Markets open deeply in red; HDFC Bank down over 3%

Indian equity benchmarks made gap-down opening on Wednesday following weakness on Wall Street overnight as well as lackluster trade in Asian counterparts as traders remained cautious ahead of the release of the US Fed's monetary policy announcement later in the day. The Fed is widely expected to pause on rate hikes. The Bank of England and the Bank of Japan are also set to announce their interest-rate decisions later in the week. Domestically, markets are trading lower with cut of over half a percent each in early deals as losses in index heavy weight such as HDFC Bank and Reliance Industries drag the indices down. Traders were concerned as the equity foreign direct investment (FDI) into India declined sharply to $13.9 billion in April-July 2023 from $22.04 billion a year ago, showing the effect of the slowdown in global economic activity. Market participants largely overlooked the Finance Ministry’s statement that the net direct tax collection increased 23.51 per cent to over Rs 8.65 lakh crore till mid-September on higher advance tax mop-up from corporates. In stock specific movements, Ashoka Buildcon traded higher on winning orders worth Rs 646 crore. NBCC rose on winning Rs 150 crore project.

The BSE Sensex is currently trading at 67165.21, down by 431.63 points or 0.64% after trading in a range of 66985.36 and 67294.16. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.06%, while Small cap index was up by 0.04%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.44%, Industrials up by 0.35%, PSU up by 0.29%, Auto up by 0.26% and Power up by 0.23%, while Realty down by 0.48%, Healthcare down by 0.43%, Bankex down by 0.42%, Oil & Gas down by 0.38% and Energy down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.33%, Mahindra & Mahindra up by 1.10%, NTPC up by 0.89%, Bajaj Finance up by 0.85% and Tata Motors up by 0.77%. On the flip side, HDFC Bank down by 3.14%, Reliance Industries down by 1.64%, Bharti Airtel down by 0.82%, Maruti Suzuki down by 0.71% and Titan Company down by 0.63% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) Member Ashima Goyal has said that the country’s economic growth will be above 6 per cent in the current fiscal (FY24) as the country has managed to strengthen its macroeconomic stability and performance even in a period of large global shocks. She further said that a global slowdown reducing India’s export growth, geopolitics fueling oil and food prices, and erratic weather are some of the continuing risks that the country faces. She said ‘India has managed to strengthen its macroeconomic stability and performance even in a period of large global shocks’. While GDP growth in 2022-23 was 7.2 per cent, lower than 9.1 per cent in 2021-22, the RBI projects India’s GDP to grow at 6.5 per cent in the FY24.

Regarding retail inflation will decline to RBI’s target of 4 per cent, she said inflation expectations are getting anchored at around 4 per cent. She noted ‘For a long time now, firms’ inflation expectations are around 4 per cent. That means, despite cost shocks, their price increases do not exceed 4 per cent’. Observing that core inflation is softening, she said inflation targeting is teaching price-setters to look through transient supply shocks. According to Goyal, under transient even if repeated supply shocks (like the Ukraine war), monetary tightening should be adequate to anchor inflation expectations, but not so sharp as to impose a large growth sacrifice on the economy. She opined ‘But other supply-side policies will continue to reduce inflation’.

Talking about rising crude oil prices and its impact on the government’s subsidy figures and inflation, Goyal said the government and oil companies have built-up counter-cyclical buffers by not fully passing through a fall in international crude oil prices. Emphasising that in a well- established inflation targeting regime, transient rise in cost is looked through and does not have second round effects, she noted that high crude oil prices have intensified efforts to diversify away from oil. She said ‘So overall we are seeing less pass-through of higher oil prices to Indian inflation’.

The CNX Nifty is currently trading at 20004.50, down by 128.80 points or 0.64% after trading in a range of 19968.90 and 20050.65. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 1.37%, Mahindra & Mahindra up by 1.19%, Coal India up by 1.17%, Bajaj Auto up by 1.13% and NTPC up by 0.97%. On the flip side, HDFC Bank down by 3.26%, Apollo Hospital down by 2.49%, Reliance Industries down by 1.67%, BPCL down by 1.55% and HDFC Life Insurance down by 1.48% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 171.39 points or 0.52% to 33,071.20, Hang Seng declined 116.05 points or 0.65% to 17,881.12, Taiwan Weighted lost 30.62 points or 0.18% to 16,605.70, Shanghai Composite weakened 10.2 points or 0.33% to 3,114.76, Straits Times fell 4.95 points or 0.15% to 3,235.80 and KOSPI was down by 4.03 points or 0.16% to 2,555.18, while Jakarta Composite was up by 46.64 points or 0.66% to 7,026.96.