Sensex, Nifty trade lower amid broad-based selling

Indian equity benchmarks made negative start on Tuesday tracking mixed cues from Wall Street overnight as well as weakness in Asian counterparts, amid lingering uncertainty about the outlook for interest rates, with some US Fed officials warning the central bank may still need to raise rates if inflation persists. Traders also seemed reluctant to make more significant bets ahead of the release of the minutes of the latest Fed meeting. Domestically, Sensex and Nifty are trading lower with cut of around 0.25% each in early deals amid broad-based selling. Foreign fund outflows dented sentiments in the markets. Foreign institutional investors continue to sell Indian equities, with net sales of Rs 92.95 crore worth of shares on May 18. Traders were concerned with a private report that demand-supply mismatches could keep prices of pulses elevated until the new crop starts arriving in the market in October, putting further pressure on already high food inflation. 

However, downside remained capped as some came in with data shared by the Reserve Bank of India (RBI) showing that India's foreign exchange reserves rose for the second straight week, by $2.561 billion to $644.151 billion in the week that ended on May 10. On the sectoral front, edible oil industry stocks are in focus as the Solvent Extractors’ Association of India data showed that India’s overall oilmeal exports during April 2024 were 6 per cent lower on a yearly basis at 4.65 lakh tonnes. During the same month last year, the total exports were 4.93 lakh tonnes. In stock specific development, Bharat Electronics traded higher on healthy Q4 results.

The BSE Sensex is currently trading at 73804.71, down by 201.23 points or 0.27% after trading in a range of 73787.83 and 73987.47. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.16%, while Small cap index was down by 0.36%.

The top gaining sectoral indices on the BSE were Metal up by 1.91%, PSU up by 1.28%, Capital Goods up by 0.89%, Energy up by 0.55% and Power up by 0.53%, while IT down by 0.69%, FMCG down by 0.65%, Auto down by 0.55%, TECK down by 0.50% and Realty down by 0.41% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 2.02%, Power Grid up by 1.47%, Tata Steel up by 1.13%, Asian Paints up by 1.12% and SBI up by 0.73%. On the flip side, Nestle down by 1.79%, Mahindra & Mahindra down by 1.32%, Axis Bank down by 0.95%, Hindustan Unilever down by 0.93% and Infosys down by 0.91% were the top losers.

Meanwhile, ahead of the government’s provisional GDP estimates for the 2023-24 fiscal and the fourth quarter (January-March 2024) scheduled to be released by the government on May 31, India Ratings and Research (Ind-RA) has forecasted India’s Gross Domestic Product (GDP) growth rate for the March quarter at 6.2 per cent and around 6.9-7 per cent for the 2023-24 fiscal. The Indian economy grew 8.2 per cent in the June quarter, 8.1 per cent in the September quarter and 8.4 per cent in the December quarter of 2023-24.

Ind-RA’s principal economist Sunil Kumar Sinha has said the growth rate in the first two quarters benefited from a low base, though the 8.4 per cent growth rate in the third (October-December 2023) quarter was surprising. He noted ‘When we analyse the data then what is visible is the wedge between the GVA and GDP. A large impetus to Q3 GDP has come from higher tax collection, but this phenomenon is unlikely to be repeated in the fourth quarter. The wedge between the GDP and GVA is unlikely to be repeated in the fourth quarter’. While the gross value added (GVA) was 6.5 per cent in the third quarter, the GDP growth rate stood at 8.4 per cent. This wedge is on account of higher taxes collected during the quarter. In the first quarter, the GVA and GDP growth was 8.2 per cent, while in the second quarter, the GVA was 7.7 per cent and GDP 8.1 per cent.

GDP is the total value of goods and services produced in a given period. GVA is GDP minus net taxes (gross tax collection minus subsidy). As regards the economic growth in the current fiscal (FY25), Sinha said the GDP is expected to expand at 7.1 per cent. He added ‘Even if we set aside the tax component, the momentum witnessed in the first and second quarters has continued in the subsequent quarters, and the likelihood is that momentum will continue in FY25’. He said ‘The prediction of above normal monsoon (by the Indian Meteorological Department), if it turns out to be true, will see some revival in rural demand, which will support consumption demand, and make it broad-based, instead of skewed currently’.

The CNX Nifty is currently trading at 22456.10, down by 45.90 points or 0.20% after trading in a range of 22404.55 and 22509.05. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Coal India up by 3.01%, JSW Steel up by 2.32%, Hindalco up by 2.13%, BPCL up by 2.01% and Power Grid up by 1.29%. On the flip side, Nestle down by 1.85%, Mahindra & Mahindra down by 1.27%, Infosys down by 0.99%, Axis Bank down by 0.99% and SBI Life Insurance down by 0.92% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 410.79 points or 2.14% to 19,225.43, Taiwan Weighted lost 52.47 points or 0.25% to 21,219.16, Jakarta Composite plunged 32.4 points or 0.45% to 7,234.29, KOSPI dropped 18.42 points or 0.68% to 2,723.72, Shanghai Composite weakened 13.12 points or 0.42% to 3,158.03 and Straits Times fell 12.69 points or 0.38% to 3,301.36, while Nikkei 225 was up by 25.42 points or 0.07% to 39,095.10.