Benchmarks trade lower in early deals; Metal stocks lose shine

Indian equity benchmarks made negative start on Friday tracking weakness in global peers coupled with rising crude oil prices. Markets soon extended their losses and are trading lower with cut of around half a percent each in early deals. Selling in Metal, Oil & Gas and Realty stocks weighted down on the domestic indices. Traders were concerned as the World Bank projected a growth rate of 6.5 per cent for the Indian economy for the fiscal year 2022-23, a drop of one per cent from its previous June 2022 projections, citing deteriorating international environment. It added that private investment growth is likely to be dampened by heightened uncertainty and higher financing costs. Market participants overlooked Chief economic adviser V Anantha Nageswaran’s statement that India is still on course for 7% growth in the current fiscal year although downside risks dominate the upside risk but it's better placed than other countries. Besides, as per provisional data available on the NSE, foreign institutional investors (FIIs) remained net buyers to the tune of Rs 279.01 crore on October 6.

On the global front, most of the Asian markets are trading lower, following the broadly negative cues from global markets overnight, as traders continue to be concerned about the outlook for interest rates and the impact higher rates will have on the economy. A continued rebound by US treasury yields also weighed on the markets. Traders are also cautiously looking ahead to the release of the US Labor Department's closely watched monthly employment report later in the day.

Back home, the Securities and Exchange Board of India (SEBI) has cancelled the recognition certificate granted to Brickwork Ratings India, one of the seven registered credit rating agencies (CRAs) in the country, for ‘repeated lapses’ and irregularities in ‘discharging its duties’. The SEBI directed Brickwork to wind down its operations within six months and intimate its clients about the same. In stock specific development, Titan rallied after its overall sales grew by 18 per cent YoY in Q2 business update.

The BSE Sensex is currently trading at 57945.34, down by 276.76 points or 0.48% after trading in a range of 57911.07 and 58178.55. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.67%, while Small cap index was down by 0.18%.

The sole gaining sectoral index on the BSE was Consumer Durables up by 2.00%, while Metal down by 1.35%, Oil & Gas down by 1.04%, Realty down by 0.99%, Bankex down by 0.96%, PSU down by 0.96% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Co up by 5.26%, Maruti Suzuki up by 1.03%, HCL Technologies up by 0.57%, Reliance Industries up by 0.28% and Asian Paints up by 0.23%. On the flip side, ICICI Bank down by 1.02%, Indusind Bank down by 0.98%, Tata Steel down by 0.87%, SBI down by 0.77% and Power Grid down by 0.75% were the top losers.

Meanwhile, citing deteriorating international environment, the World Bank in its latest report on ‘South Asia Economic Focus’ has downgraded India’s economic growth forecast to 6.5 per cent for the fiscal year 2022-23 (FY23), a drop of one per cent from its previous June 2022 projections. The Indian economy grew by 8.7 per cent in the previous year. However, it noted that India is recovering stronger than the rest of the world.

Hans Timmer, World Bank Chief Economist for South Asia said ‘The Indian economy has done well compared to the other countries in South Asia, with relatively strong growth performance... bounced back from the sharp contraction during the first phase of COVID’. He observed that India has done relatively well with the advantage that it doesn't have a large external debt, there are no problems coming from that side, and that there is prudent monetary policy. The Indian economy has done especially well in the services sector and especially service exports.

He further said ‘But we have downgraded the forecast for the fiscal year that just started and that is largely because the international environment is deteriorating for India and for all countries. We see kind of an inflection point in the middle of this year, and first signs of slowing across the world.’ He noted that the second half of the calendar year is weak in many countries and will be relatively weak also in India.

He said that's mainly because of two factors. One is the slowing of growth in the real economy of high-income countries. The other one is the global tightening of monetary policy that tightens financial markets and not just that it leads to capital outflows in many developing countries, but it also increases interest rates and uncertainty in developing countries which has a negative impact on investment.

The CNX Nifty is currently trading at 17257.60, down by 74.20 points or 0.43% after trading in a range of 17239.00 and 17322.40. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Titan Co up by 4.72%, UPL up by 1.44%, Hero MotoCorp up by 1.24%, Cipla up by 0.68% and Bajaj Auto up by 0.62%. On the flip side, Eicher Motors down by 1.68%, BPCL down by 1.57%, Tata Steel down by 1.40%, Mahindra & Mahindra down by 1.38% and ICICI Bank down by 1.21% were the top losers.

Asian market are trading mostly in red; Nikkei 225 slipped 185.68 points or 0.68% to 27,125.62, Hang Seng declined 199.40 points or 1.11% to 17,812.75, Taiwan Weighted plunged 160.34 points or 1.15% to 13,731.71 and Jakarta Composite was down by 42.12 points or 0.60% to 7,034.50. On the other hand, Straits Times added 8.23 points or 0.26% to 3,159.79 and KOSPI was up by 5.09 points or 0.23% to 2,242.95.