Post Session: Quick Review

After trading with minor losses in first half of trading session, Indian equity benchmarks widened their losses to end the session near day’s lowest points ahead of RBI MPC minutes to be released later in a day. Markets made slightly positive start but failed to protect gains and soon turned southward as sentiments got a hit with sudden spurt in Covid-19 cases reported in China, Japan, the United States of America, the Republic of Korea, and Brazil surface. Some cautiousness also prevailed after a labour bureau statement said retail inflation for farm and rural workers rose to 6.87 per cent and 6.99 per cent, respectively, in November on annual basis. Traders failed to draw any sense of relief from report witch stated that Fitch Ratings has affirmed India's sovereign credit rating at 'BBB-' with a stable outlook, and said that the rating derives strengths from a robust growth outlook and still-resilient external finances. India enjoyed 'BBB-' rating since an upgrade in August 2006 but the outlook has oscillated between stable and negative. 'BBB-' is the lowest investment grade rating. In June this year, Fitch had upped India's rating outlook to 'stable' from 'negative'.

During afternoon session, markets lost more ground, as markets participants were upset after Reserve Bank Governor Shaktikanta Das said underlying economic activity in India continues to be strong, but external factors will cause some dent to the economy. Besides, private report stated that mergers and acquisitions (M&A) activity globally fell well short of the high-water mark set last year as debt financing markets collapsed and stock market volatility decimated valuations, and dealmakers are predicting a slow path to recovery in 2023. Markets witnessed more selling pressures in last leg of trade, as traders remained pessimistic with renewed Covid outbreaks.

On the global front, European markets were trading higher lifted by healthcare and consumer discretionary firms, as investors headed into the holiday season on an upbeat note. Asian markets ended mixed as concerns over pressures on global growth tempered gains in the absence of major data releases. Besides, China continued to grapple with a surge in the number of new COVID-19 cases. Bach home, traders took note of report that Union Health Minister Mansukh Mandaviya reviewed the Covid-19 situation in the country in view of a sudden spurt in cases in some parts of the world, and directed officials to be alert and strengthen surveillance. In view of the rise in cases in Japan, the United States of America, Republic of Korea, Brazil and China the Union Health Ministry urged all states and Union territories to ramp up the whole genome sequencing of positive samples of Covid to keep track of emerging variants.

The BSE Sensex ended at 61,067.24, down by 635.05 points or 1.03% after trading in a range of 60,938.38 and 62,006.46. 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 1.40%, while Small cap index was down by 2.18%. (Provisional)

The only gaining sectoral indices on the BSE were Healthcare up by 2.25% and IT was up by 0.23%, while Utilities down by 2.50%, Power down by 2.40%, Telecom down by 2.32%, PSU down by 2.15% and Industrials was down by 2.13% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.67%, HCL Tech up by 1.01%, TCS up by 0.75%, Tech Mahindra up by 0.56% and Nestle up by 0.49%. On the flip side, Indusind Bank down by 2.37%, Maruti Suzuki down by 2.15%, Ultratech Cement down by 2.14%, Bajaj Finserv down by 1.88% and ICICI Bank down by 1.88% were the top losers.

Meanwhile, Fitch Ratings has affirmed India's sovereign credit rating at 'BBB-' with a stable outlook, and said that the rating derives strengths from a robust growth outlook and still-resilient external finances. India enjoyed 'BBB-' rating since an upgrade in August 2006 but the outlook has oscillated between stable and negative. 'BBB-' is the lowest investment grade rating. In June this year, Fitch had upped India's rating outlook to 'stable' from 'negative'.

Though, it expects a modest fiscal slippage in current financial year with central government fiscal deficit at 6.6 percent of GDP against 6.4 percent pegged in Budget, due to higher food and fertiliser subsidies. It also projected the central government setting a six percent of GDP deficit target in its upcoming Budget and retaining its 4.5 percent FY26 target, but added that it may be difficult to achieve.

It noted that ‘Fiscal pressures could arise from upcoming national elections in May 2024, but the incumbent government's dominant political position likely limits these risks’. It said India's robust medium-term growth outlook is a key supporting factor for the rating. A clear improvement in corporate and bank balance sheets, which were under strain prior to the pandemic, is likely to facilitate a steady acceleration in investment in the coming years. Nevertheless, it said risks remain given dynamics in labour force participation, the lagging rural sector recovery, and uneven reform implementation record. 

It has forecast GDP growth of seven percent in the fiscal year ending March 2023 (FY23) on the back of sustained consumption and investment recoveries. It said ‘India is somewhat insulated from the gloomy global outlook in 2023, given its modest reliance on external demand. Nevertheless, we expect declining exports, heightened uncertainty and higher interest rates to slow growth to 6.2 percent in FY24’. It forecast the current account deficit (CAD) to rise to 3.3 percent of GDP this fiscal, from 1.2 percent in the previous year, due to a rising import bill from high commodity prices and robust domestic demand, and declining exports.

The CNX Nifty ended at 18,199.10, down by 186.20 points or 1.01% after trading in a range of 18,162.75 and 18,473.35. There were 14 stocks advancing against 36 stocks declining on the index. (Provisional)

The top gainers on Nifty were Divi's Lab up by 4.99%, Apollo Hospital up by 3.69%, Cipla up by 3.38%, Sun Pharma up by 1.75% and HCL Tech up by 1.03%. On the flip side, Adani Enterprises down by 6.32%, Adani Ports &Special down by 3.01%, Indusind Bank down by 2.19%, Bajaj Finserv down by 2.10% and Ultratech Cement down by 2.08% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 37.90 points or 0.51% to 7,408.52, France’s CAC increased 64.34 points or 1% to 6,514.77 and Germany’s DAX was up by 102.98 points or 0.74% to 13,987.64.

Asian markets ended mixed on Wednesday after a modestly higher close on Wall Street overnight. Moreover, lingering worries over recession and surging new Covid-19 cases in China also added more pressure on market sentiments. Japanese shares extended losses following the Bank of Japan’s (BoJ) unexpected tweak to its bond yield control program.  BoJ decided to allow the 10-year bond yields move 50 basis points either side of its 0% target, wider than the previous 25 basis point band.