Markets extend opening losses in early deals; IT, TECK stocks drag

Indian equity benchmarks made negative start on Thursday tracking weakness in global peers after the US Federal Reserve hiked interest rates by 50 basis points (bps). Soon, markets extended their losses and are trading around half a percent lower in early deals due to selling in IT, TECK and Metal stocks. Sentiments got dampened as India Ratings said falling exports and high crude prices are set to push up current account deficit (CAD) in the second quarter to a 37-quarter high of 4.4 per cent of GDP at $36 billion as against $9.7 billion or 1.3 per cent in the year-ago period. Market participants failed to get any sense of relief with report that Finance minister Nirmala Sitharaman exuded confidence that inflation would further decline and the government is on track to meet its budgetary target for deficit and said that there is no fear of stagflation in India. Meanwhile, foreign institutional investors (FIIs) net bought shares worth Rs 372.16 crore in the Indian share market on 14 December, according to the provisional data available on the NSE.

Most of the Asian markets are trading lower, following the broadly negative cues from global markets overnight, on renewed concerns over the outlook for interest rates after the US Federal Reserve raised interest rates by 50 basis points and signaled further rate hikes ahead. Also, Japan posted a merchandise trade deficit of 2,027.4 billion yen in November. That missed forecasts for a shortfall of 1,680.3 billion yen. Back home, edible oil industry stocks were in focus as industry body SEA said India’s edible oil imports rose 34 per cent in November to 15.29 lakh tonne on sharp jump in import of crude palm and refined palm oils. In stock specific developments, Gulshan Polyols soared after it bagged Rs 137 crore order to supply over 22,000 kilolitres of ethanol across oil marketing companies. Tata Motors gained as it signed a deal with Everest Fleet to supply 5,000 units of XPRES-T EVs.

The BSE Sensex is currently trading at 62402.62, down by 275.29 points or 0.44% after trading in a range of 62363.04 and 62624.81. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.21%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.18%, Energy up by 0.08%, PSU up by 0.07%, Realty up by 0.06%, Bankex up by 0.02%, while IT down by 1.24%, TECK down by 1.20%, Metal down by 0.80%, Consumer Durables down by 0.57%, FMCG down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.37%, SBI up by 0.37%, HDFC Bank up by 0.27%, Sun Pharma up by 0.26% and Mahindra & Mahindra up by 0.19%. On the flip side, Tech Mahindra down by 1.98%, Infosys down by 1.66%, HCL Technologies down by 1.37%, TCS down by 1.09% and Titan Company down by 0.98% were the top losers.

Meanwhile, executing confidence that inflation would further decline, Finance Minister Nirmala Sitharaman has said that the government is on track to meet its budgetary target for deficit and added that there is no fear of stagflation in India. She further said that inflation has come down and it is now in the tolerable band of the RBI. She highlighted that inflation has been declining since April 2022 and it is declining further. As per the law, Monetary Policy Committee headed by RBI Governor has been given task of maintaining inflation at 4 per cent with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent.

She said Prime Minister Narendra Modi and his group of ministers are constantly watching and making periodic interventions and taking measures to keep inflation under check to ensure that the poor do not have to bear the extra financial burden. She also said several supply-side measures have been taken by the government to address inflation, including reduction in excise duty by Rs 8 per litre on petrol and Rs 6 per litre on diesel on May 21, 2022, prohibition of export of wheat products, imposition of export duty on rice, and reduction in import duties. In addition, the government has imposed stock limits on edible oils and oil seeds, and the inclusion of soya meal as an essential commodity in the schedule of the Essential Commodities Act, 1955 and imposition of a stock limit on soya meal.

Finance minister said stagflation is a phenomenon when there is slowdown in economy and high inflation, and added retail inflation has come down below 6 per cent to 5.8 per cent and the wholesale price index at 21-month low of 5.85 per cent in November. She added India is the fastest growing economy and lower inflation with forebearance limit. With regard to fiscal deficit, she said the government would be able to meet the fiscal deficit target of 6.4 per cent of the GDP for the current financial year. She also said the government is committed to the path of fiscal consolidation.

On declining value of the rupee against the US dollar, she said ‘Every report has told you that Indian rupee has only strengthened against the dollar…we have performed much better than many other emerging market economies.’ Exchange rate of the Indian Rupee (INR) is market-determined. INR, which had earlier weakened by 8.7 per cent against the US dollar till October 19, 2022 has since pared some of the losses and its depreciation stands at about 6.9 per cent in the current financial year till November 30, 2022. In comparison to emerging market peer currencies, INR movement has been relatively stable.

The CNX Nifty is currently trading at 18575.40, down by 84.90 points or 0.45% after trading in a range of 18569.25 and 18652.90. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 1.37%, SBI Life Insurance up by 1.17%, NTPC up by 0.52%, Britannia Industries up by 0.46% and SBI up by 0.40%. On the flip side, Tech Mahindra down by 2.06%, HCL Technologies down by 1.74%, Infosys down by 1.73%, Titan Company down by 1.13% and TCS down by 1.08% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 declined 83.38 points or 0.30% to 28,072.83, Straits Times fell 8.89 points or 0.27% to 3,269.68, Hang Seng plunged 232.54 points or 1.18% to 19,440.91, KOSPI weakened 24.80 points or 1.03% to 2,374.45, Jakarta Composite lost 34.25 points or 0.50% to 6,767.50 and Shanghai Composite was down by 8.80 points or 0.28% to 3,167.73, while Taiwan Weighted was up by 9.17 points or 0.06% to 14,748.53.