Benchmarks end on negative note on Monday

Indian equity benchmarks ended Monday on a negative note, dragged down by IT, Power and Utilities stocks, while the likelihood of tighter U.S. monetary policy and worsening COVID-19 infection numbers in China weighed on sentiment. Markets made weak start and stayed in red for whole day as traders were concerned as the latest payroll data released by the Employees’ Provident Fund Organisation showed the number of fresh formal jobs created fell for the second consecutive month in September, declining 9 per cent sequentially to 930,000. Enrolment of new female subscribers fell faster (11.39 per cent) than their male counterparts (8.13 per cent) in September, compared with the previous month. Some concern also came as the provisional data available on NSE showed that foreign institutional investors (FIIs) net offloaded shares worth Rs 751.20 crore on 18 November.

Markets remained under pressure in late afternoon deals amid private report that the Indian economy which claimed the title of the fastest-growing major economy in the previous fiscal is likely to lose its momentum in 2023 owing to higher borrowing costs and fading benefits from the Covid pandemic reopening. It stated gross domestic product may expand by 5.9% in the calendar year 2023 from an estimated 6.9% this year. Sentiments remained downbeat as the gross fiscal deficit of the Indian states rose nearly 79 per cent after the lockdown. According to the latest data from the Reserve Bank of India (RBI), the fiscal deficit rose from Rs 5.2 trillion in FY20 to Rs 9.3 trillion in 2020-21 (FY21). Traders overlooked data showing that retail inflation for farm and rural workers eased marginally to 7.22 per cent and 7.34 per cent, respectively, in October compared to September 2022, mainly due to lower prices of certain food items. Markets participants also paid no heed towards former Niti Aayog Vice-Chairman Rajiv Kumar’s statement that India will still grow at 6-7 per cent in the next 2023-24 fiscal even as the economy may be affected by uncertain global conditions.

On the global front, Asian markets settled mostly lower on Monday, while European markets were trading lower as China battled a record number of COVID-19 cases and Russian officials in control of Europe's largest nuclear site accused Kyiv of shelling the area. China has reported the death of three people after contracting COVID-19. It is the first COVID-related death that China's mainland has reported since May. Risk sentiment was also hit by fears of a potential escalation in the Russia-Ukraine conflict following recent shelling around the Zaporizhzhia nuclear power plant.

Back home, banking stocks were in focus, as S&P Global Market Intelligence in a report on the Indian banking sector said that the rising interest rates will enable Indian banks to continue posting good profits during the remaining part of FY23. Gem and jewellery sector stocks were in watch as GJEPC said the gem and jewellery exports declined 14.64 per cent in October at Rs 25,843.84 crore due to seasonal trend as manufacturing activities are limited or closed during Diwali. Steel related stocks were also buzzing as the government has cut the export duty on steel products and iron ore with effect November 19, 2022. As per government notification issued, exports of specified pig iron and steel products as well as iron ore pellets will attract 'nil' export duty.

Finally, the BSE Sensex fell 518.64 points or 0.84% to 61,144.84 and the CNX Nifty was down by 147.70 points or 0.81% to 18,159.95.

The BSE Sensex touched high and low of 61,456.33 and 61,059.33, respectively. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.15%, while Small cap index was up by 0.01%.

The top gaining sectoral indices on the BSE were Telecom up by 0.71% and Consumer Durables up by 0.16%, while IT down by 1.46%, Power down by 1.42%, Utilities down by 1.41%, Realty down by 1.38% and TECK down by 1.04% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.70%, Axis Bank up by 1.22%, Indusind Bank up by 1.21%, Hindustan Unilever up by 0.76% and Power Grid Corporation up by 0.39%. On the flip side, Reliance Industries down by 1.83%, HDFC down by 1.80%, Tech Mahindra down by 1.78%, TCS down by 1.78% and Infosys down by 1.61% were the top losers.

Meanwhile, S&P Global Market Intelligence in its latest report on the Indian banking sector has said that the rising interest rates will enable Indian banks to continue posting good profits during the remaining part of FY23. It stated five of the six biggest banks by assets in India reported an increase in net income for the fiscal second quarter ended September 30, 2022.

It mentioned ‘Banks took advantage of the higher interest rate environment to bolster their net interest margins, while previous efforts to reduce their non-performing assets resulted in lesser loan loss provisions, their recently released earnings reports showed.’

Besides, citing the Reserve Bank of India's (RBI) data, it said the bank credit growth has picked up for both public and private sector banks in the first half of fiscal 2022-2023. Private sector banks' credit growth for the fiscal first half came to 20.4 per cent, compared to 13.9 per cent for public sector banks. According to the report, though the RBI had hiked its benchmark lending rate by 190 basis points to 5.90 per cent since May, further hike in the interest rate may not be steep since inflation may have peaked.

The CNX Nifty traded in a range of 18,262.30 and 18,133.35. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.10%, Bharti Airtel up by 1.72%, Axis Bank up by 1.18%, Indusind Bank up by 1.12% and Hindustan Unilever up by 0.74%. On the flip side, Adani Ports & SEZ down by 2.13%, Tech Mahindra down by 2.11%, Hero Motocorp down by 2.02%, Hindalco down by 1.94% and Reliance Industries down by 1.91% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 6.34 points or 0.09% to 7,379.18, France’s CAC decreased 19.76 points or 0.3% to 6,624.70 and Germany’s DAX decreased 101.38 points or 0.7% to 14,330.48.

Asian markets settled mostly lower on Monday as surging corona virus cases with first covid deaths reported in China since May led to new restrictions there and weighed on market sentiments. Moreover, geopolitical and interest-rate uncertainties added more pressure on markets. As Russia and Ukraine trade blame over the weekend's shelling near the Zaporizhzhia nuclear power plant, the head of the UN nuclear watchdog International Atomic Energy Agency (IAEA) Rafael Mariano Grossi has warned that whoever is behind the shelling at Ukraine's Zaporizhzhia nuclear power plant is ‘playing with fire’. Meanwhile, minutes from the European Central Bank meeting and the US Fed later this week will provide markets with more direction on the outlook for interest rates. Although, Japanese shares rose marginally tracking gains posted by Wall Street stocks last week and after Warren Buffet's investment Company, Berkshire Hathaway raised its stake in the country's five biggest trading houses.