Key gauges extend losing run to 4th day

Indian equity benchmarks continued to remain under selling pressure for the fourth day running and settled with losses of over one and half percent on Friday, in tandem with weak Asian market trends as investor’s sentiment remained muted in view of the Covid-19 surge in some countries. After the gap-down start, markets gradually inched lower amid fears of economic growth slowdown. Traders continued to remain concerned with former Niti Aayog Vice Chairman Arvind Panagariya's statement that cutting trade with Beijing at this juncture would amount to sacrificing India's potential economic growth amid demands for snapping trade ties with China for its transgressions on the border. Instead, he suggested that India should try to enter into free trade agreements (FTA) with countries such as the UK and the European Union to expand its trade.

Key indices extended losses to end near day’s low points as sentiments remained negative with RBI Monetary Policy Committee (MPC) member Jayanth R Varma’s statement that India's economic growth is now 'extremely fragile' and needs all the support that it can get, as private consumption and capital investment are yet to pick up. Varma further said out of the four engines of growth for the economy, exports and government spending supported the Indian economy through the pandemic, but other engines need to pick up the baton now. Traders took note of a private report that amid a slowdown in demand for Indian goods in developed countries, India can focus on 18 products, such as insecticides, construction material, chemicals, and iron and steel, to boost its exports to developing countries where the country meets only 2.5 per cent of the demand at present.

On the global front, European markets were trading higher with gains in healthcare firms and banks putting the index on course to end the last week before Christmas on an upbeat note. Asian markets settled mostly lower on Friday as strong U.S. data released fueled worries that the Federal Reserve would stick to its aggressive tightening path for longer to tame inflation. U.S. weekly jobless claims data pointed to a still tight labor market and third-quarter GDP data was revised higher, renewing hawkish Federal Reserve bets and raising concerns about an economic contraction in 2023.

Finally, the BSE Sensex fell 980.93 points or 1.61% to 59,845.29 and the CNX Nifty was down by 320.55 points or 1.77% to 17,806.80.

The BSE Sensex touched high and low of 60,546.88 and 59,765.56, respectively. There were 29 stocks declining, while 1 stock remained unchanged on the index.

The broader indices ended in red; the BSE Mid cap index fell 3.40%, while Small cap index was down by 4.11%.

The top losing sectoral indices on the BSE were Utilities down by 5.17%, Power down by 4.89%, Metal down by 3.93%, Energy down by 3.82%, Oil & Gas down by 3.71%, while there were no gaining sectoral indices on the BSE.

The top losers on the Sensex was Tata Steel down by 4.97%, Tata Motors down by 4.07%, SBI down by 3.27%, Bajaj Finserv down by 3.07% and Reliance Industries down by 2.96%, while there were no gainers on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) executive director Ajay Kumar Choudhary has termed the launch of digital rupee a historic milestone and said the currency would bring in a lot of operational efficiency in the system and will foster financial inclusion. As per the central bank digital currency (CBDC) tracker, almost 105 countries representing 95 per cent of the world's GDP have taken steps to inculcate digital currency in their ecosystem. He said around 50 countries are at the advanced phase of exploration to launch the digital currency, while 10 countries have fully launched the digital currency.

He also said that digital rupee will add the resilience associated with innovation in the way payments are made, and added that it will also boost innovation in the cross-border payment space. He further said CBDC will give the public the desired experience while ensuring consumer protection but avoiding the damaging social and economic consequences. RBI has already launched the Central Bank Digital Currency CBDC-W and CBDC-R on a pilot basis for the Indian market. CBDC-W and CBDC-R refer to wholesale and retail, respectively. Digital currency is expected to complement rather than to replace the current forms of currency and it would provide an additional avenue to the users as a payment instrument.

He said that the RBI would be taking all steps to ensure that the issuance of CBDC follows a calibrated and nuanced approach with adequate safeguards to tackle any potential difficulties and risks so as to build a system which is inclusive, competitive, and responsive to innovation and tech changes. Clarifying the difference between digital currency and UPI, Choudhary said that like physical currency, digital currency issued by the central bank is the RBI's liability whereas UPI is a means of payment and any transaction through UPI is the respective bank's liability.

The CNX Nifty traded in a range of 18,050.45 and 17,779.50. There were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were Cipla up by 0.24%, Divi's Lab up by 0.22% and Titan Company up by 0.20%. On the flip side, Adani Ports & SEZ down by 7.06%, Adani Enterprises down by 5.65%, Hindalco down by 5.16%, Tata Steel down by 5.02% and Tata Motors down by 4.04% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 19.98 points or 0.27% to 7,489.26, France’s CAC increased 10.47 points or 0.16% to 6,528.44 and Germany’s DAX increased 69.43 points or 0.5% to 13,983.50.

Asian markets settled mostly lower on Friday tracking steep falls on Wall Street overnight amid concerns that the US Federal Reserve would stick to its aggressive tightening path for longer to cool off inflation, while forecasts of a recession in 2023 also weighed on the market. Chinese shares slipped as the country battled a wave of Covid-19 cases. China is reporting over a million new infections and at least 5,000 deaths every day. Japanese shares declined sharply as data showed Japan's core consumer inflation hit a fresh 40-year high in November. Meanwhile, minutes of the Bank of Japan's October policy meeting showed that some policymakers called for the need to continue checking how a future exit from ultra-low interest rates could affect markets and households' mortgage rates.