Benchmarks witness bloodbath; Nifty closes below 18,450 mark

Indian equity benchmarks traded under heavy selling pressure throughout the day and settled with losses of around one and half percent on Thursday amid weak global cues. Traders got anxious 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. Some cautiousness also came as former governor of the Reserve Bank of India Raghuram Rajan said the next year will be difficult for the Indian economy as also for the rest of the world and the country failed to generate reforms needed for growth. He said policies should be formulated keeping in mind the lower middle class which suffered the most due to the coronavirus pandemic.

Key gauges extended fall in late afternoon deals, as some pessimism came with finance minister Nirmala Sitharaman’s statement that India is seeing a fall in demand for jobs under a rural employment guarantee programme. Investors failed to draw any solace with Union minister Piyush Goyal’s statement that huge opportunities are there in the textiles segment and the country would achieve $100 billion export target from the sector by 2030. He said that free trade agreements will further help boost textile exports. Meanwhile, the Parliament has passed the Energy Conservation (Amendment) Bill, 2022 that aims to mandate the use of green energy and enables the government to set up a carbon trading scheme. The Bill also allows the government to specify the minimum amount of non-fossil sources to be used by designated energy consumers.

On the global front, European markets were trading lower ahead of key central bank reviews and major economic data releases. Interest rate decisions by Bank of England, European Central Bank and Swiss National Bank are due on Thursday. Asian markets settled lower on Thursday 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.

Back home, textile industry stocks were in watch as Icra in a report said even as macro headwinds impact performance of textile players across segments in the second quarter of 2022-23, the companies are expected to witness a healthy turnover in this financial year. Icra said it expects textile companies to report healthy growth in turnover in FY23 while the margins are expected to moderate amidst cost pressures. 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.

Finally, the BSE Sensex fell 878.88 points or 1.40% to 61,799.03 and the CNX Nifty was down by 245.40 points or 1.32% to 18,414.90.

The BSE Sensex touched high and low of 62,624.81 and 61,715.61, respectively. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.05%, while Small cap index was down by 0.61%.

The lone gaining sectoral index on the BSE was Oil & Gas up by 0.09%, while IT down by 2.06%, TECK down by 1.92%, Metal down by 1.82%, Consumer Durables down by 1.37% and Realty down by 1.25% were the top losing indices on BSE.

The only gainers on the Sensex were Sun Pharma up by 0.08% and NTPC up by 0.06%. On the flip side, Tech Mahindra down by 3.98%, Infosys down by 2.59%, Titan Company down by 2.57%, HDFC down by 2.07% and ITC down by 1.87% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that falling exports and high crude prices are set to push up current account deficit (CAD) in the second quarter (Q2FY23) 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. As a percentage of GDP, the previous high was in the first quarter of 2013-14 when CAD had scaled to 4.7 per cent, but in absolute terms the previous high was in the third quarter of 2012-13 when it touched $31.8 billion. In the first quarter of this fiscal (Q1FY23), the deficit was $23.9 billion or 2.8 per cent.

Global headwinds facing merchandise exports had the shipments contracting by close to 20 per cent in October 2022, first time since February 2021 and the agency expects merchandise exports to slip to an eight-quarter low of $88.2 billion in Q3FY23 which would be 17.4 per cent lower than Q3FY22. On the other side, falling commodity prices will help the country lower its import bill in the third quarter (Q3), even though crude prices were still 19.9 per cent in October-November.

The agency expects merchandise imports to decelerate to a three-quarter low of $171.9 billion in Q3, but will still be up 2.9 percent on-year. Overall, merchandise trade deficit will rise to a fresh high of $83.7 billion in Q3, which is 38.9 per cent higher than Q3FY22. Further, the agency expects the rupee to average 81.8 against the USD, up 9.1 per cent in Q3, further putting pressure on CAD

The CNX Nifty traded in a range of 18,652.90 and 18,387.70. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Britannia Industries up by 1.14%, Hero MotoCorp up by 0.79%, NTPC up by 0.41%, SBI Life Insurance up by 0.33% and Sun Pharma up by 0.07%. On the flip side, Tech Mahindra down by 3.81%, Titan Company down by 2.72%, Infosys down by 2.50%, Grasim Industries down by 2.35% and Eicher Motors down by 2.09% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 40.27 points or 0.54% to 7,455.66, France’s CAC decreased 81.06 points or 1.2% to 6,649.73 and Germany’s DAX decreased 172.29 points or 1.19% to 14,287.91.

Asian markets settled lower on Thursday, tracking overnight losses in Wall Street after the US Federal Reserve raised interest rates by 50 basis points and signalled further rate hikes ahead. Chinese and Hong Kong shares declined amidst disappointing industrial production and retail sales numbers in China, while surging Covid-19 cases also dampened sentiments.