Markets fail to hold opening gains; slip in red terrain on weak global cues

Indian equity indices made slightly positive start on Tuesday but failed to hold on their gains and slipped into red terrain in early deals. Investors remained on sidelines and avoided taking any long position ahead of the Economic Survey of 2022-23, an annual report released by the Finance Ministry with complete analysis of the economy and projections for economic growth, to be tabled in Parliament today. There are expectations that India's annual pre-budget economic survey is likely to peg GDP growth at 6-6.8% for 2023-24. Traders were concerned as provisional data available on the NSE showed that foreign institutional investors (FII) have net-sold shares worth Rs 6,792.80 crore on January 30, 2023. Meanwhile, the Indian rupee fell by 14 paise to 81.66 against the US dollar in early trade. Though, downside remained capped as the International Monetary Fund (IMF) said inflation in India is expected to come down from 6.8 percent in the current fiscal year ending March 31 to 5 percent the next fiscal, and then drop further to 4 percent in 2024.

Global cues remained dulled with all the Asian markets trading in red, following the broadly negative cues from Wall Street overnight, as traders continued to refrain from creating fresh long positions and are cautious ahead of the interest rate decisions from the US Fed, Bank of England and European Central Bank later in the week. Back home, cement industry stocks will be in focus as CARE Advisory and Research said with healthy demand drivers for cement, the industry is expected to close FY23 with a production of 380-390 million ton. In stock specific development, Tech Mahindra lost after its quarterly consolidated net profit slipped 5.2 percent.

The BSE Sensex is currently trading at 59267.62, down by 232.79 points or 0.39% after trading in a range of 59227.55 and 59787.63. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.26%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were PSU up by 0.77%, Telecom up by 0.65%, Auto up by 0.49%, Metal up by 0.23%, while Utilities down by 1.47%, Power down by 1.30%, IT down by 1.27%, TECK down by 1.01%, Healthcare down by 0.92% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.75%, Mahindra & Mahindra up by 1.08%, Maruti Suzuki up by 0.88%, Bharti Airtel up by 0.77% and Reliance Industries up by 0.56%. On the flip side, Tech Mahindra down by 3.01%, HCL Technologies down by 1.59%, Larsen & Toubro down by 1.45%, TCS down by 1.33% and Bajaj Finance down by 1.32% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its January update of World Economic Outlook stated that growth in India is set to decline from 6.8 percent in 2022 to 6.1 percent in 2023 before picking up to 6.8 percent in 2024, with resilient domestic demand despite external headwinds. Pierre-Olivier Gourinchas, Chief Economist and Director, Research Department of the IMF said ‘our growth projections actually for India are unchanged from our October Outlook. We have 6.8 percent growth for this current fiscal year, which runs until March, and then we're expecting some slowdown to 6.1 percent in fiscal year 2023. And that is largely driven by external factors’.

As per the World Economic Outlook, the global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then rise to 3.1 percent in 2024. It noted that growth in emerging and developing Asia is expected to rise in 2023 and 2024 to 5.3 percent and 5.2 percent, respectively, after the deeper-than-expected slowdown in 2022 to 4.3 percent attributable to China's economy. Growth in China is projected to rise to 5.2 percent in 2023, reflecting rapidly improving mobility, and to fall to 4.5 percent in 2024 before settling at below 4 percent over the medium term amid declining business dynamism and slow progress on structural reforms.

Gourinchas said ‘overall, I want to point out that emerging market economies on the whole and developing economies seem to be already on their way up. We have a slight increase in growth for the region from 3.9 percent in 2022 to 4 percent in 2023’. He said ‘another relevant point here is that if we look at both China and India together, they account for about 50 percent of world growth in 2023. So a very significant contribution’. He said ‘I want to say, we had a positive view on India in our October forecast. That positive view is largely unchanged’. He further noted that India remains a bright spot, and added that together with China, it will account for half of global growth this year, versus just a 10th for the US and euro area combined.

The CNX Nifty is currently trading at 17578.25, down by 70.70 points or 0.40% after trading in a range of 17571.75 and 17735.70. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.70%, Adani Enterprises up by 1.68%, UPL up by 1.60%, Power Grid up by 1.49% and ONGC up by 1.48%. On the flip side, Tech Mahindra down by 2.93%, Apollo Hospital down by 2.40%, Britannia Industries down by 2.12%, Cipla down by 1.93% and HCL Technologies down by 1.53% were the top losers.

All Asian markets are trading lower; Hang Seng declined 235.18 points or 1.08% to 21,834.55, Taiwan Weighted lost 161.34 points or 1.05% to 15,332.48, Nikkei 225 slipped 57.96 points or 0.21% to 27,375.44, Jakarta Composite plunged 37.32 points or 0.55% to 6,835.16, KOSPI dropped 13.47 points or 0.55% to 2,437.00, Shanghai Composite weakened 12.28 points or 0.38% to 3,257.04 and Straits Times was down by 0.94 points or 0.03% to 3,377.35.