Post Session: Quick Review

The Indian equity benchmarks ended Wednesday’s session near day’s low points amid volatility post rate hike. Following weak other Asian markets, indices made cautious start, as traders remain concerned about the outlook for interest rates and about how much further the central bank will raise rates ahead of next week's US Fed meeting following recent upbeat economic data. Some cautiousness also came with stock exchange data showed that foreign institutional investors (FIIs) were net sellers in the capital market, as they sold shares worth Rs 635.35 crore on Tuesday. Soon, markets erased their losses and entered into positive territory, as traders got some support after Fitch Ratings retained India's economic growth forecast at 7 per cent for the current fiscal, saying India could be one of the fastest-growing emerging markets this year.

However, key indices were unable to hold on to the gains for long and dragged sharply lower after the Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 per cent with immediate. Meanwhile, it also announced a mild reduction in the GDP growth forecast for the current financial year to 6.8 per cent from 7 per cent earlier. It said that while the growth forecast had been reduced, India would still be among the fastest-growing major economies. Markets continued their volatile trade in afternoon session, as traders failed to get any sense of relief after Reserve Bank projected inflation to come down below the upper threshold level of 6 per cent by March quarter of the current fiscal. RBI Governor Shaktikanta Das said the central bank will keep ‘Arjuna’s eye’ (focus) on the evolving inflation dynamics and will remain ‘nimble and flexible’ to deal with the price situation. Selling got intensified in last leg of trade and markets touched their day’s low points despite Rupee appreciated against the U.S. dollar on Wednesday.  

On the global front, European markets were trading mostly in green helped by gains in healthcare stocks. Besides, investors digested the further easing of COVID restrictions in China as well as regional recessionary concerns. All Asian markets ended lower amid Beijing announced it was drastically scaling back its zero-COVID' policies, shifting away from trying to isolate every single case. Back home, sector wise, agriculture sector remained in limelight after Reserve Bank Governor Shaktikanta Das said the agriculture sector remains resilient, and the rabi sowing has got off to a strong start. However, India is expecting some moderation in kharif production due to uneven rainfall. Oil companies remained in focused after Fitch Ratings in its APAC Oil & Gas Outlook 2023 has said that the five-month-old tax on windfall profits made by oil companies will be phased out in 2023 on the back of moderating oil rates.

 The BSE Sensex ended at 62,410.68, down by 215.68 points or 0.34% after trading in a range of 62,316.65 and 62,759.97. There were 7 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 0.41%, while Small cap index was down by 0.44%. (Provisional)

The few gaining sectoral indices on the BSE were FMCG up by 0.87%, Capital Goods up by 0.84%, Industrials up by 0.44% and Oil & Gas was up by 0.04%, while Utilities down by 1.28%, Realty down by 1.11%, Consumer Durables down by 1.06%, Power down by 0.91% and Metal was down by 0.90% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Asian Paints up by 2.04%, Hindustan Unilever up by 1.99%, Larsen & Toubro up by 1.58%, Axis Bank up by 0.93% and ITC up by 0.83%. On the flip side, NTPC down by 2.05%, Bajaj Finserv down by 1.74%, Indusind Bank down by 1.68%, Reliance Industries down by 1.53% and Tata Steel down by 1.51% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) has increased the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 6.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent.

RBI’s Monetary Policy Committee (MPC) also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the price front, inflation is projected at 6.7 per cent in 2022-23, with Q3 at 6.6 per cent and Q4 at 5.9 per cent, and risks evenly balanced. CPI inflation for Q1:2023-24 is projected at 5.0 per cent and for Q2 at 5.4 per cent, on the assumption of a normal monsoon. On the economic growth front, the real GDP growth for 2022-23 is projected at 6.8 per cent with Q3 at 4.4 per cent and Q4 at 4.2 per cent, with risks evenly balanced. Real GDP growth is projected at 7.1 per cent for Q1:2023-24 and at 5.9 per cent for Q2.

The RBI also noted that the global economic outlook is skewed to the downside. Global growth is set to lose momentum as monetary policy actions tighten financial conditions and as consumer confidence weakens with the rising cost of livelihood. Inflation remains elevated and persistent across countries as they grapple with food and energy price shocks and shortages. More recently, however, there are some signs of moderation in price pressures, which have raised expectations of an easing in the pace of monetary tightening.

The CNX Nifty ended at 18,560.50, down by 82.25 points or 0.44% after trading in a range of 18,528.40 and 18,668.30. There were 9 stocks advancing against 41 stocks declining on the index. (Provisional)

The top gainers on Nifty were Asian Paints up by 2.05%, Hindustan Unilever up by 1.99%, BPCL up by 1.77%, Larsen & Toubro up by 1.46% and Axis Bank up by 1.11%. On the flip side, NTPC down by 1.91%, SBI Life Insuran down by 1.79%, Bajaj Finserv down by 1.75%, Tata Motors down by 1.64% and Indusind Bank down by 1.64% were the top losers. (Provisional)

European markets were trading mostly in green, UK’s FTSE 100 increased 16.37 points or 0.22% to 7,537.76 and Germany’s DAX was up by 10.30 points or 0.07% to 14,353.49. On the flip side, France’s CAC was down by 4.87 points or 0.07% to 6,682.92.

Asian markets settled lower on Wednesday tracking a sharp fall in US stocks overnight as investors worried about uncertainty over the US Federal Reserve’s interest rate hikes. Meanwhile, US recession fears also weighed on the market sentiments. Chinese shares dipped after data showed China's exports and imports both shrank at their steepest pace in at least 2-1/2 years in November. Although, some losses were capped after US senators called back a proposal that placed new curbs on semiconductor sales to China.