Mkt slips for 3rd day as Fed`s hawkish stance prompts selling

The domestic equity benchmarks closed lower for the third consecutive day on Thursday, with the Nifty closing below the 19,750 level. Trading was volatile due to expiry of weekly index options on the NSE. While the US Federal Reserve kept its policy stance unchanged, it issued a cautionary statement indicating that interest rates would remain elevated for an extended period. As a result, investors became apprehensive, given the hawkish tone of the Fed chair, expectations of prolonged high interest rates, and worries about a decelerating global economy. Furthermore, the bearish sentiment was exacerbated by negative factors like overseas fund outflows, an increase in the US Dollar index, rising treasury yields, and elevated crude oil prices. As a consequence, mid and small-cap stocks declined sharply. PSU banks and auto shares tumbled, while media and IT shares bucked the weak market trend.

The barometer index, the S&P BSE Sensex slipped 570.60 points or 0.85% to 66,230.24. The Nifty 50 index lost 159.05 points or 0.80% to 19,742.35. Both the indices corrected about 2.3% in the three consecutive sessions.

M&M (down 3.08%), ICICI Bank (down 2.81%) and Reliance Industries (down 0.74%) were major drags.

The broader market underperformed the headline indices. The S&P BSE Mid-Cap index declined 0.99% while the S&P BSE Small-Cap index lost 0.98%.

The market breadth was weak. On the BSE, 1,230 shares rose and 2,436 shares fell. A total of 127 shares were unchanged.

The NSE`s India VIX, a gauge of the market`s expectation of volatility over the near term, slipped 2.78% to 10.82.

Following a two-day meeting, the US Federal Reserve made several announcements. Firstly, it decided to leave the benchmark interest rates unchanged at the range of 5.25% to 5.50%. Secondly, it revealed that most officials anticipate another quarter percentage point increase in interest rates before the end of the year. Lastly, the central bank revised its forecast, suggesting that interest rates will remain elevated for a longer duration than previously expected.

Economy:

The Organisation for Economic Cooperation and Development (OECD) has revised its GDP growth projection for India in the FY24 to 6.3% from earlier projection of 6%.

According to RBI, Indian households saved 19% less in FY23 compared to FY22 on a net basis, with the net savings falling to just 5.1% of GDP in FY23 from 7.2% of GDP in FY22.

The RBI has directed credit information companies (CICs) to set out a common data quality index (DQI) for commercial and microfinance segments, which will help in assessing the quality of data submissions by credit institutions (CIs) to CICs.

Numbers to track:

The yield on India`s 10-year benchmark federal paper declined 0.17% to 7.141 from previous close of 7.153.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 83.0375, compared with its close of 83.1100 during the previous trading session.

MCX Gold futures for 5 October 2023 settlement slipped 0.79% to Rs 58,936.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was up 0.31% to 105.48.

The United States 10-year bond yield advanced 1.80% to 4.425.

In the commodities market, Brent crude for November 2023 settlement fell $1.02 or 1.09% to $92.51 a barrel.

Global Markets:

The Dow Jones futures were down 183 points, indicating a negative opening in the US stock market today.

Markets in Europe and Asia declined across the board today, tracking fall overnight in the US stock market following the U.S. Fed meet outcome. Projections showed the central bank expects to hike rates to a median of 5.6% by the end of 2023, up from the current range between 5.25% and 5.5%.

US stocks ended lower on Wednesday as investors digested the Fed`s moves.

Stocks in Spotlight:

Mahindra and Mahindra (M&M) dropped 3.08%. The auto major`s Canada-based associate company, Resson Aerospace Corporation, filed for voluntary winding-up. Resson has received a Certificate of Dissolution from Corporations Canada, ceasing its existence and association with M&M under Indian Accounting Standards. M&M is set to receive approximately 4.7 million Canadian Dollars (~Rs 28.7 cr) as a distribution of proceeds from Resson.

Infosys rose 0.80%. Infosys and NVIDIA announced that they have expanded their strategic collaboration with the aim to help enterprises worldwide, drive productivity gains with generative AI applications and solutions.

SJVN plunged 13.05%. The government will offload a 4.92% stake in SJVN at a floor price of Rs 69 per share through a two-day offer for sale. OFS opened for non-retail investors today, 21 September 2023. It will open for retail investors on 22nd September.

Cipla slipped 2.56%. An inspection was conducted by the United States Food and Drug Administration (USFDA) at the manufacturing facility of InvaGen Pharmaceuticals Inc., wholly owned subsidiary of the company from 11 to 19th September 2023. On conclusion of the inspection, InvaGen has received 5 inspectional observations in Form 483.

Tata Power Company fell 2.10%. The company said that its subsidiary, Tata Power Renewable Energy has signed an agreement with Dugar Power to entered into Nepal`s rapidly evolving renewable energy sector.

Zydus Lifesciences shed 1.43%. The company has received final approval from the United States Food and Drug Administration (USFDA) for Clindamycin Phosphate Gel USP, 1%. Clindamycin Phosphate Gel is used to treat acne.

Biocon declined 2.36%. The biopharmaceuticals company said that its subsidiary Biocon Biologics has been granted marketing authorization in the European Union (EU) by European Commission (EC) for YESAFILI, a biosimilar of Aflibercept.

DCB Bank rose 1.61%, Karur Vysya Bank rose 0.11% and Equitas Small Finance Bank rose 1.74% after HDFC Asset Management Company secured the Reserve Bank of India`s approval to acquire upto 9.5% in each of the above three banks.

Kalpataru Projects International fell 1.64%. A meeting of the Executive Committee of the Board of Directors of the Company is scheduled to be held on 25th September 2023, to consider and approve the proposal for the raising of funds by way of issuance of Non-Convertible Debentures on private placement basis.

Sheela Foam dropped 3.74%. The company announced that its board approved the opening of qualified institutional placement (QIP) of equity shares with the floor price of Rs 1,133.99 per share.

Apollo Tyres slipped 2.43% after the Bias and OTR tyres production at its manufacturing facility in Limda, Gujarat has been stopped due to certain concerns amongst shop floor employees relating to renewal of long-term settlement agreement.

New Listing:

Shares of EMS settled at Rs 279.75 on the BSE, representing a premium of 32.58% as compared with the issue price of Rs 211.

The scrip was listed at Rs 281.55, exhibiting a premium of 33.44% to the issue price.

The stock has hit a high of Rs 290.85 and a low of Rs 268.60. On the BSE, over 18.21 lakh shares of the company were traded in the counter.

IPO Update:

The initial public offer (IPO) of Signatureglobal (India) received bids for 1.81 crore shares as against 1.12 crore shares on offer, according to stock exchange data at 17:00 IST on Thursday (21 September 2023). The issue was subscribed 1.61 times.

The issue opened for bidding on Wednesday (20 September 2023) and it will close on Friday (22 September 2023). The price band of the IPO is fixed at Rs 366-385 per share. An investor can bid for a minimum of 38 equity shares and in multiples thereof.

The IPO of Sai Silks (Kalamandir) received bids for 1.27 crore shares as against 3.84 crore shares on offer, according to stock exchange data at 17:00 IST on Thursday (21 September 2023). The issue was subscribed 33%.

The issue opened for bidding on Wednesday (20 September 2023) and it will close on Friday (22 September 2023). The price band of the IPO is fixed at Rs 210-222 per share. An investor can bid for a minimum of 67 equity shares and in multiples thereof.

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