Markets tumble in early deals amid global sell-off; Nifty crashes 200 points

Indian equity benchmarks extended their previous session’s losses with gap-down opening on Monday amid slide in global equities and surge in crude oil prices. Markets are trading deeply in red with cut of over a percent each in early deals dragged by broad based losses across sectors led by Auto, FMCG, Capital Goods down, Power and Healthcare. Traders were concerned as the Reserve Bank of India's (RBI) weekly statistical supplement showed that India's foreign exchange reserves fell to $532.66 billion in the week through Sept. 30, their lowest level since July 2020. Sharp fall in rupee also weighted down on the domestic markets. Indian currency depreciated 38 paise to 82.68, a fresh low, against the U.S. dollar, at the open. On Friday, rupee had closed at 82.30. Traders took note of Union Finance Secretary T V Somanathan’s statement that India has a nano demographic window to achieve developed country status, and if it misses, it may not reach there. He said the country has to grow at a rate of 8-8.5 per cent to reach developed country status. Meanwhile, the tax department said the gross collection of tax on corporate and individual earnings jumped nearly 24 per cent so far in the current fiscal year to Rs 8.98 trillion.

Global cues remained lackluster with Asian markets trading lower, following the broadly negative cues from global markets on Friday, after stronger than expected U.S. employment data raised grave concerns over the outlook for interest rates. Worries about inflation, economic slowdown and resultant recession also continued to weigh market sentiments. Markets in Japan, South Korea, Taiwan and Malaysia are closed for holidays. Back home, metal stocks were in focus with a private report stating that India's crude steel output rose by 2.56 per cent to 30.06 million tonne (MT) during the July-September period of the ongoing financial year. In stock specific development, shares of Tata Consultancy Services (TCS) declined marginally ahead of their July-September results update (Q2FY23). On the other hand, Shares of IDBI Bank rallied after the finance ministry invited initial bids for strategic disinvestment in the lender. The government aims to jointly sell 60.7% stake in the lender along with the LIC.

The BSE Sensex is currently trading at 57505.44, down by 685.85 points or 1.18% after trading in a range of 57365.68 and 57625.06. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 1.16%, while Small cap index was down by 0.71%.

The top losing sectoral indices on the BSE were Auto down by 1.53%, FMCG down by 1.47%, Capital Goods down by 1.26%, Power down by 1.26%, Healthcare down by 1.24%, while there was no gainer on BSE sectoral front.

The only gainers on the Sensex were TCS up by 0.66% and Power Grid up by 0.26%. On the flip side, HDFC down by 2.25%, Hindustan Unilever down by 2.00%, HDFC Bank down by 1.95%, Asian Paints down by 1.91% and Sun Pharma down by 1.77% were the top losers.

Meanwhile, expressing confidence over the country’s economic growth, Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal has said that India will perhaps emerge as the strongest major economy with 7 per cent growth rate in FY23, amid fears of the world slipping into recession. He observed that India can grow at 9 per cent in an external conducive environment like in early 2000s when the global economy was growing. He added ‘We are clearly entering an environment where many countries around the world will be facing much slower growth or even slipping into recession. This is due to a combination of factors ranging from tighter monetary policy to higher energy costs, as well as disruptions caused by the Ukraine war.’

Sanyal emphasised that the cumulative impact of supply side reforms over many years by the Modi government has meant that India's economy is currently much more flexible and resilient than it used to be. He noted that if India gets an external environment like the one it had during 2002-03 to 2006-07 when the global economy was growing, global inflationary pressures were muted, then its economy is capable of delivering 9 per cent growth. He said ‘But obviously, we are not in that environment right now. So given that situation 7 per cent GDP growth rate is a good performance’.

However, the EAC-PM member cautioned against pushing growth unnecessarily ‘when the highway has so many bumps and hurdles in the way’. On the Indian rupee touching a historic low last week, he said ‘I don't think we should get too fussed about looking at just the dollar INR exchange rate’. According to him, there is obviously a very sharp strengthening of the US dollar against all currencies and in that circumstance, the rupee actually is appreciating against all currencies except dollar. Noting that the Reserve Bank is correct in allowing the rupee to find its level while at the same time using the reserves to smoothen the volatility, he said the central bank should not defend a particular level, it should however, use its reserves to control volatility.

The CNX Nifty is currently trading at 17108.65, down by 206.00 points or 1.19% after trading in a range of 17064.70 and 17149.65. There were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were TCS up by 0.58%, Coal India up by 0.52% and Power Grid up by 0.19%. On the flip side, Tata Motors down by 3.40%, Hero MotoCorp down by 3.11%, HDFC down by 2.20%, Hindalco down by 2.04% and HDFC Bank down by 1.98% were the top losers.

Asian markets are trading in red; Straits Times declined 36.34 points or 1.16% to 3,109.47, Hang Seng slipped 450.38 points or 2.54% to 17,289.67, Jakarta Composite fell 50.61 points or 0.72% to 6,976.17 and Shanghai Composite was down by 11.81 points or 0.39% to 3,012.58.