Benchmarks at the day`s low; bank stocks decline

The key equity indices declined further and hit fresh intraday low in early afternoon trade. The Nifty traded below the 16,250. Bank stocks witnessed across the board selling. Investors remained cautious ahead of the US inflation data expected later today.

At 12:27 IST, the barometer index, the S&P BSE Sensex, was down 845.44 points or 1.53% to 54,474.84. The Nifty 50 index fell 234.30 points or 1.42% to 16,243.80.

In the broader market, the S&P BSE Mid-Cap index lost 0.61% while the S&P BSE Small-Cap index was down by 0.54%.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 1,201 shares rose and 1,940 shares fell. A total of 141 shares were unchanged.

Economy:

Fitch Ratings has revised the Outlook on India`s long-term foreign-currency issuer default rating (IDR) to `stable`, from `negative`, and has affirmed the IDR at `BBB-`.

The outlook revision reflects Fitch Ratings` view that downside risks to medium-term growth have diminished due to India`s rapid economic recovery and easing financial sector weaknesses, despite near-term headwinds from the global commodity price shock. It expects robust growth relative to peers to support credit metrics in line with the current rating.

High nominal GDP growth has facilitated a near-term reduction in the debt-to-GDP ratio, but public finances remain a credit weakness with the debt ratio broadly stabilising, based on our expectation of persistent large deficits. The rating also balances India`s external resilience from solid foreign-exchange reserve buffers against some lagging structural indicators.

The credit rating agency said that India`s economy continues to see a solid recovery from the COVID-19 pandemic shock. GDP recovered by 8.7% in the fiscal year ended March 2022 (FY22), and Fitch Ratings forecasts GDP growth to remain robust at 7.8% in FY23 compared with the 3.4% `BBB` median.

However, this is a downward revision from its 8.5% forecast in March as the inflationary impacts of the global commodity price shock are dampening some of the positive growth momentum.

Derivatives:

The NSE`s India VIX, a gauge of the market`s expectation of volatility over the near term, rose 0.64% to 19.26. The Nifty 30 June 2022 futures were trading at 16,249.95 at a premium of 6.15 points as compared with the spot at 16,364.25.

The Nifty option chain for the 30 June 2022 expiry showed maximum Call OI of 23.6 lakh contracts at the 17,000 strike price. Maximum Put OI of 43.8 lakh contracts was seen at 16,000 strike price.

Buzzing Index:

The Nifty Bank index slipped 1.37% to 34,604. The index had advanced 0.40% to end at 35,085.45 yesterday.

Among the components of the Nifty Bank index, Kotak Mahindra Bank (down 3.33%), Bandhan Bank (down 2.16%), HDFC Bank (down 1.96%), AU Small Finance Bank (down 1.35%) and ICICI Bank (down 1.07%) were the top losers.

Among the other losers were IDFC First Bank (down 1.02%), Punjab National Bank (down 0.8%), State Bank of India (down 0.77%), IndusInd Bank Ltd (down 0.72%) and Bank of Baroda (down 0.57%).

Stocks in Spotlight:

Oriental Aromatics zoomed 14.69%. The Ministry of Environment, Forest and Climate Change, Government of India, has accorded its environmental clearance for the proposed greenfield project for manufacturing of speciality chemicals & chemical intermediates by Oriental Aromatics & Sons, wholly owned subsidiary of the company, at Raigad district in Maharashtra.

West Coast Paper Mills (WCPM ) said that India Ratings and Research has revised its outlook on the company to `positive` from `stable` while affirming the long-term issuer rating at `IND AA-`.

The `positive` outlook reflects India Ratings` expectation of a sustained growth in the consolidated revenue and the maintaining of strong profitability and credit metrics, as the benefits of the improvement in business profile post the acquisition of Andhra Paper have kicked in with the recovery in demand.

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