Nifty, Sensex snap 9-day rally run as IT stocks drag

Domestic equity benchmarks snapped their nine-day winning streak, with the BSE Sensex and Nifty 50 index witnessing a sharp correction on Monday. The IT sector took the biggest hit, dragging the Nifty IT index down by 4.71%, while concerns over the US Federal Reserve`s interest rate policy and global economic slowdown dampened investor sentiment. However, PSU banks, FMCG, and realty stocks managed to buck the trend.

The S&P BSE Sensex declined by 520.25 points or 0.86% to 59,910.75, while the Nifty 50 index fell by 121.15 points or 0.68% to 17,706.85. This decline comes after the indices recorded a significant upswing over the past nine trading sessions, with the Sensex surging by 4.89% and the Nifty gaining 5.17%.

The Nifty 50 index began trading at 17,863, but slipped during early trades, hitting a low of 17,574.05 in the morning. Despite this dip, it gradually recovered throughout the day, managing to close above 17,700 by day`s end.

Sector major, Infosys, saw its shares plummet nearly 15% during the day`s trade due to a weak revenue outlook. Other major IT players such as LTIMindtree, Tech Mahindra and Persistent Systems closed down by 6.96%, 5.18 and 4.14%, respectively.

Meanwhile, the midcap and smallcap indices on the BSE managed to end the day higher, gaining 0.56% and 0.13%, respectively.

The market breadth was unfavorable, with more shares falling than rising. On the BSE, 1,796 shares recorded gains, while 1,805 shares experienced losses. A total of 167 shares remained unchanged.

Economy:

India`s annual wholesale price index (WPI) based inflation eased to 29-month low of 1.34% in March 2023 as compared to 3.85% recorded in February 2023 and 14.63% in March 2022.

�Decline in the rate of inflation in March, 2023 is primarily contributed by fall in prices of basic metals, food products, textiles, non-food articles, minerals, rubber & plastic products, crude petroleum & natural gas and paper and paper products,� the Ministry of Commerce & Industry said in a statement today.

Separately, India`s March goods exports declined 13.9% to $38.38 billion and imports declined 7.9% to $58.11 billion. In March 2022, goods exports were $44.57 billion and imports were $63 billion. March`s trade deficit is at $19.73 billion. The total trade deficit for 2022-23 is at $122 billion, according to the government.

Numbers to Watch:

The yield on India`s 10-year benchmark federal paper advanced to 7.245 from 7.229 in previous trading session.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 82.0125, compared with its close of 81.85 during the previous trading session

MCX Gold futures for 5 June 2023 settlement added 0.33% to Rs 60,531.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was up 0.11% to 101.67.

The United States 10-year bond yield advanced 0.39% to 3.536.

In the commodities market, Brent crude for June 2023 settlement declined 35 cents or 0.41% to $85.96 a barrel.

Global Markets:

Most European shares declined while Asian shares closed higher on Monday, as U.S. earnings season gets into full swing.

Wall Street ended lower on Friday as a barrage of mixed economic data appeared to affirm another Federal Reserve interest rate hike, dampening investor enthusiasm after a series of big US bank earnings launched first-quarter reporting season.

Stocks in Spotlight:

Infosys tanked 9.37% and it was the top drag on the Nifty 50 after the IT major pegged its revenue growth guidance at 4-7% in the fiscal ended 31 March 2024. During an investor call held after the earnings report, Infosys stated three reasons for the revenue shortfall: unplanned client rampdowns across verticals, delayed decision making, and a one-time impact.

Infosys reported 7% decline in consolidated net profit to Rs 6,128 crore on a 2.3% fall in revenues to Rs 37,441 crore in Q4 FY23 over Q3 FY23. On a year-on-year basis, the company`s net profit and revenues are higher by 7.8% and 16%, respectively as compared with Q4 FY22.

HCL Technologies slipped 2.72%. Anand Birje, head of Digital Business Services, resigned from the company to pursue another opportunity.

HDFC Bank fell 1.55%. The bank`s net revenue grew by 21% to Rs 32,083 crore in Q4 March 2023 from Rs 26,509.8 crore in Q4 March 2022. Its net profit rose 19.8% to Rs 12,047.5 crore in Q4 March 2023 over in Q4 March 2022.

The board of directors of HDFC Bank approved the issuance of perpetual debt instruments, tier II capital bonds and long-term bonds up to total amount of Rs 50,000 crore over the period of next twelve months through private placement mode.

Adani Green Energy (AGEL) added 2.29%. AGEL said its sale of energy for solar portfolio increased by 6% YoY at 2,872 million units in Q4 FY23 as against 2,717 million units in Q4 FY22.

Zee Entertainment Enterprises declined 2.11% after mega block deals in initial trade today. According to the media reports, Invesco Oppenheimer Developing Markets Fund offloaded 5.65% stake in the company through block deals.

TV18 Broadcast rose 1.63%, and Reliance Industries added 0.47%. Viacom18, a subsidiary of the company, closed the merger of Reliance Storage with itself and integrated JioCinema as well. Viacom18 allotted shares to RIL group entities and Bodhi Tree Systems as consideration for the scheme of merger.

KIOCL zoomed 14.01%. The company received two mineral exploration projects in Karnataka for a reconnaissance survey for polymetallic mineralisation in Nagavanda gold and base metal blocks in parts of Dhanvangere, Haveri, and Shimoga districts at Rs 1.48 crore and preliminary exploration for amalgamated Kalaburagi limestone blocks in the Jevargi region at Rs 2.33 crore.

Jubilant Ingrevia advanced 3.61%. The company announced that it has commissioned new acetic anhydride plant, at its manufacturing facility at Bharuch, Gujarat. The plant adds around 60,000 MT of capacity, whereby scaling the company`s overall annual acetic anhydride capacity to 210,000 MT.

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