Markets trim opening losses to trade tad lower in early deals

Indian equity markets resumed trade after a day's holiday and made negative start on Wednesday amid fears of further rate hikes and a prolonged higher rate regime as indicated by the US Federal chief spooked investors. Fed Chair Jerome Powell said in his testimony to Congress the US central bank will likely need to hike interest rates more than previously expected. Worsening sentiment towards China also weighed markets, as warning on a potential escalation in Sino-U.S. tensions from China's foreign minister soured risk appetite. Now, domestic indices trimmed some of their losses and are trading tad lower in early deals as sell-off in IT and Realty counters weighted on markets, whereas buying in Utilities and Power stocks limit the downside. Besides, the rupee slipped to 82.20 vs the dollar, 27 paise lower from its previous close.

Sectorally, aviation industry stocks are in focus as rating agency Icra revised the outlook for the country's aviation sector to stable from negative, citing fast-paced recovery in the domestic air passenger traffic. In stock specific developments, Adani Power gained after the company amalgamated six wholly-owned subsidiary companies, including Adani Power (Mundra), with itself. Larsen & Toubro traded higher as it bagged a contract worth Rs 3,100 crore for supply of three cadet training ships from the defence ministry.

The BSE Sensex is currently trading at 60095.49, down by 128.97 points or 0.21% after trading in a range of 59844.82 and 60147.92. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.16%, while Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were Utilities up by 1.43%, Power up by 1.28%, Capital Goods up by 1.00%, Oil & Gas up by 0.68%, Industrials up by 0.65%, while IT down by 0.99%, Realty down by 0.93%, TECK down by 0.85%, Consumer Durables down by 0.72%, Metal down by 0.67% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.92%, NTPC up by 0.85%, Tata Steel up by 0.62%, Maruti Suzuki up by 0.43% and HDFC Bank up by 0.42%. On the flip side, Tech Mahindra down by 1.33%, Infosys down by 1.20%, HCL Technologies down by 1.04%, Titan Company down by 1.01% and Bajaj Finserv down by 0.88% were the top losers.

Meanwhile, Moody's Analytics in its report on emerging market outlook has said that India's domestic economy, rather than trade, is its primary engine of growth and the slowdown in economic activity late last year will only be temporary. It said growth slowed substantially on a year-ago basis, with private consumption lagging overall GDP for the first time since the Delta wave of Covid-19 struck the economy in the second quarter of 2021.

It also said ‘Our take is that the slowdown late last year will be temporary and even salutary, helping to wring some of the demand-side pressures out of the economy without stopping it wholesale. On the external front, better growth in the US and Europe's incipient recovery will propel India at the mid-year mark’. The US and Europe are India's largest trade partners and are important destinations for exports of business services.

It further said India's domestic economy, rather than trade, is its primary engine, in contrast to most other emerging-Asia economies. It added ‘with this in mind we observe India's fourth-quarter performance with caution’. Sectors such as manufacturing and agriculture that are highly linked to private consumption spending either contracted or barely grew during December quarter of current fiscal. The normally faster-growing construction and retail and wholesale trade sectors came in somewhat hotter, though both lagged gains from earlier this year.

It noted that ‘While high interest rates have slowed the domestic economy and curbed imports, external imbalances have widened, putting pressure on the rupee and adding to inflation’. In the current fiscal (2022-23), the GDP is projected to grow by 7 per cent as per official estimates. This would require about 5 per cent GDP expansion in the fourth (January-March) quarter. In 2021-22 the economy grew 9.1 per cent. In 2020-21 (Covid-impacted year), the economy contracted 5.8 per cent, while in 2019-20 the growth was 3.9 per cent.

The CNX Nifty is currently trading at 17666.45, down by 45.00 points or 0.25% after trading in a range of 17602.25 and 17692.45. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.14%, Adani Enterprises up by 1.87%, Bajaj Auto up by 1.12%, NTPC up by 0.96% and BPCL up by 0.65%. On the flip side, Hindalco down by 2.24%, Tech Mahindra down by 1.44%, Infosys down by 1.42%, Bajaj Finance down by 1.22% and Sun Pharma down by 1.21% were the top losers.

Asian markets are trading mostly in red; Hang Seng plunged 510.16 points or 2.55% to 20,024.32, Taiwan Weighted slipped 85.23 points or 0.54% to 15,772.66, KOSPI dropped 33.44 points or 1.38% to 2,429.91, Shanghai Composite dropped 15.77 points or 0.48% to 3,269.33, Straits Times weakened 15.14 points or 0.47% to 3,230.13 and Jakarta Composite fell 14.94 points or 0.22% to 6,751.82, while Nikkei 225 was up by 84.15 points or 0.3% to 28,393.31.