Market drops on weak global signals; Nifty ends below 17,550; RIL down 3%

The domestic equity benchmarks ended with deep cuts on Thursday, tracking weak global cues. Investors continue to be spooked by fears of aggressive rate hikes by the global central banks. The Nifty 50 index ended below the 17,550 mark. Trading was volatile due to expiry of weekly index options on the NSE. IT, oil & gas and healthcare stocks declined. On the other hand, realty, PSU banks and auto shares bucked the trend.

The barometer index, the S&P BSE Sensex, tumbled 770.48 points or 1.29% to 58,766.59. The Nifty 50 index lost 216.50 points or 1.22% to 17,542.80.

Reliance Industries (down 2.99%), TCS (down 2.49%) and Sun Pharmaceutical Industries (down 2.42%) were major drags.

The NSE`s India VIX, a gauge of the market`s expectation of volatility over the near term, jumped 6.27% to 19.87.

In the broader market, the S&P BSE Mid-Cap index rose 0.57% while the S&P BSE Small-Cap index advanced 0.48%.

The market breadth was positive. On the BSE, 1,952 shares rose and 1,473 shares fell. A total of 153 shares were unchanged.

Economy:

India`s GDP growth surged to 13.5% in April-June from 4.1% in the previous quarter, data released on August 31 by the Ministry of Statistics and Programme Implementation showed. The sharp uptick in growth was driven by a favourable base effect and the ongoing economic revival.

India`s eight core sectors grew 4.5% in July, slowing from an upwardly revised 13.2% in June, the commerce ministry said on 31st August. Output in six of the eight core sectors grew in July. These sectors include coal, refinery products, electricity, fertilisers, cement and steel, said the ministry.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers` Index (PMI) was little-changed from July`s reading of 56.4, posting 56.2 in August 2022. It signalled the second-strongest improvement in operating conditions since last November.

The gross GST revenue collected in the month of August 2022 is Rs 1,43,612 crore of which CGST is Rs 24,710 crore, SGST is Rs 30,951 crore, IGST is Rs 77,782 crore (including Rs 42,067 crore collected on import of goods) and cess is Rs 10,168 crore (including Rs 1,018 crore collected on import of goods), official data showed.

The revenues for the month of August 2022 are 28% higher than the GST revenues in the same month last year. During the month, revenues from import of goods was 57% higher and the revenues from domestic transaction (including import of services) are 19% higher than the revenues from these sources during the same month last year.

Numbers to Track:

The yield on India`s 10-year benchmark federal paper slipped to 7.215 compared with 7.188 at close in the previous trading session.

In the foreign exchange market, the rupee declined against the dollar. The partially convertible rupee was hovering at 79.565, compared with its close of 79.52 during the previous trading session.

MCX Gold futures for 5 October 2022 settlement shed 0.33% to Rs 52,045.

The 10-year U.S. Treasury yield was hovering at 3.193%.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was up 0.31% to 109.04.

In the commodities market, Brent crude for October 2022 settlement declined $2.22 or 2.32% at $93.42 a barrel.

Global Markets:

The Dow Jones futures were down 166 points, indicating a negative opening to equities on Wall Steet today.

Shares in Europe and Asia tumbled on Thursday, as worries about aggressive interest rate hikes from the Federal Reserve persist.

Federal Reserve Chair Jerome Powell last Friday indicated the central bank will keep raising interest rates to fight inflation, even as that causes pain for households and businesses.

The results of a private survey showed China`s factory activity contracted in August. The Caixin/Markit manufacturing Purchasing Managers` Index came in at 49.5 for August, compared to 50.4 in July.

U.K. factory activity offered a rare upside surprise in August, with the the S&P Global/CIPS manufacturing PMI coming in at 47.3. The reading still represents the worst month for British factories since May 2020, as the country battles a historic cost of living crisis.

Stocks in Spotlight:

Ashok Leyland advanced 5.71%. The auto major`s total commercial vehicle (CV) sales jumped 51% to 14,121 units in August 2022 from 9,360 units sold in August 2021.

Meanwhile, the media reported that Ashok Leyland bagged orders from major fleets for 1,400 school buses in UAE.

Escorts Kubota rose 1.39%. The company`s Agri Machinery Segment in August 2022 sold 6,111 tractors, registering a growth of 7.3% as against 5,693 tractors sold in August 2021. The Construction Equipment Segment in August 2022 sold 225 machines as against 307 machines sold in August 2021, recording a de-growth of 26.7% on a YoY basis.

Bajaj Auto shed 0.33%. The two wheeler maker`s total sales increased 8% to 4,01,595 units in August 2022 compared with 3,73,270 units sold in August 2021.

Tata Motors declined 0.90%. The auto major`s sales in the domestic & international market for August 2022 stood at 78,843 vehicles, up by 35.95% as compared to 57,995 units during August 2021.

Separately, Tata Motors and Marcopolo S.A. have entered into a share purchase agreement where the company will purchase the balance 49% shareholding in TMML for a cash consideration of Rs 99.96 crore. Tata Marcopolo Motors (TMML or JV), is a 51:49 JV formed in 2006 between the Company and Marcopolo S.A., one of the largest bus and coach manufacturers globally.

Eicher Motors added 1.53%. The company`s unlisted subsidiary, VE Commercial Vehicles (VECV) sold 5,003 units of commercial vehicles (CV) in August 2022, registering a rise of 4.4% year on year from 4,793 units sold in August 2021.

Eicher Motors` total motorcycles (Royal Enfield) sales soared 53% to 70,112 units in August 2022 as against 45,860 units sold in the same period last year.

Mahindra & Mahindra (M&M) rose 0.28%. The company said that its overall auto sales for the month of August 2022 stood at 59,049 vehicles, which is significantly higher as compared with 30,585 vehicles sold in August 2021.

M&M`s Farm Equipment Sector (FES) sold 21,520 tractor units in August 2022 as compared with 21,360 tractor units sold in August 2021.

Maruti Suzuki India lost 0.70%. The car major recorded total sales of 1,65,173 units in August 2022, recording a growth of 26.38% as against 1,30,699 units sold in August 2021.

SpiceJet fell 3.13%. The company`s board on Wednesday (31 August) took note of resignation of Sanjeev Taneja, chief financial officer with effect from 31 August 2022.

SpiceJet reported a net loss of Rs 789 crore (Rs 420 crore excluding forex adjustment) for the quarter ending 30 June 2022 as against a net loss of Rs 729 crore in the quarter ending 30 June 2021, as business was severely impacted by record high fuel prices and a depreciating Rupee. Total revenue for the reported quarter was Rs 2,478 crore as against Rs 1,266 crore in the same quarter of the previous year.

Zee Entertainment Enterprises tumbled 4.75%. The media reported that the Competition Commission of India (CCI), in an initial review, found that the proposed merger of Sony Pictures Networks India (SPN) and Zee Entertainment Enterprises (ZEE)�two of the biggest television networks in the country�will hurt competition by having �unparalleled bargaining power�, emphasising that more scrutiny was needed.

Zee and Sony in December agreed to merge their businesses to create a $2 billion media powerhouse.

Meanwhile, Zee announced that it has entered into a strategic licensing agreement with Disney Star, by way of which it will gain licensing of the television broadcasting rights of the International Cricket Council`s Men`s and Under 19 global events. The company entered into this agreement for the period of four years.

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