Domestic indices extend losses after flat opening

Indian equity benchmarks made flat opening with negative bias on Wednesday tracking overnight losses on Wall Street coupled with weakness in Asian counterparts amid renewed concerns about turmoil in the banking sector after First Republic reported a loss of more than $100 billion in deposits in the first quarter. Domestic indices soon extended their losses and are trading lower in early deals due to selling at Metal, Oil & Gas and Bankex counters. Some cautiousness came in as the finance ministry in its Monthly Economic Review for March said that India’s economy continues to be robust, but downside risks such as rising crude oil prices, adverse weather conditions, and the global banking crisis outweigh the upside potential in gross domestic product (GDP) growth in the current financial year (FY24).

More pessimism came amid foreign fund outflows. according to provisional data from National Stock Exchange, foreign institutional investors (FII) sold shares worth Rs 407.35 crore on April 25. Meanwhile, Gujarat-based PSUs, including Gujarat Alkalies, Gujarat State Fertilizers and Chemicals, and Gujarat Narmada Valley Fertilizers and Chemicals, surged after the state government announced a policy of minimum dividend payout, buyback, and bonus shares for its state PSUs including seven listed players.

The BSE Sensex is currently trading at 59998.51, down by 132.20 points or 0.22% after trading in a range of 59987.66 and 60187.28. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.21%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.39%, Realty up by 0.32%, Industrials up by 0.26%, Telecom up by 0.23%, Auto up by 0.14%, while Metal down by 1.19%, Oil & Gas down by 0.51%, Bankex down by 0.40%, Energy down by 0.38%, PSU down by 0.34% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 0.88%, Larsen & Toubro up by 0.59%, TCS up by 0.51%, Nestle up by 0.39% and Tata Motors up by 0.38%. On the flip side, Bajaj Finserv down by 0.96%, Bajaj Finance down by 0.96%, SBI down by 0.75%, Tata Steel down by 0.75% and Reliance Industries down by 0.72% were the top losers.

Meanwhile, expressing cautiousness, the Finance Ministry in its March edition of Monthly Economic Review has said that India needs to be vigilant against potential risks of lower agriculture output, elevated prices and geopolitical developments. Although the 6.5 per cent growth projection for India for the current fiscal is in line with the estimates of the World Bank and the Asian Development Bank (ADB), it said there are factors which could affect the favourable combination of growth and inflation outcomes currently estimated. The review said ‘It is important… to be vigilant against potential risks such as El Nino conditions creating drought conditions and lowering agricultural output and elevating prices, geopolitical developments and global financial stability’. The report said FY23 has been strong for India’s economy despite the tailwind of the pandemic and the headwind of the geopolitical conflict intertwining to escalate global economic uncertainty.

It said ‘the strength is seen in the economy, estimated to grow at 7 per cent, higher than the trend rate and the growth of the other major economies. Growing macroeconomic stability as seen in the improved current account deficit, easing inflation pressure, and a banking system strong enough to survive the increase in policy rates, has made the growth rate further sustainable’. On the financial sector, the report said banking supervision is robust with the RBI’s overarching coverage of institutions, regardless of asset size, in its bi-annual assessment of financial stability. Macro stress tests are also performed from time to time on individual banks. Investment in held-to-maturity (HTM) securities is limited to 23 per cent of deposits, reflecting an effective insulation of asset value from adverse market developments.

With regard to the price situation, the report said, the sequential growth of CPI-core in March 2023 is the weakest since June 2022 and can be attributed to the beginning of the pass-through of declining WPI inflation in consumer goods prices. Although CPI for the full year rose from 5.5 per cent in FY22 to 6.7 per cent in FY23, the report said it was much lower in the second half of FY23 at 6.1 per cent compared to 7.2 per cent in the first half. On the external sector, it said, the narrowing of the Current Account Deficit (CAD), accompanied by a rising inflow of foreign portfolio investment (FPI) resulted in an increase in foreign exchange reserves by the end of Q3. With forex reserves further increasing by the end of FY23, prospects of a still narrower CAD in Q4 are bright.

The CNX Nifty is currently trading at 17715.60, down by 53.65 points or 0.30% after trading in a range of 17714.90 and 17776.00. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 1.43%, Power Grid up by 0.84%, Adani Enterprises up by 0.83%, Larsen & Toubro up by 0.65% and HDFC Life Insurance up by 0.60%. On the flip side, JSW Steel down by 1.53%, Hindalco down by 1.48%, Coal India down by 0.85%, SBI down by 0.85% and Bajaj Finserv down by 0.83% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 288.18 points or 1.01% to 28,331.89, Taiwan Weighted lost 61.55 points or 0.4% to 15,309.18, Shanghai Composite weakened 10.18 points or 0.31% to 3,254.69, Straits Times fell 4.89 points or 0.15% to 3,291.67 and KOSPI was down by 2.26 points or 0.09% to 2,486.76. On the other hand, Hang Seng advanced 116.07 points or 0.59% to 19,733.95 and Jakarta Composite was up by 31.98 points or 0.47% to 6,853.79.