Sensex slips 38 pts in volatile session, Nifty below 16,250; metal stocks crash

The domestic equity benchmarks reversed intraday gains and settled with small losses on Monday. The Nifty closed below the 16,250 mark after hitting the day`s high of 16,414.70 in afternoon trade. While metal stocks witnessed sharp sell-off, IT and auto shares managed to close in the green. Persisting inflation worries, looming fears of sharp interest rates hikes and worsening global economic outlook clouded investors` sentiment.

The barometer index, the S&P BSE Sensex, declined 37.78 points or 0.07% to 54,288.61. The Nifty 50 index lost 51.45 points or 0.32% to 16,214.70.

In the broader market, the BSE Mid-Cap index fell 0.26% and the BSE Small-Cap index lost 0.64%.

The market breadth was negative. On the BSE, 1,373 shares rose and 2,048 shares fell. A total of 156 shares were unchanged.

Economy:

On Saturday, the government cut excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre to give relief to consumers battered by high fuel prices that have also pushed inflation to a multi-year high. The excise duty cut would translate into a reduction of Rs 9.5 a litre on petrol and Rs 7 a litre on diesel after taking into account its impact on other levies.

The finance ministry notified export duty on 11 iron and steel intermediates and lowered import duty on three key raw materials for steel production. The duty revision is effective from Sunday, 22 May 2022.

The import duty on coking coal and anthracite (high energy coal) has been reduced from 2.5% to zero while the same on coke and semi-coke has been brought down from 5% to zero. The import duty on ferronickel, an alloy containing iron and nickel, has been lowered from 2.5% to zero.

To increase local availability of iron ore and a few steel intermediates, export duty has been raised on one item and imposed on 10 other items afresh. In the case of iron ore and concentrates, the duty has been raised to 50% on all categories, up from 30% that is now applicable on lumps above 58% iron content.

For iron ore pellets, which currently does not attract export duty, a 45% duty has been imposed. In the case of nine other classes of iron ore and steel intermediates a 15% export duty has been imposed. This includes Flat-rolled products of iron or non-alloy steel.

Numbers to Watch:

The yield on India`s 10-year benchmark federal paper rose to 7.388% as compared with 7.359% at close in the previous trading session.

In the foreign exchange market, the rupee was higher against the dollar. The partially convertible rupee was hovering at 77.56, compared with its close of 77.70 during the previous trading session.

MCX Gold futures for 3 June 2022 settlement rose 0.47% to Rs 51,070.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, decreased 1.01% to 102.14.

In the commodities market, Brent crude for July 2022 settlement rose $1.35 or 1.20% at $ 113.90 a barrel. The contract rose 51 cents or 0.46% to settle at $ 112.55 a barrel during the previous trading session.

Foreign Markets:

The Dow Jones index futures were up 277 points, indicating a positive opening in the US stocks later today.

European shares were trading higher while Asian shares settled on a mixed note on Monday. Concerns continued to linger over slowdown in global economic growth and hawkish statement from Federal Reserve Chairman Powell. The Fed Chair said that the central bank would notch up interest rates as high as needed taking rates above neutral (rate at which economic activity is neither simulated nor constrained) to curb soaring inflation.

The U.S. President Joe Biden on Monday said he would be willing to use force to defend Taiwan, prompting thanks from the democratic, self-ruled island � but sharp criticism from China. When asked at a joint press conference with Japanese Prime Minister Fumio Kishida whether the U.S. would be prepared to defend Taiwan if attacked, Biden reportedly replied: "Yes."

Buzzing Index:

Metal shares dropped after the government on Saturday decided to impose export duties on crucial steel-making raw materials like iron ore and pellets.

The Nifty Metal index tumbled 8.14% to 5,241.60. The index advanced 4.20% on Friday.

Jindal Steel & Power (down 17.51%), Jindal Stainless (Hisar) (down 15.37%), JSW Steel (down 13.21%), Tata Steel (down 12.32%), NMDC (down 11.74%), Steel Authority of India (down 10.42%), Welspun Corp (down 8.74%), Hindustan Copper (down 4.62%) and Hindalco Industries (down 3.41%) slumped.

Stocks in Spotlight:

The Indian Hotels Company (IHCL) rose 3.63% after the hospitality major said it aims to build a portfolio of 300 hotels, clock 33% EBITDA margin with 35% EBITDA share contribution from new businesses and management fees by FY 2025-26.

Divi`s Laboratories slumped 9.50%. The company`s standalone net profit rose 81% to Rs 883 crore on 45.20% increase in net sales to Rs 2495.03 crore in Q4 March 2022 over Q4 March 2021.

Power Grid Corporation of India fell 1.96%. The state-run company reported consolidated net profit of Rs 4,156.44 crore in Q4 FY22 as compared to net profit of Rs 3,526.23 crore in Q4 FY21. Total income rose to Rs 11,067.94 crore from Rs 10,816.33 crore.

Thermax slumped 6.59%. The company reported 4.5% decline in consolidated net profit to Rs 102.54 crore from Rs 107.35 crore in Q4 FY22 over Q4 FY21. The revenue from operations rose a 26.5% year on year to Rs 1,991.92 crore in the quarter ended 31 March 2022. Profit before tax fell 6.3% year on year to Rs 131.51 crore from Rs 140.38 crore in the quarter ended 31 March 2022.

One 97 Communications (Paytm) jumped 7.76%. The company reported a consolidated net loss to Rs 763 crore in Q4 March 2022, higher than net loss of Rs 441.80 crore in Q4 March 2021. Its consolidated revenue from operations grew 89% year-on-year (Y-o-Y) to Rs 1,540.90 crore in the quarter under review compared with Rs 815.30 crore in the corresponding quarter last year.

Cochin Shipyard surged 5.89%. The company`s consolidated net profit rose 16.26% to Rs 274.62 crore on 12.23% increase in net sales to Rs 1212.49 crore in Q4 March 2022 over Q4 March 2021.

Tata Power Company on Monday announced that it has teamed up with Tata Motors for development of a 7 Megawatt peak (MWp) solar rooftop project at Tata Motors` Passenger Vehicle Plant in Pune. This is the third phase of a joint 17 MWp on-site solar project developed by the two companies, of which a 10 MWp has been installed earlier.

Shares of Tata Power Company shed 1.5% while Tata Motors advanced 0.87%.

Jyoti Structures jumped 4.64%. The company has secured contracts from MPSEZ Utilities for turnkey supply and erection of transmission line at Mundra SEZ. The total value of contracts is Rs. 55 crore. The project is to be completed in 4 months.

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