Benchmarks extend losing run to 4th straight session

Indian equity benchmarks extended their losing run to the 4th straight session and ended with heavy losses on Monday, tracking a risk-off mood among investors leading to unrelenting pressure on global stocks as worries of elevated inflation and global recession continued to rise.  Key gauges made gap-down opening and remained under selling pressure throughout the day, amid foreign fund outflows. Foreign institutional investors offloaded shares worth a net Rs 2,899.68 crore on Friday, according to data available with BSE. Traders were concerned as infusing more than Rs 51,000 crore last month, foreign investors have slowed down the pace of equity buying in India in September so far, as they invested a little over Rs 8,600 crore, on sharp depreciation in rupee. Some concern also came as S&P Global Ratings projected India's economic growth at 7.3 percent in the current fiscal with downside risks and said inflation is likely to remain above RBI's upper tolerance threshold of 6 percent till the end of 2022.

Sentiments also remain dampened on report that the Reserve Bank of India is set to raise interest rates again this week on September 30 with a slim majority expecting a half-point hike and some others expecting a smaller 35 basis point rise. The RBI has lagged many of its global peers, despite inflation sticking above the top end of its target range of 2-6 percent all year. Traders also took a note of the Asian Development Bank’s (ADB) report stating that with economic activity still to reach pre-pandemic levels, the RBI may slow down the pace of rate hikes until next year to quell soaring inflation while supporting growth. Traders overlooked the commerce and industry ministry’s statement that the country is on track to attract $100 billion foreign direct investment (FDI) in the current fiscal on account of economic reforms and ease of doing business in recent years.

European markets were trading lower, on worries about an economic downturn. A renewed selloff in British gilts pushed euro zone yields higher after Britain's new chancellor Kwasi Kwarteng announced a sweeping package of tax cuts. Investors were also digesting the victory of a right-wing bloc led by Giorgia Meloni in Italy's parliamentary elections on Sunday. Asian markets settled down on Monday, as traders remain concerned the aggressive monetary tightening by global central banks to combat elevated inflation will push the global economy into a recession, rendering the mood in the markets extremely bearish.

Back home, insurance industry stocks ended lower despite data from insurance sector regulator Irdai showing that non-life insurers registered a 12 per cent yearly growth in their gross direct premium income during August this fiscal at Rs 24,471.95 crore. agriculture industry stocks were in watch the agriculture ministry said paddy planting continued to lag behind as sown area under this crop fell 5.51 per cent from last year to 401.56 lakh hectare so far, as sowing of kharif (summer) crops almost comes to an end.

Finally, the BSE Sensex fell 953.70 points or 1.64% to 57,145.22 and the CNX Nifty was down by 311.05 points or 1.80% to 17,016.30.

The BSE Sensex touched high and low of 57,708.38 and 57,038.24, respectively. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 2.84%, while Small cap index was down by 3.33%.

The lone gaining sectoral index on the BSE was IT up by 0.14%, while Metal down by 4.50%, Realty down by 4.29%, Auto down by 3.86%, Utilities down by 3.72%, Power down by 3.71% were the losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.28%, Asian Paints up by 1.14%, Infosys up by 1.06%, Ultratech Cement up by 0.50% and TCS up by 0.40%. On the flip side, Maruti Suzuki down by 5.49%, Tata Steel down by 4.22%, ITC down by 3.96%, Axis Bank down by 3.40% and NTPC down by 3.35% were the top losers.

Meanwhile, expressing optimism over India’s foreign investment, the commerce and industry ministry has said the country is on track to attract $100 billion foreign direct investment (FDI) in the current fiscal on account of economic reforms and ease of doing business in recent years. In 2021-22, the country received the ‘highest ever’ foreign inflows of $83.6 billion. It added that this FDI has come from 101 countries, and invested across 31 union territories and states and 57 sectors in the country.

It said that to attract foreign investments, the government has put in place a liberal and transparent policy wherein most sectors are open to FDI under the automatic route. It added that the reform measures include liberalization of guidelines and regulations, in order to reduce unnecessary compliance burden, bring down cost and enhance the ease of doing business in India.

Besides, FDI equity inflows in India dipped by 6 per cent to $16.6 billion during April-June period of the current fiscal. It also said that to address the import of low-quality and hazardous toys and to enhance domestic manufacturing of toys, several strategic interventions have been taken by the government. The import of toys in 2021-22 reduced by 70 per cent to $110 million (Rs 877.8 crore). On the other hand, exports rose by 61 per cent to $326 million.

The CNX Nifty traded in a range of 17,196.40 and 16,978.30. There were 9 stocks advancing against 41 stocks declining, while 1 stock remains unchanged on the index.  

The top gainers on Nifty were HCL Technologies up by 1.36%, Infosys up by 1.29%, Asian Paints up by 1.14%, Divi's Lab up by 0.75% and TCS up by 0.60%. On the flip side, Adani Ports &Special down by 6.35%, Tata Motors down by 5.93%, Hindalco down by 5.85%, Maruti Suzuki down by 5.81% and Eicher Motors down by 4.93% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 52.05 points or 0.74% to 6,966.55, France’s CAC decreased 7.71 points or 0.13% to 5,775.70 and Germany’s DAX decreased 10.43 points or 0.08% to 12,273.76.

Asian markets settled down on Monday, tracking weakness in Wall Street last Friday as recession fears continue to grow following concerns over aggressive monetary policy tightening by the US Federal Reserve. Japanese shares declined as a measure of Japan's factory activity hit a 20-month low in September. Japanese authorities’ currency intervention also added more pressure on market sentiments. Chinese shares dropped ahead of factory activity data due later in the week. Meanwhile, the Reserve Bank of India’s monetary policy committee is scheduled to meet later this week.