Markets magnify losses amid weak global cues

Indian equity markets magnified their losses in late morning deals, tracking weak cues from other global markets as investors await US inflation data later in the day for additional clues on the rate outlook. Meanwhile, broader indices were also trading lower with cut in the range of 0.45-0.78%.  Depreciation in Indian rupee against dollar too weighed down sentiments. Rupee weakened by 6 paise to 82.39 against the dollar at the Inter-bank Foreign Exchange market on account of increased demand for the American currency from importers and banks. Further, weak set of macro-economic data also dampened sentiments. India's retail inflation spiked to 7.41% in September, mainly due to costlier food items. For the ninth month in a row, retail inflation has remained above the Reserve Bank of India's tolerance level of 6%.

On the global front, Asian markets were trading mostly lower following negative cues from US markets overnight, as traders were cautious as they reacted to the US Fed's minutes from its latest monetary policy meeting. Back home, on the BSE sectoral front, Telecom, Bankex, Capital Goods, Industrials, Consumer Durables witnessed the maximum losses in trade, while Healthcare and Consumer Disc remained only gainers.

The BSE Sensex is currently trading at 57221.88, down by 404.03 points or 0.70% after trading in a range of 57158.15 and 57568.14. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.78%, while Small cap index down by 0.45%.

The only gaining sectoral indices on the BSE were Healthcare up by 0.14% and Consumer Disc up by 0.01%, while Telecom down by 1.43%, Bankex down by 1.22%, Capital Goods down by 1.19%, Industrials down by 0.94% and Consumer Durables down by 0.86% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Tech. up by 3.03%, Sun Pharma up by 1.09%, NTPC up by 0.73%, Dr. Reddy's Lab up by 0.70% and Nestle up by 0.24%. On the flip side, Wipro down by 6.17%, Larsen & Toubro down by 1.78%, SBI down by 1.74%, HDFC Bank down by 1.53% and Asian Paints down by 1.51% were the top losers.

Meanwhile, rating agency Crisil's research wing in its latest report has said that India Inc is likely to report a three per cent year-on-year fall in profits for the July-September period (Q2FY23). This fall in profitability will be the fourth straight quarter of the decline in profits for the listed companies. Profitability is seen declining 300 basis points (bps) due to elevated commodity prices.

The report, based on research of 300 companies from 47 sectors, said that rising revenue momentum is not translating into profit margin proportionately. The revenues are expected to rise by 15 per cent during the quarter when compared to the year-ago period, attributing it to moderate price hikes and steadily rising volumes. It can be noted that starting earlier this week, major companies have been reporting their earnings for the July-September period. On a sequential basis, that is when compared with the performance in Q1, the corporate revenue has declined by 3 per cent.

The report said nearly half of the 47 sectors have outpaced overall revenue growth during the quarter, with key sectors within consumer discretionary services logging maximum year-on-year growth. The underperforming sectors include construction-linked, consumer staples and industrial commodities verticals. Consumer discretionary services, which accounted for 8 per cent of overall revenue, are estimated to have grown 35 per cent year-on-year, largely due to revenue more than doubling in sectors, such as airline services on account of a rise in passenger traffic and high fares and hotels due to the increase in occupancy and room tariff.

It further said the IT services sector will report a 15-17 per cent rise in revenues, aided by the rapid adoption of digital platforms across the world. It said the construction-linked sectors, which accounted for 16 per cent of overall revenue, grew only 5 per cent on-year in the September quarter, adding that the largest contributor steel products likely to de-grew by 3 per cent after a continued run-up in revenue growth over the past eight quarters.

The CNX Nifty is currently trading at 17005.90, down by 117.70 points or 0.69% after trading in a range of 16989.50 and 17112.35. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were HCL up by 2.96%, Hindalco up by 1.84%, Sun Pharma up by 1.07%, NTPC up by 0.67% and Dr. Reddy's Lab up by 0.65%. On the flip side, Wipro down by 6.19%, Adani Ports down by 2.14%, SBI Life Insurance down by 1.87%, Larsen & Toubro down by 1.85% and SBI down by 1.66% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 slipped 110.31 points or 0.42% to 26,286.52, Taiwan Weighted dropped 258.70 points or 1.98% to 12,822.54, Hang Seng decreased 174.15 points or 1.04% to 16,526.88, KOSPI fell 27.29 points or 1.24% to 2,175.18, Straits Times trembled 36.37 points or 1.18% to 3,046.82 and Shanghai Composite declined 2.83 points or 0.09% to 3,022.68.  However, Jakarta Composite soared 10.73 points or 0.16% to 6,919.94.