Benchmarks end in deep red on Wednesday

Indian equity benchmarks ended in the deep red on Wednesday, weighed down by losses in Banking, Oil & Gas and IT stocks. The decline was a result of high volatility on Dalal Street and uncertainty over Lok Sabha election results and GDP data. Markets made a negative start and remained under pressure for whole day, as traders remained cautious as data released by the government showed the ratio of cost overruns in central government projects rose to a 12-month high of 20.09% in April compared with 18.65% in the previous month. It said the anticipated cost of 1,838 projects with a value of Rs 150 crore and above, at Rs 33.2 lakh crore, was Rs 5.6 lakh crore higher than the original cost, with the ratio of delayed projects also rising compared with the previous few months.  Moreover, market participants also remained on sidelines ahead of monthly F&O expiry on Thursday. 

Markets extended losses in late afternoon deals, tracking weakness in Asian counterparts coupled with surge in oil prices overnight and a jump in U.S. Treasury yields to multi-week highs. Traders overlooked report by SBI Research in which it anticipates India's GDP growth could touch 8 per cent in FY24, with strong performance across various economic indicators and favorable monsoon conditions. The report also highlights the potential impact of global economic resilience on India's growth trajectory. Despite the challenges faced by the global economy, including geopolitical tensions and extreme weather events, global growth remains resilient, supported by easing inflationary pressures and strong employment conditions. Traders failed to take support with data showing that foreign institutional investors (FIIs) remained net buyers on May 28 as they bought Indian equities worth Rs 65.57 crore, while domestic institutional investors (DIIs) continued their buying as they purchased equities worth Rs 3,231.67 crore on the same day. 

On the global front, European markets were trading lower as higher bond yields and a surge in oil prices due to heightened tensions in the Middle East stoked concerns that interest rates will likely stay higher for longer. Asian markets settled mostly down on Wednesday as skepticism over the outlook for interest rates continue ahead of the release of key inflation readings from the U.S. and Europe later in the week.

Finally, the BSE Sensex fell 667.55 points or 0.89% to 74,502.90, and the CNX Nifty was down by 183.45 points or 0.80% points to 22,704.70.   

The BSE Sensex touched high and low of 74,986.22 and 74,454.55 respectively. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.38%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Telecom up by 0.31%, Healthcare up by 0.31%, Utilities up by 0.25%, Power up by 0.24% and Industrials up by 0.23%, while Bankex down by 1.37%, Oil & Gas down by 0.95%, IT down by 0.92%, Energy down by 0.90% and Realty down by 0.88% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.52%, Sun Pharma up by 0.92%, Nestle up by 0.71%, ITC up by 0.44% and Bharti Airtel up by 0.26%. On the flip side, Tech Mahindra down by 2.35%, ICICI Bank down by 2.19%, Axis Bank down by 1.92%, Bajaj Finserv down by 1.89% and HDFC Bank down by 1.48% were the top losers.

Meanwhile, the commerce ministry held deliberations with experts, former officers and senior officials from different departments on framing a standard operating procedure (SoP) for Free Trade Agreements (FTAs) and other related issues under these agreements. 

The ministry said the participants also deliberated on SoP for FTA negotiations, capacity building and resource management for trade negotiations as well as certain contemporary issues under modern FTAs such as labour, environment, and gender. It said economic assessment and modelling of FTAs, addressing new disciplines into FTAs such as labour, environment, gender, and indigenous people; and services and digital trade in FTAs were among the main themes for discussions.

It further said SoP for FTA negotiations including stakeholder consultations; capacity building and FTA resource management; and leveraging trade agreements to address emerging areas such as CBAM (carbon border adjustment mechanism), supply chain disruptions, critical minerals, and artificial intelligence were also discussed. It said that participants in the economic assessment session highlighted that detailed economic studies, including models like computable general equilibrium, are necessary to guide FTA negotiations. The participants also discussed the need for careful consideration of trade and industrial policies together.

The CNX Nifty traded in a range of 22,825.50 and 22,685.45. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.52%, Divi's Lab up by 1.72%, Power Grid Corporation up by 1.29%, Bajaj Auto up by 1.03% and Cipla up by 0.95%. On the flip side, HDFC Life Insurance down by 2.90%, SBI Life Insurance down by 2.53%, Tech Mahindra down by 2.27%, Tata Consumer Product down by 2.17% and Bajaj Finserv down by 2.04% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 17.41 points or 0.21% to 8,236.77, France’s CAC fell 71.72 points or 0.89% to 7,986.08 and Germany’s DAX lost 103.24 points or 0.55% to 18,574.63.

Asian markets settled mostly down on Wednesday tracking Wall Street’s mixed closing overnight as the dollar and US bond yields ticked higher after hawkish comments from Minneapolis Federal Reserve Bank President Neel Kashkari and a weak 2-year and 5-year note auctions. Market sentiments weakened further as another attack on a ship in the Red Sea added to heightened geopolitical tensions in the Middle East. Meanwhile, investors are focusing key inflation readings from the major economies this week for more signals about interest rate policy. Japanese shares declined as rising Japan’s government bond yields hurting growth stocks. However, Chinese shares gained marginally after the country's biggest cities eased requirements for home down payments and mortgages to bolster slumping property market and the International Monetary Fund raised its forecast for China's economic outlook.