Benchmarks end lower amid global growth worries

Indian equity benchmarks succumbed to selling pressure on Thursday amid global growth worries. TECK, IT and Banking stocks were the major draggers. Markets opened on a weak note and continued to drift lower throughout the day as sentiments remained down-beat with Chief Economic Advisor V Anantha Nageswaran’s statement that the performance of the manufacturing sector and growth rate in private consumption expenditure in the December quarter of 2022-23 is appearing ‘depressed’ because of higher base. Continued foreign fund outflows dented domestic sentiments. Foreign Portfolio Investors (FPIs) again offloaded shares worth Rs 424.88 crore on Wednesday, according to exchange data.  

Traders overlooked a private report stating that India's FY24 GDP growth is likely to be higher than the threshold 6 per cent. It also said private final consumption expenditure (PFCE) is expected to increase to Rs 164 lakh crore in FY23 (2022-23), with the yearly growth moderating to 14.8 per cent. Traders also paid no heed towards Moody's Investors Service’s report that the banking sector outlook remains stable and is supported by economic growth and improved financials. It said ‘while we expect the country's real GDP growth to moderate in the fiscal year ending March 2024 (fiscal 2024), India's underlying growth potential is fundamentally strong, which will support banks' credit growth and asset quality.’

On the global front, European markets were trading lower even as preliminary data showing that inflation in the euro zone eased slightly in the month of February, following comments from the European Central Bank chief that bringing the rate down will take some time. Asian markets ended mixed on Thursday, as signs of rising inflationary pressures in the U.S. and hawkish comments from Federal Reserve officials cemented investor worries over further interest-rate hikes.

Back home, Coal industry stocks were in focus with report that India's coal production increased by 15.10 per cent to 784.41 million tonnes during April 2022-February 2023 as compared to 681.5 million tonnes produced during the same period of last year. Technology industry’s stocks were also in watch as Nasscom president Debjani Ghosh has said that the Indian technology industry is set to grow by 8.4 per cent in FY23 to become a $245 billion sector. She said the sector had revenues of $226 billion in FY22. She added that the cross currency headwinds have shaved off over 2 per cent of the revenue growth.

Finally, the BSE Sensex fell 501.73 points or 0.84% to 58,909.35 and the CNX Nifty was down by 129.00 points or 0.74% to 17,321.90.

The BSE Sensex touched high and low of 59,423.79 and 58,866.26, respectively. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.13%, while Small cap index was down by 0.22%.

The top gaining sectoral indices on the BSE were Realty up by 2.09%, Utilities up by 0.78%, Oil & Gas up by 0.26%, Power up by 0.24% and Energy up by 0.22%, while TECK down by 1.33%, IT down by 1.24%, Bankex down by 0.87%, Auto down by 0.85% and Financial Services down by 0.73% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 0.66%, Power Grid up by 0.62%, HCL Technologies up by 0.49%, Larsen & Toubro up by 0.30% and Ultratech Cement up by 0.11%. On the flip side, Maruti Suzuki down by 2.42%, Axis Bank down by 2.29%, TCS down by 1.91%, Mahindra & Mahindra down by 1.71% and Nestle down by 1.70% were the top losers.

Meanwhile, India Ratings and Research in its latest report has said mobilising required deposits without compromising on margins and the heightened provisions as the system shifts to a new model of loan provisioning will be the key challenges for Indian banking in FY24. Maintaining its neutral outlook on the important sector for the economy for the upcoming fiscal year, India Ratings said the key financial metrics are likely to improve further in FY24 on stronger balance sheets, higher credit demand and more stability in interest rates.

It mentioned the banking sector's challenges include mobilising deposits while minimising the impact on margins, and provisions that could emerge in the near-medium term on account of the expected transition to the Expected Credit Loss (ECL) regime for provisions. It estimated the deposit growth to come at a low 9-11 per cent in FY24. Deposit repricing will continue to happen in a 'competitive environment', it said, pointing out that banks have drawn on almost Rs 5 lakh crore of liquidity since March 2022, which has enabled reasonably priced and evenly paced deposit mobilisation.

It said as banks grow their books at higher rates than seen in the preceding five to seven years, some of the improvements in low-cost deposits could reverse especially for public sector banks (PSBs). Further, it stated credit growth, which stood at 18.8 per cent as of December 2022 growth, will continue to race ahead of deposit growth that lagged at 11.8 per cent in the same quarter. It added that this will keep pushing up deposit rates.

The CNX Nifty traded in a range of 17,445.80 and 17,306.00. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 3.06%, Coal India up by 1.87%, BPCL up by 1.77%, Adani Enterprises up by 1.52% and Hero MotoCorp up by 1.39%.  On the flip side, Maruti Suzuki down by 2.60%, Axis Bank down by 2.44%, TCS down by 1.82%, Tech Mahindra down up 1.63% and Infosys down by 1.62% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 25.77 points or 0.33% to 7,889.16, France’s CAC fell 38.24 points or 0.53% to 7,196.01 and Germany’s DAX lost 93.71 points or 0.61% to 15,211.31.

Asian markets ended mixed on Thursday, tracking an overnight mostly fall in Wall Street following hawkish comments from the Federal Reserve officials on further interest-rate hikes in the United States. Minneapolis Fed President Neel Kashkari said he is open-minded on either a 25-basis point or a 50-basis point interest rate hike in March, while Atlanta Fed President Raphael Bostic said monetary policy will have to remain tight until well into 2024. Chinese and Hong Kong shares declined, despite unexpectedly upbeat readings from China PMI surveys. Japanese shares finished down, despite fading expectations of an imminent hawkish turn by the Japanese central bank.