Markets trade under pressure after gap-down opening amid global selloff

Indian equity benchmarks made gap-down opening on Wednesday following overnight sell-off on Wall Street after hotter-than-expected US inflation data dampened hopes for quick interest rate cuts by the Federal Reserve. Domestic markets are trading deeply in red with cut of around 0.80% each in early deals amid selling pressure in IT and TECK counters, which are down over one and half a percent. Traders took note of report that aided by interest-free loans from the Centre, capital expenditure by states jumped by 40% on year in the first nine months of the current financial year compared with a 7% rise in the year-ago period. Market participants failed to take any sense of relief after Prime Minister Narendra Modi asserted that the country will emerge as the third largest economy in the world in coming years. 

Most of the Asian markets are trading lower after data showing a bigger than expected increase in U.S. consumer price inflation in January reduced the possibility of a rate cut by the US Fed anytime soon. Traders have pushed back their expectations for rate cuts from March to May or June. Taiwan and China remain closed for the Lunar New Year holidays. Indonesia market is close for Election Day. Back home, auto components sector stocks are in focus as ICRA said auto components sector growth is likely to moderate to around 5-7 per cent in FY25 thanks to a possibility of moderation in domestic volume growth and a weak outlook for exports. In stock specific development, BHEL traded lower after it posted a consolidated net loss of Rs 148.77 crore for the third quarter ended December 2023, impacted by higher expenses.

The BSE Sensex is currently trading at 70951.56, down by 603.63 points or 0.84% after trading in a range of 70809.84 and 71038.92. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.47%, while Small cap index was down by 0.05%.

The top gaining sectoral indices on the BSE were Telecom up by 0.52%, Energy up by 0.11%, Auto up by 0.09% and Oil & Gas up by 0.08%, while IT down by 1.84%, TECK down by 1.57%, Healthcare down by 1.28%, Bankex down by 0.76% and Utilities down by 0.45% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 0.81%, Axis Bank up by 0.31%, ITC up by 0.23%, Maruti Suzuki up by 0.21% and Bajaj Finserv up by 0.07%. On the flip side, Wipro down by 2.37%, Infosys down by 2.36%, Tech Mahindra down by 2.19%, HDFC Bank down by 1.89% and JSW Steel down by 1.72% were the top losers.

Meanwhile, in order to become a developed nation with $13000 per capita income by 2047, former Reserve Bank Governor C Rangarajan has said India needs to grow at seven to eight per cent annually. Asserting that innovation cannot be a single solution to reduce inequalities or poverty, Rangarajan who is also the former Chairman of the Prime Minister's Economic Advisory Council said besides faster growth rate, the country may need social safety nets such as subsidies in kind of cash and basic income.

He added ‘I would say that the real growth between 7 per cent and 8 per cent will take it closer to the developed economy, because the developed economy by definition shows per capita income of $13,000 or more. India's per capita income is now at $2700. That means per capita income will have to increase by five times’. 
According to him, if the exchange rate is kept at a lower level or if the prices go up then nominal income will increase, then India can become a developed nation. He added ‘Therefore, I am saying that the calculation of dollar value of the Indian economy depends upon the real growth, the level of inflation and exchange rate’.

The CNX Nifty is currently trading at 21576.60, down by 166.65 points or 0.77% after trading in a range of 21530.20 and 21600.65. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Coal India up by 1.05%, Eicher Motors up by 0.98%, BPCL up by 0.94%, Adani Enterprises up by 0.78% and Mahindra & Mahindra up by 0.70%. On the flip side, Infosys down by 2.36%, Wipro down by 2.26%, Tech Mahindra down by 2.14%, LTIMindtree down by 2.05% and Cipla down by 2.02% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 326.52 points or 0.86% to 37,637.45, KOSPI dropped 27.65 points or 1.04% to 2,621.99 and Straits Times was down by 12.08 points or 0.38% to 3,129.79, while Hang Seng was up by 16.09 points or 0.1% to 15,762.67.