Post Session: Quick Review

Indian equity benchmarks witnessed gloomy trade on Thursday as traders remained cautious with Federal Reserve officials raising rates by 75 basis points for the third consecutive meting and signaled even more aggressive hikes than investors had envisioned in the months. The start of the trading day was lower as traders were cautious with report that foreign institutional investors (FIIs) have sold (net) shares worth Rs 461.04 crore on September 21, as per provisional data available on the NSE. Markets widened their losses to touch intraday low point as sentiment got hit with private report stating that India's headline retail inflation is expected to rise to a five-month high of 7.4% in September, with the risk of going higher if the momentum of food and vegetable prices picks up further in the rest of the month. Bourses continued to trade under pressures even after rating agency Crisil stating that gross non-performing assets (GNPAs) of banks - a key indicator of asset quality - is expected to improve 90 basis points (bps) to 5% this fiscal on-year (FY23), and another 100 bps to a decadal low of 4% by March 31, 2024 (FY24), riding on post-pandemic economic recovery and higher credit growth.

However, markets pared most of their losses to trade near neutral line in late afternoon session as traders took some solace with Federation of Indian Export Organisations (FIEO), the apex body of India's export promotion councils’ statement that Indian exports to the six Gulf Cooperation Council countries (GCC) grew by 44 per cent to about $43.9 billion in 2021-22 fiscal year compared to previous fiscal’s $27.8 billion with the UAE leading the trade with a remarkable 68 per cent growth. But, in last leg of trade, markets once again came under selling pressure to end with a cut of over half a percent as traders remain concerned ahead of Accenture's financial result to be released later in the day. It is significant because it comes amid rising concerns about a slowdown in Europe manufacturing as there are worries about delays in the decision-making cycle, some slowdown in order wins, etc.

On the global front, European markets were trading lower after the U.S. Federal Reserve and Swiss National Bank both hiked their key policy rates by 75 basis points, as widely expected, to tackle surging inflation. Back home, Union Power Minister R K Singh has exuded confidence that the second version of production linked incentive (PLI-II) scheme for solar manufacturing worth Rs 19,500 crore, will help save close to Rs 1.4 lakh crore forex every year and it will also result in a huge quantity of inflows on account of exports.

The BSE Sensex ended at 59,119.72, down by 337.06 points or 0.57% after trading in a range of 58,832.78 and 59,457.58. There were 12 stocks advancing against 18 stocks declining on the index (Provisional).

The broader indices ended in green; the BSE Mid cap index gained 0.32%, while Small cap index was up by 0.47% (Provisional).

The top gaining sectoral indices on the BSE were FMCG up by 1.32%, Consumer Durables up by 0.96%, Auto up by 0.73%, Utilities up by 0.49% and Industrials was up by 0.46%, while Bankex down by 1.44%, PSU down by 0.50%, Energy down by 0.42%, Realty down by 0.34% and Metal was down by 0.32% were top the losing indices on BSE (Provisional).

The top gainers on the Sensex were Titan Company up by 2.80%, Hindustan Unilever up by 2.71%, Asian Paints up by 2.51%, Maruti Suzuki up by 1.85% and ITC up by 1.39%. On the flip side, Power Grid down by 2.76%, HDFC Bank down by 2.16%, HDFC down by 1.84%, Axis Bank down by 1.81% and Bajaj Finserv down by 1.35% were the top losers (Provisional).

Meanwhile, exhibiting optimism over Indian economy, global rating agency S&P has said even though the US and the Euro zone are headed to recession, India is unlikely to face the impact given the ‘not so coupled’ nature of its economy with the global economy. Paul F Gruenwald, S&P global chief economist and managing director said ‘Indian economy is a lot decoupled from the global economy than we normally think of, given its large domestic demand, even though you (India) are a net importer of energy. But you have enough forex reserves on one hand and your companies have managed to maintain healthy balance sheets’.

He said in fact India was never coupled fully with the global economy and so is relatively independent of global markets, and added that a lot depends on how global fund flows behave if there is a recession in the US and Europe. Their inflation numbers continue to dodge the monetary actions by their central banks as the gap between the US core inflation target and the actual number is three times at 6 per cent.

On Indian growth numbers, Crisil Ratings (which is majority-owned by S&P Global Ratings) chief economist D K Joshi saidthat they hold their recent forecast wherein they ‘expect the economy to grow at 7.3 per cent this fiscal and slow down to 6.5 per cent next fiscal, with more downside risks to both the numbers.’ Besides, Gruenwald said despite these headwinds, India will be doing a lot better than the rest of the world.

The CNX Nifty ended at 17,629.80, down by 88.55 points or 0.50% after trading in a range of 17,532.45 and 17,722.75. There were 22 stocks advancing against 28 stocks declining on the index (Provisional).

The top gainers on Nifty were Titan Company up by 2.66%, Hindustan Unilever up by 2.64%, Asian Paints up by 2.38%, Eicher Motors up by 1.81% and Maruti Suzuki up by 1.66%. On the flip side, Power Grid down by 3.06%, Axis Bank down by 2.15%, HDFC Bank down by 2.13%, Coal India down by 1.94% and HDFC down by 1.76% were the top losers.

European markets were trading lower, UK’s FTSE 100 decreased 26.73 points or 0.37% to 7,210.91, France’s CAC decreased 35.99 points or 0.6% to 5,995.34 and Germany’s DAX was down by 50.31 points or 0.39% to 12,716.84.

Asian markets settled mostly lower on Thursday, tracking weakness in Wall Street overnight as the US Fed delivered a widely expected 75-bps rate hike and signalled more aggressive rate hikes ahead to curb rampant inflation reaching a 40-year high. Russian President Putin’s announcement of Russia’s first mobilisation since the second world war also adding more pressure on market sentiments. Moreover, concerns over China's slowdown and global recession fears also fuelled cautious trading sentiment. Lingering concerns over the economic impact of China's zero-covid policy weighed on Chinese shares. Japanese shares declined as investors reacted to the Bank of Japan's decision to maintain its ultra-easy monetary policy, while Japanese markets will be closed tomorrow for a national holiday. Although, Indonesian shares rose as the country's central bank delivered a larger-than-expected interest rate hike in line with expectation.