Benchmarks snap two-day winning run amid weak global cues

Snapping a two-day winning run, Indian equity benchmarks ended lower on Wednesday amid weakness across most sectors. Key gauges made negative start as traders were concerned as retail inflation for farm and rural workers increased to 6.94 per cent and 7.26 per cent, respectively, in August mainly due to higher prices of certain food items. In July, retail inflation for farm and rural workers stood at 6.60 per cent and 6.82 per cent respectively. Some concern also came as chief economic advisor V Anantha Nageswaran said Indian economy will grow at over 7 per cent, down from above 8 per cent of growth rate projected in January. He, however, said that the economic momentum and the animal spirits are unmistakable.

Key gauges extended losses in afternoon deals after the Asian Development Bank (ADB) in an update of its flagship economic publication, Asian Development Outlook (ADO) has lowered its 2022 economic growth outlook for India, amid sluggish global demand and tightening of monetary policy to manage inflationary pressures from elevated prices for oil and other commodities. ADB forecasts growth of 7.0% for fiscal year (FY) 2022 (ending March 31, 2023). That compares with a projection of 7.5% in April. The growth outlook for 2023 is also revised down to 7.2% from 8.0%. Traders overlooked the chairman of National Bank for Financing Infrastructure and Development K V Kamath’s statement that India is expected to be a $25-trillion economy in 25 years. He said the Indian economy is growing at a compound annual growth rate of 8-10 per cent. Meanwhile, foreign institutional investors (FIIs) have net bought shares worth Rs 1,196.19 crore on September 20, as per provisional data available on the NSE.

On the global front, European markets were trading mostly in green as rising oil prices helped lift energy stocks. Asian markets settled lower on Wednesday after Russian President Vladimir Putin announced a partial military mobilization in the country, bringing geopolitical tensions to the forefront. Worries about aggressive Federal Reserve policy tightening also kept investors on their toes ahead of the U.S. Federal Reserve's much-anticipated interest-rate decision later in the day.

Back home, medical devices industry stocks were in focus as the Union government notified the Medical Devices Rules as Medical Devices (Amendment) Rules, 2022. The Rules made provisions for all class A medical device manufacturers to register themselves through an identified online portal established for the purpose. Stocks related to tourism sector were in watch as the Centre said the country's tourism sector will strive to recover to the pre-pandemic level by mid-2024 and contribute $250 billion to the country's GDP by 2030. 

Finally, the BSE Sensex fell 262.96 points or 0.44% to 59,456.78 and the CNX Nifty was down by 97.90 points or 0.55% to 17,718.35.

The BSE Sensex touched high and low of 59,799.04 and 59,275.40, respectively. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.63%, while Small cap index was down by 0.69%.

The top gaining sectoral index on the BSE was FMCG up by 1.14%, while Utilities down by 2.31%, Power down by 2.19%, Capital Goods down by 1.36%, Oil & Gas down by 1.33% and Realty down by 1.19% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.60%, ITC up by 1.59%, Bajaj Finance up by 0.76%, Tech Mahindra up by 0.42% and Reliance Industries up by 0.29%. On the flip side, Indusind Bank down by 3.19%, Power Grid Corp down by 2.64%, Ultratech Cement down by 2.40%, Larsen & Toubro down by 1.88% and NTPC down by 1.83% were the top losers.

Meanwhile, Commerce and Industry Minister Piyush Goyal has said the government is working to extend incentives under the production linked incentive (PLI) scheme to more sectors. The government has announced PLI schemes for 14 sectors, including white goods, textiles and auto components.  He mentioned ‘We came up with PLI for 14 sectors apart from semiconductor... We are willing to go the extra mile in other  sectors. We are working on a few PLI schemes already.’
The objective of the PLI scheme is to make domestic manufacturing globally competitive, create global champions in manufacturing, boost exports and create jobs. He stated there are demands for extending the PLI scheme for sectors like toys, certain electronic components, furniture and bicycles.

Besides, to promote manufacturing, he asked the industry to focus on standards, technology-led manufacturing, skill development, and sustainable development goals. On free trade agreements, he urged the industry to engage with the world and take advantage of these trade pacts as protectionism cannot continue.

The CNX Nifty traded in a range of 17,838.70 and 17,663.60. There were 13 stocks advancing against 36 stocks declining, while 1 stock remains unchanged on the index.  

The top gainers on Nifty were Britannia Industries up by 2.91%, Hindustan Unilever up by 1.51%, ITC up by 1.37%, Apollo Hospital up by 0.87% and Bajaj Finance up by 0.78%. On the flip side, Shree Cement down by 5.94%, Adani Ports &SEZ down by 3.74%, Power Grid Corp down by 3.52%, Indusind Bank down by 3.13% and Ultratech Cement down by 2.85% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 41.56 points or 0.58% to 7,234.22 and France’s CAC increased 3.90 points or 0.07% to 5,983.37, while Germany’s DAX decreased 17.01 points or 0.13% to 12,653.82.

Asian markets settled lower on Wednesday, tracking losses in Wall Street overnight due to caution ahead of the Fed's rate hike announcement due later in the day, while fears of a global recession also weighed on market sentiments. The Bank of England, the Swiss National Bank and the Bank of Japan will announce their monetary policy decisions on Thursday. Market sentiments were also hurt by Russian President Vladimir Putin's announcement of a partial military mobilisation in Russia. Chinese shares slipped as the Asian Development Bank (ADB) cut its economic growth forecast for China to 3.3% for 2022 from the previous forecast of a 5.0% expansion, while ADB also cut its growth forecast for developing Asian economies to 4.3% this year from a previous projection of a 5.2% expansion amid the continued rise in inflation in the region.