Post Session: Quick Review

Indian equity benchmarks witnessed complete bloodbath on Friday on account of weak global cues amid fears of aggressive tightening by the Fed in the face of warnings of a global recession. Markets made a gap-down start amid concerns over the country’s economic growth as India Ratings cut the forecast to 6.9 per cent from 7 per cent, joining other institutions who have cut their projections to below 7 per cent since the release of the April-June quarter GDP data. The agency expects the slowdown in the growth of government final consumption expenditure (GFCE) and worsening of net exports to weigh on the FY23 GDP growth. Moreover, the rating agency said that the current account deficit (CAD) may have reached a nine-year or 36-quarter high of 3.4 per cent of the gross domestic product (GDP) in the first quarter of this financial year against a surplus of 0.9 per cent a year ago. Some concern also came as Global Rating agency Moody’s said India’s rated infrastructure firms can largely withstand further depreciation in the value of rupee against US dollar due to financial hedges and other mitigants.

Markets extended losses to end near intraday lows as sentiments remained fragile as International Monetary Fund (IMF) stated that the global economic outlook remains downbeat and some countries are expected to slip into recession in 2023, but it is too early to say if there will be a widespread global recession. The IMF in July revised down global growth to 3.2% in 2022 and 2.9% in 2023. It will release a new outlook next month. Sentiments also remain dampened after the World Bank said the world could be heading towards a global recession in 2023 as central banks across the world simultaneously hike interest rates to combat persistent inflation. Traders overlooked Union Minister for Petroleum and Natural Gas Hardeep Singh Puri’s statement that the country is on the path to becoming a 10 trillion-dollar economy in 2030 and the third largest economy in the world by 2047.

Global cues too remained daunting as Asian markets ended mostly in red, while European markets were trading mostly in red amid growing expectations of hawkish moves by the Federal Reserve and fears of a global recession. Back home, the Ministry of Corporate Affairs (MCA) has yet again revised the threshold limit for paid-up capital of small companies. Earlier, the definition of small companies under the Companies Act, 2013 was revised by increasing their thresholds for paid-up capital from not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover from not exceeding Rs 2 crore to not exceeding Rs 20 crore. On the sectoral front, stocks related to information technology space edged lower amid the selloff in global equities after the release of the US inflation number for August triggered risk-off bets. Aviation industry stocks remained in focus as rating agency ICRA said domestic air passenger traffic rose 5 per cent to 1.02 crore in August and a fast-paced recovery in the traffic is expected this fiscal on the back of normalcy in flight operations and widening vaccination coverage.

The BSE Sensex ended at 58840.79, down by 1093.22 points or 1.82% after trading in a range of 58687.17 and 59720.56. There were 2 stocks advancing against 28 stocks declining on the index (Provisional).

The broader indices ended in red; the BSE Mid cap index was down by 2.85%, while Small cap index down by 2.38% (Provisional).

The top losing sectoral indices on the BSE were Realty down by 3.53%, IT down by 3.37%, Basic Materials down by 3.05%, TECK down by 3.03% and Auto down by 2.67%, while there no gaining sectoral indices on the BSE (Provisional).

The only gainers on the Sensex were Indusind Bank up by 2.47% and Axis Bank was up by 0.04%. On the flip side, Tech Mahindra down by 4.43%, Ultratech Cement down by 4.17%, Infosys down by 3.80%, Mahindra & Mahindra down by 3.52% and Wipro down by 3.02% were the top losers (Provisional).

Meanwhile, expressing optimism over India’s economic growth, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri has said that the country is on the path to becoming a 10 trillion-dollar economy in 2030 and the third largest economy in the world by 2047. Puri said that despite the unique challenges posed by the current global setting, India is wedded to the concept of net zero and is committed to making a transition from the world of hydrocarbons to a world where green and sustainable energy will be determining our energy needs.

The Minister also noted that India's progress in ensuring energy security for its citizens and outlined the Government's plans to make the country's energy mix more sustainable and environmentally friendly. He said ‘In the wake of global crises, India has fared extremely well on three fronts - energy, food and fuel. The country was able to navigate out of the crises brought by global headwinds with a degree of confidence, assuring energy availability and affordability. The country's per capita energy consumption is one-third of the global average now and will surpass it in the years to come. India is on becoming to become a 10 trillion-dollar economy in 2030 and the third largest economy in the world by 2047 and therefore there is a growing need to change the energy mix’.

Highlighting the progress in the Energy sector, he said that now a day’s modernization and digitization have become an imperative rather than a choice. He further said ‘By May 2022, India already attained 10% biofuel blending and is on course to reach the 20% mark in a year or two. The Government's attitude has always been positive and supportive and assured that whenever attention is drawn to any area where there is scope for a more supportive environment, interventions required to produce the same will be made’.

The CNX Nifty ended at 17530.85, down by 346.55 points or 1.94% after trading in a range of 17497.25 and 17820.05. There were 2 stocks advancing against 48 stocks declining on the index (Provisional).

The only gainers on Nifty were Indusind Bank up by 2.63% and Cipla up by 0.99%. On the flip side, UPL down by 5.28%, Tata Consumer down by 5.04%, Tech Mahindra down by 4.60%, Ultratech Cement down by 4.55% and Infosys down by 3.89% were the top losers (Provisional).

European markets were trading mostly in red, France’s CAC decreased 79.09 points or 1.28% to 6,078.75 and Germany’s DAX was down by 203.44 points or 1.57% to 12,753.22. On the flip side, UK’s FTSE 100 was up by 9.04 points or 0.12% to 7,291.11.

Asian markets settled mostly lower on Friday, tracking losses in Wall Street overnight. Persisting worries about a global economic slowdown amid hiking rates also pressurising market sentiments. Meanwhile, investors are awaiting Federal Reserve’s meeting next week, where another 75-basis-point rise is widely expected to tame the rising pressure. Although, data showed that US retail sales unexpectedly rebounded in August, while another set showed the number of people filing new claims for unemployment benefits fell to the lowest level in more than three months. Chinese shares declined even as China’s industrial production and retail sales figures for August beats expectations.