Markets trim opening losses; trade flat in early deals

Indian equity benchmarks made pessimistic start on Wednesday tracking overnight losses on wall street coupled with lackluster trade in Asian counterparts as representatives of President Joe Biden and congressional Republicans ended another round of debt ceiling talks on Tuesday with no signs of progress. But, soon domestic indices trimmed their losses and are trading flat with negative bias in early deals. Buying activity at counters such as Utilities, Power and Oil & Gas helped to trim losses. Initially, traders were concerned with a private report that foreign direct investment (FDI) inflows into the country fell 16% to $71 billion (on a gross basis) during 2022-23 on the back of a weak global economic situation, marking the first decline in a decade. Though, foreign fund inflows aided domestic sentiments. Foreign institutional investors (FII) bought shares worth net Rs 182.51 crore on May 23, according to the provisional data available on the NSE. 

Besides, the Centre has ruled out lifting the ban on wheat exports but said the shipments of the foodgrain through diplomatic channels will be considered on a case-to-case basis. India, the world’s second-largest wheat producer, banned wheat exports in May 2022 as part of measures to control rising domestic prices. In stocks specific developments, Shree Cement declined after the company reported 20 per cent year-on-year (YoY) drop in consolidated net profit in Q4FY23. However, Biocon rallied on beating Q4 estimates.

The BSE Sensex is currently trading at 61961.78, down by 20.01 points or 0.03% after trading in a range of 61730.53 and 61972.64. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.38%, while Small cap index up by 0.31%.

The top gaining sectoral indices on the BSE were Utilities up by 1.38%, Power up by 1.14%, Oil & Gas up by 0.69%, Consumer Durables up by 0.52% and Healthcare up by 0.48%, while Metal down by 0.45%, Realty down by 0.33% and Bankex down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 0.94%, Maruti Suzuki up by 0.83%, Kotak Mahindra Bank up by 0.81%, Power Grid up by 0.70% and Bajaj Finance up by 0.46%. On the flip side, Mahindra & Mahindra down by 0.57%, HDFC down by 0.56%, ICICI Bank down by 0.49%, HDFC Bank down by 0.38% and Tata Motors down by 0.37% were the top losers.

Meanwhile, Moody’s Investors Service in its latest research report said that India's Gross Domestic Product (GDP) has crossed $3.5 trillion in 2022 and will be the fastest-growing G-20 economy over the next few years, but reform and policy barriers could hamper investment. It said bureaucracy could slow approval processes in obtaining licences and setting up businesses, prolonging project gestation. It also said ‘India's higher bureaucracy in decision-making will reduce its attractiveness as a destination for foreign direct investment (FDI), especially when competing with other developing economies in the region, such as Indonesia and Vietnam’.

It also said a large young and educated workforce, increasing nuclear families and urbanization will fuel demand for housing, cement and new cars. Government infrastructure spending will bolster steel and cement, while India's net-zero commitment will drive investment in renewable energy. It noted that while demand across the manufacturing and infrastructure sectors will grow 3-12 per cent annually for the rest of the decade, India's capacity will still rank well behind China's by 2030.

The agency said despite the economy's strong potential, there is a risk that the pace of investment in India's manufacturing and infrastructure sectors could slow because of limited economic liberalization or slower policy implementation. It said ‘lack of certainty around the amount of time needed for land acquisition approvals, regulatory clearances, obtaining licenses and setting up businesses can materially prolong project gestation. Furthermore, India's limited multilateral liberalisation with respect to regional trade agreements will also weigh on foreign investments in the country’.

Ongoing efforts by India’s government to reduce corruption, formalize economic activity, and bolster tax collection and administration are encouraging, although there are increasing risks to the efficacy of these efforts. It said if implemented effectively, measures undertaken over the last few years, including those introduced during the pandemic to increase the flexibility of labour laws, raise agricultural sector efficiency, expand investment in infrastructure, incentivize manufacturing sector investment, and strengthen the financial sector, would lead to higher economic growth.

The CNX Nifty is currently trading at 18343.50, down by 4.50 points or 0.02% after trading in a range of 18269.70 and 18345.40. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 0.97%, Dr. Reddy's Lab up by 0.95%, Britannia Industries up by 0.85%, Kotak Mahindra Bank up by 0.81% and Maruti Suzuki up by 0.80%. On the flip side, Hindalco down by 1.13%, HDFC down by 0.58%, ICICI Bank down by 0.56%, Mahindra & Mahindra down by 0.52% and Grasim Industries down by 0.47% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 248.17 points or 0.8% to 30,709.60, Hang Seng declined 182.97 points or 0.94% to 19,248.28, Taiwan Weighted lost 84.71 points or 0.52% to 16,103.32, Shanghai Composite weakened 15.77 points or 0.49% to 3,230.47, Straits Times fell 7.93 points or 0.25% to 3,210.15 and KOSPI was down by 2.93 points or 0.11% to 2,564.62, while Jakarta Composite was up by 2.4 points or 0.04% to 6,739.08.