Market extends losses; Nifty drops below 16,200

Selling continued unabated as the equity barometers hit fresh intraday low in mid-afternoon trade. The Nifty dropped below the 16,200 mark. All the sectoral indices on the NSE were in the red. Financial services, IT and oil & gas shares tumbled. Investors remained cautious ahead of the US inflation data expected later today.

At 14:28 IST, the barometer index, the S&P BSE Sensex, tumbled 1,099.34 points or 1.99% to 54,220.94. The Nifty 50 index lost 295.80 points or 1.80% to 16,182.30.

The broader market outperformed the key equity indices, the S&P BSE Mid-Cap index lost 0.78% while the S&P BSE Small-Cap index was down by 0.81%.

Sellers were almost twice as that of buyers. On the BSE, 1,194 shares rose and 2,050 shares fell. A total of 124 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.

Numbers to Track:

The yield on India`s 10-year benchmark federal paper rose to 7.521% as compared with 7.496% at close in the previous trading session.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 77.855, compared with its close of 77.74 during the previous trading session.

MCX Gold futures for (3 June 2022) settlement fell 0.23% to Rs 50,886.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, rose 0.07% to 103.30.

In the commodities market, Brent crude for August 2022 settlement fell 13 cents or 0.11% at $ 122.94 a barrel.

Buzzing Index:

The Nifty Financial services index fell 2.41% to 15,819.80. The index has rose 0.39% in the past trading session.

Among the components of the Nifty Financial Services index, Kotak Mahindra Bank (down 3.87%), Cholamandalam Investment & Finance Company (down 3.74%), Bajaj Finance (down 3.72%), Housing Development Finance Corporation (down 3.55%) and Piramal Enterprises (down 2.09%) were the top losers.

Stocks in Spotlight:

Oriental Aromatics jumped 14.02% to Rs 599.90 after the company said that its proposed Greenfield project in Mahad (Maharashtra) received environmental clearance. The company`s wholly owned subsidiary, Oriental Aromatics & Sons, secured the environmental clearance for the proposed Greenfield project for manufacturing speciality chemicals & chemical intermediates at Mahad, Raigad, Maharashtra. The State Environment Impact Assessment Authority (�SEIAA�), Ministry of Environment, Forest and Climate Change, Government of India, granted the environmental clearance vide its letter dated 9 June 2022.

Life Insurance Corporation of India (LIC) fell 1.66% to Rs 710 as the lock-in period for anchor investors is expected to end on 13 June 2022. Anchor investors are marquee institutional investors who are allotted shares in a company ahead of its initial public offer (IPO). The end of lock-in period will allow anchor investors to sell their existing shares in the market. Ahead of the IPO, LIC on 2 May 2022 raised Rs 5,627.27 crore from anchor investors by allotting about 5.93 crore shares to 123 investors at Rs 949 per share. The IPO of insurance major was subscribed 2.95 times. The issue opened on 4 May 2022 and it closed on 9 May 2022. The IPO price band was Rs 902 to Rs 949 per equity share.

Hindalco Industries fell 3.30% to Rs 386.55, extending losses for the fourth trading session. Shares of Hindalco Industries have fallen 5.36% in four trading sessions from its recent closing high of Rs 409.25 on 6 June 2022. In the past one year, the stock rose 0.43% while the benchmark Sensex has risen 4.17% during the same period. On the technical front, the stock`s daily RSI (relative strength index) stood at 31.478. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

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