Domestic indices trade lower in early deals; Indusind Bank falls over 3%

Indian equity benchmarks made negative start on Thursday tracking weakness in Asian counterparts and overnight sell-off in global markets. Domestic indices are trading lower with over 0.40% cut in early deals amid weekly F&O expiry. Weak opening in rupee also dampen sentiments in equity markets. The rupee opened at record low of 83.05 against the US dollar from its previous close of 83.00 on Wednesday due to a stronger greenback overseas and unrelenting foreign fund outflows. Foreign institutional investors (FIIs) net offloaded shares worth Rs 453.91 crore on Wednesday (October 19), according to the provisional data available on the NSE. Though, downside remained capped as RBI Monetary Policy Committee (MPC) member Ashima Goyal said that the efforts of the Reserve Bank to contain price rise by repeatedly increasing interest rates will help in containing inflation, which is likely to fall below 6 per cent next year. Goyal further said that the policy rate hikes have largely reversed pandemic-time cuts but the real rate remains low enough not to hurt the growth recovery.

Global cues remained lackluster with most of the Asian markets are trading lower following the broadly negative cues from global markets overnight, as traders remained concerned about a global recession after data showed a sharp acceleration in UK inflation. A jump in US treasury yields to its highest closing level in over fourteen years also strengthened the US dollar against Asian currencies. Back home, aviation industry stocks were in focus as data released by aviation safety regulator Directorate General of Civil Aviation (DGCA) showing that domestic air passenger volume grew 64.61 per cent to 10.35 million in September over the same period last year. In stock specific development, IndusInd Bank dipped on profit booking after the bank reported a healthy 57% Y-o-Y growth in July-September (Q2FY23) consolidated net profit to Rs 1,805 crore driven by a healthy rise in loan disbursement and net interest income.

The BSE Sensex is currently trading at 58848.22, down by 258.97 points or 0.44% after trading in a range of 58791.28 and 58989.17. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.94%, while Small cap index was down by 0.43%.

The sole gaining sectoral index on the BSE was FMCG up by 0.14%, while Consumer Durables down by 1.80%, Auto down by 1.29%, Realty down by 1.05%, Metal down by 1.02%, Bankex down by 0.96% were the top losing indices on BSE.

The top gainers on the Sensex were Nestle up by 1.26%, ITC up by 0.42%, HCL Technologies up by 0.37%, Reliance Industries up by 0.36% and Hindustan Unilever up by 0.36%. On the flip side, Indusind Bank down by 3.41%, Titan Company down by 2.17%, Mahindra & Mahindra down by 1.60%, HDFC Bank down by 1.02% and NTPC down by 0.98% were the top losers.

Meanwhile, highlighting the Reserve Bank of India’s (RBI’s) efforts to contain price rise by repeatedly increasing interest rates, RBI Monetary Policy Committee (MPC) member Ashima Goyal has said that this will help in containing inflation, which is likely to fall below 6 per cent next year. She further said that the policy rate hikes have largely reversed pandemic-time cuts but the real rate remains low enough not to hurt the growth recovery. She added that with a lag of two-three quarters, higher real rates will reduce demand in the economy. She noted that ‘International commodity prices are softening with the global slowdown and supply chain bottlenecks have reduced’.

In order to control rising inflation, the RBI on September 30, raised the short-term lending rate for the third consecutive time by 50 bps to take the repo rate to 5.9 per cent. Since May it has cumulatively increased the key interest rate by 190 basis points. Goyal said ‘The Indian government is also taking action to reduce supply-side inflation. Current projections show inflation falling below 6 per cent next year’. The central bank is mandated to keep inflation at 4 per cent with a 2 per cent margin on either side. According to Goyal, a mildly positive real interest rate can act to reduce inflation, with supportive supply-side action, while imposing minimal growth sacrifice.

She noted that currently the forward-looking real interest rate is positive and such a rapid response in an inflation targeting regime to inflation exceeding tolerance bands, helps anchor inflation expectations. On the Indian rupee touching a historic low, she pointed out that a more depreciated rupee makes imports more expensive and hurts those who have borrowed abroad but may raise returns for some exporters. While observing that lower imports and higher exports can help reduce the current account deficit, she said the dollar is strengthening against all currencies as rising Fed rates attract funds back to the US. She pointed out that corporates have reduced debt over the last decade and the financial sector is well-capitalized. He noted that ‘All this lowers contagion risk for India’.

The CNX Nifty is currently trading at 17438.65, down by 73.60 points or 0.42% after trading in a range of 17422.05 and 17469.85. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Nestle up by 1.32%, Cipla up by 0.87%, Reliance Industries up by 0.60%, HCL Technologies up by 0.54% and Hindustan Unilever up by 0.48%. On the flip side, Indusind Bank down by 3.34%, Titan Company down by 2.25%, Mahindra & Mahindra down by 1.86%, Coal India down by 1.81% and Bajaj Auto down by 1.58% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 372.21 points or 1.37% to 26,885.17, Straits Times fell 4.06 points or 0.13% to 3,018.74, Hang Seng plunged 402.75 points or 2.44% to 16,108.53, Taiwan Weighted declined 210.74 points or 1.62% to 12,766.02, KOSPI lost 36.03 points or 1.61% to 2,201.41, Shanghai Composite was down by 11.75 points or 0.39% to 3,032.63, while Jakarta Composite was up by 87.80 points or 1.28% to 6,948.22.