Post Session: Quick Review

Indian equity benchmarks ended near intraday low points amid profit booking ahead of a holiday on Wednesday for Diwali Balipratipada. Key gauges made slightly positive start, as traders took support after finance ministry in its monthly economic review stated that India’s growth and stability concerns are less than that of the world at large, and estimated the country’s medium-term growth rate above 6 percent. However, markets unable to maintain their gains and slipped into red zone, as traders were worried after Reserve Bank of India (RBI) said India’s forex reserves dropped by $4.50 billion to $528.37 billion for the week ended October 14. Foreign Currency Assets (FCA), a major component of the overall reserves, saw a drop of $2.828 billion to $468.668 billion during the week to October 14. Markets continued their dull trade in afternoon session, as sentiments remained downbeat after foreign investors have pulled out close to Rs 6,000 crore from the Indian equity markets so far this month in the wake of strength in the US dollar against the rupee. Traders were concerned as private report stated that the government will not infuse any capital into public sector banks (PSBs) this financial year (FY23). This will happen for the first time since FY08.

Traders took note of report that attributing the rise in tax collections to demonetisation, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) member Ashima Goyal has said that it will help the nation move towards the ideal situation where low taxes are levied on a large base. Noting that demonetisation had short-term costs but some long-term benefits, she said it enhanced digitisation and formalization in the economy and reduced tax evasion, although all this has further to go. The selling was intensified in last leg of trade to touch day’s low points.  Sentiments continued to hit after ministry of Statistics and Programme Implementation in its latest data report has showed that a total of 986,850 people subscribed to employee provident fund during the month of August, an 11 per cent decline in comparison to the previous month.

On the global front, European markets were trading mostly in red as investors digested a slew of earnings updates and looked ahead to the policy meetings by the European Central Bank and Federal Reserve for directional cues. Asian markets ended mostly in red as concerns over China's growth prospects and a new political order in the country offset hopes of a Fed pivot. The U.S. dollar stabilized at lower levels amid growing bets that a pronounced economic slowdown will push the Federal Reserve into softening its hawkish stance after a 75-points rate hike in November. Back home, in scrip specific, Hindustan Unilever ended lower even after it has reported 22% rise in Q2 consolidated net profit. The broader indices, the BSE Mid cap index and Small cap index ended mixed.

The BSE Sensex ended at 59,543.96, down by 287.70 points or 0.48% after trading in a range of 59,489.02 and 60,081.24. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index gained 0.45%, while Small cap index was down by 0.35%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 1.24%, Auto up by 1.22%, PSU up by 1.07%, Industrials up by 0.84% and Oil & Gas was up by 0.53%, while FMCG down by 1.10%, Telecom down by 0.91%, Realty down by 0.61%, Utilities down by 0.60% and Bankex was down by 0.56% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tech Mahindra up by 3.39%, Maruti Suzuki up by 2.78%, Larsen & Toubro up by 1.78%, Dr. Reddy's Lab up by 1.52% and SBI up by 1.14%. On the flip side, Nestle down by 2.83%, Hindustan Unilever down by 2.70%, Bajaj Finserv down by 2.62%, Kotak Mahindra Bank down by 2.60% and HDFC down by 1.59% were the top losers. (Provisional)

Meanwhile, expressing cautiousness, the Finance Ministry’s Economic Review stated that inflation might witness another resurgence in case of deterioration of geo-political situation leading to higher global energy prices and supply chain pressures. Observing that India has managed inflation better than most other countries in the world, the Review said that barring further weather extremities, retail food inflation is expected to decline in the coming months, leading to lower headline retail inflation. However, it said global energy prices and supplies remain sources of concern.

It said retail inflation for India during these six months stood at 7.2 per cent, lower than the world inflation of 8 per cent, as represented by the median inflation of major economies. During the same period, it said the INR depreciated by 5.4 per cent against the USD, less than the depreciation of 8.9 per cent of six major currencies in the DXY Index. It said a series of measures taken by the RBI during July 2022 is expected to stabilise the capital flows further and support the INR.

The report said India’s growth narrative in the first six months of the current financial year featured the uninterrupted thrust government provided to its capital expenditure that, until August of FY 2022-23, stood 46.8 per cent higher than the corresponding period of the previous year. It said the increase marked a decisive shift towards improved quality of spending as the ratio of revenue expenditure to capital outlay fell to 4.5 from 6.4 in the last year, and added that rising capital expenditure levels were also supported by stronger revenue generation following an improvement in tax compliance, higher corporate profitability, and growing economic activity.

It further said that increasing revenue generation has further kept the fiscal deficit until August aligned with its budgeted level, which otherwise could have gone awry with high capital expenditure, higher fertilizer and food subsidies and excise tax cuts to rein in inflation. It added that quietly rebuilding the economy’s ability to grow and letting it grow, after at least half a decade of financial stress followed by the pandemic, the global inflation shock and the global tightening of financial conditions will yield results that will be harder for the world to miss.

The CNX Nifty is currently trading at 17656.35, down by 74.40 points or 0.42% after trading in a range of 17637.00 and 17811.50. There were 20 stocks advancing against 29 stocks declining on the index, while 1 stock remained unchanged. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 3.28%, Maruti Suzuki up by 2.73%, JSW Steel up by 2.34%, Larsen & Toubro up by 2.06% and Eicher Motors up by 1.91%. On the flip side, Nestle down by 2.84%, Hindustan Unilever down by 2.63%, Kotak Mahindra Bank down by 2.60%, Bajaj Finserv down by 2.54% and Britannia down by 2.33% were the top losers. (Provisional)

European markets were trading mostly in red, UK’s FTSE 100 decreased 30.63 points or 0.44% to 6,983.36 and Germany’s DAX was down by 55.20 points or 0.43% to 12,876.25. On the flip side, France’s CAC was up by 23.43 points or 0.38% to 6,154.79.

Asian markets settled mostly lower on Tuesday, despite bets that the US Federal Reserve could begin to slow monetary policy tightening later in the year. Chinese shares declined marginally amid concerns over growth prospects following signs that the country won't compromise on issues over Taiwan and the zero-covid policy. Market sentiments dropped further amid fears about Chinese President Xi Jinping's shocking move to tighten his grip on power at a major leadership reshuffle. Concerns over US restrictions on semiconductor exports to China also weighed on Taiwan shares. Although, Japanese shares gained on earnings optimism.