Markets end flat amid weak global trends

Indian equity benchmarks kept swinging between the red and green zones throughout the choppy session and closed flat with a negative bias on Thursday, amid weak global trends. Key gauges made positive start, as traders took some support with Finance Minister Nirmala Sitharaman’s statement that any increase in GST rates under the rate rationalisation exercise is intended to make up for the ‘inefficiencies’ in the value chain.  Some support also came as Prime Minister Narendra Modi stating that his government is taking measures to help micro, small and medium enterprises (MSMEs) increase exports and is framing new policies that will help the sector realize its potential. Traders also took a note of a report released by Washington-based World Federation of Direct Selling Associations (WFDSA) stated that the Indian direct selling industry has reported retail sales of $3.25 billion in 2021 (around Rs 27,650 crore) and maintained its 12th place in the global rankings.

However, key gauges soon erased gains and turned volatile, as exchange data showed that foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold shares worth Rs 851.06 crore on Wednesday. Some concern also came amid reports that the Goods and Services Tax (GST) Council’s two-day meeting concluded without any decision on extending compensation to states - for revenue loss on account of the regime’s implementation five years ago - beyond June 30. This was despite at least two dozen states raising the issue. Adding to the pessimism, a private report stated that inflationary pressures are likely to continue and force the RBI to further hike interest rates during the course of the current fiscal but the tighter financial conditions can impact growth. The report said there are reasons to be optimistic on the growth front but factors like tighter financial conditions can have an impact on the GDP expansion.

On the global front, European markets were trading lower, as French inflation quickened to the fastest since the euro was introduced, raising pressure on President Emmanuel Macron to address high inflation through a package of measures. Asian markets ended mostly lower on Thursday as uncertainty about the near-term outlook for the markets kept traders on the sidelines following recent volatility and global recession concerns.

Back home, metal stocks were in watch with a private report that after back-to-back downward corrections, steel prices are expected to rise from July due to high input costs. Oil & gas sector stocks were focus as the Union Cabinet decided to give marketing freedom to domestic crude oil producers, allowing them to sell petroleum to any company in the local market. Besides, there were some reaction in coal industry stocks as India's coal ministry said it sought assistance from the World Bank and other global institutions for re-purposing its abandoned coal mines to make them environmentally stable and suitable for commercial purpose.

Finally, the BSE Sensex fell 8.03 points or 0.02% to 53,018.94 and the CNX Nifty was down by 18.85 points or 0.12% to 15,780.25.

The BSE Sensex touched high and low of 53,377.54 and 52,883.25, respectively. There were 11 stocks advancing against 19 stocks declining on the index.   

The broader indices ended in red; the BSE Mid cap index fell 0.74%, while Small cap index was down by 0.54%.

The top gaining sectoral indices on the BSE were Power up by 0.79%, Bankex up by 0.62%, Utilities up by 0.59% and Capital Goods up by 0.18%, while Metal down by 2.18%, Auto down by 1.25%, Basic Materials down by 1.20%, Realty down by 1.17%, Consumer Discretionary down by 0.90% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.74%, SBI up by 1.38%, Kotak Mahindra Bank up by 0.92%, NTPC up by 0.88% and Larsen & Toubro up by 0.59%. On the flip side, Tech Mahindra down by 2.09%, Bajaj Finance down by 2.00%, Bajaj Finserv down by 1.74%, Tata Steel down by 1.65% and Indusind Bank down by 1.61% were the top losers.

Meanwhile, RBI Governor Shaktikanta Das has emphasised the need for proper interpretation of data to facilitate more informed decision making as it will bring clarity in communication from decision makers as well as formation of rational expectations from market participants. He said the importance of statistics in public policy is well understood. In the face of high uncertainty brought on by the COVID-19 pandemic, the discipline of statistics found itself in greater spotlight. This unprecedented global phenomenon has tested human endeavour in multiple facets and magnitude.

Das mentioned that lockdowns in various countries, including India, posed severe challenges to the compilation and availability of data relating to the spread of the pandemic, and its impact on various economies and the world urgently needed solutions to a problem it had never seen before. Recalling India's experience in data gathering, he said the Ministry of Statistics and Programme Implementation was compelled to publish imputed figures for Consumer Price Index (CPI) for two consecutive months during the first wave of the pandemic in 2020 due to immense difficulty in collection of prices for many items.

RBI Governor said statistical innovations arising out of the pandemic disruption will have long-lasting benefits and added that the upheaval also posed challenges to statistical agencies to build more public trust in the resulting statistics. While new data sources open up opportunities for official statistics, he said it also raises issues for the discipline.  He also stated that statistics should focus on laying down the pathway towards proper interpretation in the present world of data abundance. This would facilitate more informed decision making, clarity in communication from decision makers and formation of rational expectations from market participants.   

The CNX Nifty traded in a range of 15,890.00 and 15,728.85. There were 13 stocks advancing against 36 stocks declining, while 1 stock remains unchanged on the index. 

The top gainers on Nifty were Axis Bank up by 1.49%, SBI up by 1.42%, Divi's Lab up by 1.30%, Britannia Industries up by 1.08% and HDFC Life Insurance up by 1.06%. On the flip side, Eicher Motors down by 3.55%, Cipla down by 3.55%, BPCL down by 2.78%, JSW Steel down by 2.58% and Shree Cement down by 2.50% were the top losers. 

European markets were trading lower; UK’s FTSE 100 decreased 140.87 points or 1.93% to 7,171.45, France’s CAC decreased 163.23 points or 2.71% to 5,868.25 and Germany’s DAX decreased 347.89 points or 2.68% to 12,655.46.

Asian markets ended mostly lower on Thursday tracking the mixed finish on Wall Street overnight and as US Federal Chair Jerome Powell reiterated his hawkish stance on fighting inflation and cautioned there's no guarantee the US Fed can engineer a soft landing. Meanwhile, the US economy shrank at an annualized pace of 1.6 percent in the first quarter, reflecting a deeper contraction than the most recent estimate of a 1.5 percent. Japanese shares dropped and the yen weakened to a 24-year low overnight after data showed that Japan's monthly industrial production fell the most in two years, that stoking fears of an economic slowdown in Japan. However, Chinese shares gained after China's official gauges of factory and services activity returned to expansion in June following three months of contraction.

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