bank of India (RBI) to allow cross-border trade transactions in the rupee is a timely move and a step towards internationalisation of the currency. Currently, a large part of bilateral trade between India and Russia is getting settled in the rupee due to sanctions imposed by the US and Europe following Moscow's attack on Ukraine.

The CNX Nifty traded in a range of 18,091.55 and 17,771.15. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.23%, NTPC up by 3.32%, SBI up by 2.56%, Power Grid Corporation up by 2.51% and Kotak Mahindra Bank up by 1.59%. On the flip side, Infosys down by 4.53%, TCS down by 3.23%, Tech Mahindra down by 3.09%, HCL Technologies down by 2.39% and Larsen & Toubro down by 1.71% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 56.90 points or 0.77% to 7,328.96, France’s CAC decreased 7.31 points or 0.12% to 6,238.38 and Germany’s DAX decreased 47.54 points or 0.36% to 13,141.41.

Asian markets settled lower on Wednesday tracking Wall Street's overnight plunge on hotter-than-expected inflation numbers for August that boosted expectations the US Federal Reserve would stay aggressive in raising rates. Chinese shares declined on escalating tensions between the US and China after reports suggested that the United States is considering options for a sanctions package against China to deter it from invading Taiwan. Moreover, Japanese shares declined after reports of the BoJ apparently preparing for a currency intervention amid sharp declines in the Japanese currency yen.