The domestic benchmarks, the BSE Sensex and the NSE Nifty, are set to fall in opening trade on Tuesday, following a sharp sell-off in equities markets across Asia, Europe, and the U.S. amid fear that aggressive interest rate hikes by central banks would push the world into recession. The bearish trends on SGX Nifty also indicated a negative opening for the domestic bourses, with SGX Nifty futures trading 100 points, or 0.63%, lower at 15,678 on the Singapore Stock Exchange at 7:30 AM.
On Monday, the Indian share market closed lower for the second straight session as surging inflation, the Russia-Ukraine crisis, and sustained selling by foreign investors amid rate hike fears weighed on investors’ sentiments. The anticipation of an aggressive rate hike by the U.S. Federal Reserve to curb inflation and fresh Covid-19 waves in China raised concerns about global economic growth. Extending Friday’s fall over 1,000 points, the 30-share Sensex tumbled 1,457 points, or 2.68%, to hit a one-month low of 52,847 levels on Monday, with 29 of 30 index heavyweights closing in negative terrain. Barring Nestle India, all stocks in the Sensex pack ended in red, led by Bajaj Finserv and Bajaj Finance, IndusInd Bank, Tech Mahindra, and ICICI Bank. Among others, TCS, NTPC, Infosys, State Bank of India, L&T, Wipro and Mahindra, and Mahindra were notable losers. Similarly, the NSE Nifty dropped 427 points, or 2.64%, to settle at 15,774. Among sectors, all indices ended lower, while bank, capital goods, auto, IT, metal, realty, PSU Bank, oil & gas indices declined the most.
Stocks to watch
Zydus Lifesciences: The drug maker, earlier known as Cadila Healthcare, has said its ₹750 crore share buyback offer will commence on June 23 and close on July 6. The company has fixed July 15, 2022, as the last date for the settlement of bids on stock exchanges.
Delta Corp: HDFC Mutual Fund has acquired an additional 2.15% stake in Delta Corp via open market transactions on June 10. With this, its shareholding in the company rose to 9.21%, from 7.06% earlier.
Torrent Power: The company has completed the acquisition of a 50 MW solar power plant from SkyPower Group in Telangana at an enterprise value for ₹416 crore.
Amara Raja Batteries: The battery maker has secured a contract from NTPC to set up India's first green hydrogen fuelling station in Leh.
Embassy REIT: The real estate investment trust company has distributed over ₹5,800 crore to unitholders since its listing in April 2019 and delivered over 15% annualised total returns.
IIFL Finance: The company’s subsidiary, IIFL Home Finance, plans to raise between ₹4,000-5,000 crore through a direct assignment of housing loans and to boost funding to developers.
Tata Steel: The steel major plans to set up a 7 million pound investment plan for its Hartlepool Tube Mill in north-east England that will cut carbon emissions.
Infosys: The IT major has proposed to set up four new offices in tier-2 cities to get closer to bring the available talent pool.
Crompton Greaves Consumer Electricals: The company aims to raise long-term funds up to ₹925 crore through the issuance of non-convertible debentures on a private placement basis.
Here are the key things investors should know before the market opens today:
Wall Street rout on inflation fear
In the overnight trade, all three major U.S. indices nosedived after consumer inflation hit a 40-year high of 8.6% in May, raising concerns that Federal Reserve may hike interest rate aggressively which could lead to a recession. There is speculation in the market that the U.S. central bank may raise interest rates again later this week, possibly by as much as 0.75%. The S&P 500 index ended 3.9% lower, extending fall for the fourth straight session. The benchmark is down nearly 22% from its record closing high on January 3. Meanwhile, the Dow Jones index closed 2.8% lower, and the Nasdaq Composite tumbled 4.7%.
Asian stocks slide on recession concerns
Shares in the Asia-Pacific region were trading in the sea of red in opening deals after Wall Street ended sharply lower in overnight trade. The bond yields hit a record high amid growing concerns that the steep hike in the U.S. interest rate would push the world's largest economy into recession.
The Australian share market was the worst performer in the regional market, falling more than 5% in the opening trade amid rate hike concerns. Regional heavyweight Japan’s Nikkei 225 tumbled 2%, South Korea’s KOSPI dropped 1.3%, and the Straits Times Index in Singapore shed 0.9%.
In a similar trend, Hong Kong’s Hang Seng dived 1.5%, while Taiwan Weighted and Indonesia’s Jakarta Composite fell 1.1% and 0.3%, respectively.
In mainland China, the Shenzhen Component and the Shanghai Composite plunged 1.1% and 0.9%, respectively, in early trade.
Crude prices steady
The price of Brent and U.S. crude was steady in early trade on Tuesday amid rising concerns that the U.S. economy may enter recession due to aggressive rate hike by the Federal Reserve. Adding to it, the fresh Covid wave in China raised concerns about the demand outlook. In a meeting this month, OPEC+ members agreed to boost output by 648,000 barrels per day (bpd) in July and August, as compared to 432,000 bpd proposed earlier, which is unlikely to ease supply concerns.
In Asian trading hours, the Brent oil for July delivery was trading flat at $122.3 per barrel, while the U.S. West Texas Intermediate (WTI) crude July futures were quoting at $121 a barrel.
FIIs continue selling spree
The foreign institutional investors (FIIs) continued their selling spree in the Indian equity market on June 13, while domestic institutional investors (DIIs) continued to support the market. As per the exchange data, FIIs net sold shares worth ₹4,164 crore, while DIIs net purchased shares worth ₹2,814.5 crore.
The foreign investors have pulled out around ₹14,000 crore this month so far. Overall, the net outflow by foreign portfolio investors (FPIs) from equities touched ₹1.81 lakh crore so far in 2022, data with depositories showed.
Retail inflation moderates to 7.04% in May
India’s retail inflation fell from an eight-year high of 7.79% in April to 7.04% in May, staying above the Reserve Bank of India's upper tolerance limit for a fifth consecutive month. Inflation in the food basket declined from 8.31% in April to 7.97% in May. Rural inflation eased to 7.01% from 8.38% the previous month, while urban inflation was stable at 7.08%. Inflation dropped as the government cut fuel tax and imposed a ban on exports of sugar, wheat, and other commodities.
