Sensex, Nifty end flat with negative bias amid high volatility

Indian equity markets, after swinging between the red and green zones, ended flat with negative bias on Wednesday as investors turned cautious as the focus shifts to key December inflation data to be announced on Thursday. For the most part of the session, the benchmark indices kept treading around the neutral lines, as traders were concerned as the World Bank slashed its 2023 growth forecasts to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia’s war in Ukraine continues, and the world’s major economic engines sputter. It expected global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993. In its previous Global Economic Prospects report in June 2022, the bank had forecast 2023 global growth at 3.0%. Some cautiousness also came in the markets as a private report stated that private equity investments into domestic companies fell sharply year-on-year by 42 per cent to $23.3 billion in 2022, which is the lowest since 2019, when it was $15.8 billion. The numbers reflect the overall funding winter that the startup space in particular, and the overall foreign investments in general have been witnessing since the Ukraine war began last February.

However, losses were limited as traders took some support with Ministry of Commerce and Industry joint secretary M Balaji’s statement that the Economic Cooperation and Trade Agreement (ECTA) signed between India and Australia would provide immediate market access at zero duty accounting 96.4 per cent of India’s exports in value terms to Australia.  He said the ECTA has the potential to double bilateral ties between the two countries to $50 billion over the next five years. Traders also took a note of private report that the central government is likely to further consolidate its fiscal deficit by 50 basis points (bps) to 5.9 per cent in FY24 from 6.4 per cent in FY23. Meanwhile, the Reserve Bank of India (RBI) in its latest report has showed that India Inc raised $5.20 billion via external commercial borrowings (ECBs) during November 2022 as against $1.43 billion in October 2022, higher by 3.63 times.

On the global front, Asian markets settled mostly higher on Wednesday. European markets were trading higher as optimism surrounding China's reopening offset lingering worries about slowing global growth and interest rates staying high for a longer period. After Fed Chair Jerome Powell refrained from commenting on rate policy at a symposium, investors now await the release of U.S. inflation data on Thursday for additional clues on the rate outlook.

Back home,  there were some buzz in gem and jewellery related stocks as Gem Jewellery Export Promotion Council (GJEPC) said the overall gem and jewellery exports in December declined 11.25 per cent to Rs 19,432.88 crores (USD 2,356.70 million) due to rising prices, affecting the cost of living and talks of a downturn in the US. During December 2021, the overall gems and jewellery exports stood at Rs 21,896.46 crores (USD 2,905.79 million). Real estate related stocks were in watch as a private report said that Indian real estate got $5.2 billion of institutional investments across 47 deals in the calendar year 2022 (CY22), a time of geopolitical headwinds and inflationary pressures. Investments increased 19 per cent compared to 2021.

Finally, the BSE Sensex fell 9.98 points or 0.02% to 60,105.50 and the CNX Nifty was down by 18.45 points or 0.10% to 17,895.70.

The BSE Sensex touched high and low of 60,364.77 and 59,805.78, respectively. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.27%, while Small cap index was up by 0.02%.

The top gaining sectoral indices on the BSE were Metal up by 0.80%, Capital Goods up by 0.55%, Financial Services up by 0.50%, Bankex up by 0.47% and Industrials up by 0.36%, while FMCG down by 0.98%, Utilities down by 0.78%, Healthcare down by 0.73%, Energy down by 0.53% and Auto down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.65%, Ultratech Cement up by 1.58%, HDFC Bank up by 1.37%, TCS up by 1.30% and Tata Motors up by 1.21%. On the flip side, Bharti Airtel down by 3.46%, Hindustan Unilever down by 1.89%, Reliance Industries down by 1.27%, Nestle down by 1.25% and Titan Company down by 1.20% were the top losers.

Meanwhile, Fitch Ratings in its latest report has said that price volatility and infrastructure constraints will challenge India's target of increasing the share of natural gas in its primary energy to 15 per cent by 2030 from 6 per cent in 2017. It said progress on the target has been minimal - 6 per cent share in 2021 - as natural gas growth has not managed to outpace total energy growth. It noted that this is despite resilient demand from city gas distribution (CGD) networks and rising domestic production.

The report stated that the government had in 2017 set a target of raising the share of natural gas in the primary energy consumption basket with a view to cutting down emissions. However, it said the demand for the fuel is rising at a slower rate, with current growth rates only around 53 per cent of levels required for the country to meet a 15 per cent gas use target. Gas demand by 2030 will only reach 326 million standard cubic meters per day at current 4-5 per cent growth rates, much lower than the 611 mmscmd of consumption needed to meet the 15 per cent energy mix goal.

It said ‘we believe that natural gas demand from price-sensitive industrial and power sectors may be limited in times of rising prices, as they switch to cheaper alternate fuels in the absence of robust emission norms’. Gas adoption for mobility and household fuel may also slow when its price benefit against alternate fuels decreases. It saw inadequate gas pipeline network and expectation of execution delays in some under-construction projects may limit natural gas demand growth to lower than its intrinsic levels, even in times of low prices.

The CNX Nifty traded in a range of 17,976.35 and 17,824.35. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.77%, BPCL up by 1.57%, Sun Pharma up by 1.46%, Ultratech Cement up by 1.40% and HDFC Bank up by 1.32%. On the flip side, Bharti Airtel down by 3.46%, Cipla down by 2.79%, Divi's Lab down by 2.56%, Apollo Hospital down by 2.52% and Hindustan Unilever down by 1.95% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 40.81 points or 0.53% to 7,735.30, France’s CAC increased 53.55 points or 0.78% to 6,922.69 and Germany’s DAX increased 136.50 points or 0.92% to 14,911.10.

Asian markets settled mostly higher on Wednesday with slower interest rate hike expectations from the US Central Bank. Wall Street gains overnight on relief that US Fed Chair Jerome Powell refrained from commenting on interest rate policy in a speech at a symposium, also supported market sentiments. Japanese shares rallied with export-oriented stocks gaining on recent weakness in the Japanese currency, yen. In Hong Kong, tech giants such as Alibaba Group Holding and Tencent Holdings soared after China signalled that it would wind down regulatory scrutiny of the country's biggest internet firms. Even though, the market participants remained cautious ahead of the release of inflation data from US due on Thursday. Chinese shares dropped as PBoC data showed that Chinese banks extended 1.4 trillion yuan in new yuan loans in December, up from November and beats expectations.