Markets extend opening losses amid global uncertainty

Indian equity benchmarks made slightly negative start on Thursday amid losses across global markets after the Fed's FOMC minutes showed that officials believed more rate hikes may be needed given upside risks to inflation. Soon, domestic indices extend their southward journey and are trading with cut of over 0.30% each in early deals as selling got intensified in counters such as FMCG, TECK and IT. Some cautiousness crept in as global rating agency Fitch warned that rapid loan growth, especially in unsecured retail credit, needs careful management to avoid a spike in risks and credit costs for India's banks and finance companies. Adding more worries, Crisil Market Intelligence and Analytics said that urban poor have been the most impacted by 15-month high consumer price inflation (CPI) in July. Though, broader indices are outperforming larger peers with notable gains of around half a percent. 

On the global front, most of the Asian markets are trading lower, following the broadly negative cues from Wall Street overnight, as traders remained cautious after the US Fed indicated it will continue to hold interest rates higher for longer to contain inflation. The prospects of a possible downgrade of several U.S. lenders by Fitch Ratings and lingering concerns about China's economic slowdown also continued to weigh on sentiment. Indonesia market is closed for Independence Day.

Back home, hospital industry stocks are in focus as ICRA anticipates the revenues for the hospital industry to grow by 8-10 per cent in FY24, due to a rise in lifestyle diseases, increased awareness, and penetration of health insurance. In stock specific development, IRFC dropped amid reports the government is looking to sell an 11.36 per cent stake in the company via an OFS.

The BSE Sensex is currently trading at 65319.55, down by 219.87 points or 0.34% after trading in a range of 65294.67 and 65535.14. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.49%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.17%, Realty up by 0.50%, Industrials up by 0.41%, PSU up by 0.19% and Telecom up by 0.18%, while FMCG down by 0.65%, TECK down by 0.41%, IT down by 0.33%, Oil & Gas down by 0.26%, Energy down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 1.52%, Axis Bank up by 0.72%, SBI up by 0.44%, Indusind Bank up by 0.29% and Tata Steel up by 0.26%. On the flip side, Power Grid down by 1.57%, ITC down by 1.53%, Nestle down by 0.96%, Ultratech Cement down by 0.91% and Larsen & Toubro down by 0.71% were the top losers.

Meanwhile, day’s after the government’s data released indicating that the headline inflation accelerated to 7.44 per cent for July CRISIL’s arm -- Crisil Market Intelligence and Analytics in its note has said that urban poor have been the most impacted by 15-month high consumer price inflation (CPI) in July. The high-income segment in urban areas faced the lowest inflation burden, as food has a relatively low share in their consumption basked. It noted that poorest segment in urban areas faced highest inflation rate in July.

It added the poorest segment in both urban and rural areas faced a higher inflation burden than their high-income counterparts, as food inflation accelerated sharply. Crisil said it used data from the National Sample Survey Organisation (NSSO) and mapped the expenditure baskets of three broad income groups the bottom 20 per cent, middle 60 per cent and upper 20 per cent of the population with July inflation. It said the overall CPI inflation for the bottom 20 per cent income earners in urban areas came at 8.5 per cent in July against 7.9 per cent for their rural counterparts, added that the same numbers had stood at 4.9 per cent and 4.7 per cent, respectively, in June. As compared to this, the degree of change for the top 20 per cent income earners between July and June was more subdued.

The CPI for the top 20 per cent income earners in urban areas increased to 7.1 per cent in July from 5 per cent in June, while for the rural segment, it went up to 7.3 per cent from 4.9 per cent. The note said the high-income segment in urban areas faced the lowest inflation burden, as food has a relatively low share in their consumption basket. It said within the poor people, the poorest segment in urban areas faced a higher burden than their rural counterparts as both food (12.3 per cent in urban against 11 per cent in rural) and fuel inflation (4.4 per cent versus 3.3 per cent) were higher in the former than the latter. Meanwhile, the rating agency also upped its FY24 overall CPI estimate to 5.5 per cent from the earlier 5 per cent following the release of the July data.

It said the extent of the sharp rise in July came as a surprise, and added that early signs are pointing to a minimum relief in August. Admitting that typically the rate-setting panel overlooks supply-side shocks like the current one, the note said the higher-than-expected inflation reading and continued food price pressure, despite a softening core, put monetary policy in a dilemma. It expects the monetary policy committee to hold rates at its next meeting in October and cut rates only in the early part of next fiscal.

The CNX Nifty is currently trading at 19397.30, down by 67.70 points or 0.35% after trading in a range of 19388.70 and 19461.55. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 1.52%, Adani Ports & SEZ up by 1.48%, Axis Bank up by 0.80%, Adani Enterprises up by 0.70% and SBI up by 0.42%. On the flip side, Power Grid down by 1.71%, ITC down by 1.67%, LTIMindtree down by 1.59%, Cipla down by 1.22% and Nestle down by 0.98% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 120.91 points or 0.38% to 31,645.91, Hang Seng declined 26.89 points or 0.15% to 18,302.41, KOSPI dropped 12.98 points or 0.52% to 2,512.66 and Straits Times fell 11.7 points or 0.37% to 3,201.88. On the other hand, Taiwan Weighted added 29.12 points or 0.18% to 16,475.90 and Shanghai Composite was up by 0.16 points or 0.01% to 3,150.29.