Sensex tanks 1017 pts, Nifty ends at 16,201.80; RIL drops 3%

The domestic equity benchmarks slumped on Friday, resuming its losing run after a day`s gap. Global cues were negative as investors were cautious ahead of the US inflation data expected later today. The Nifty settled above the 16,200 mark after hitting the day`s low of 16,172.60 in mid-afternoon trade. All the sectoral indices on the NSE ended in the red. Financial services, IT and oil & gas shares witnessed major selling pressure.

The S&P BSE Sensex, was tumbled 1,016.84 points or 1.84% to 54,303.44. The Nifty 50 index fell 276.30 points or 1.68% to 16,201.80.

Index heavyweight Reliance Industries fell 3.02% to Rs 2714.

In the broader market, the S&P BSE Mid-Cap index lost 0.64% while the S&P BSE Small-Cap index shed 0.70%.

Sellers outnumbered buyers. On the BSE, 1,298 shares rose and 2,010 shares fell. A total of 121 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 7.522% 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 77.8700, compared with its close of 77.74 during the previous trading session.

MCX Gold futures for (3 June 2022) settlement fell 0.32% to Rs 50,843.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, rose 0.18% to 103.41.

In the commodities market, Brent crude for August 2022 settlement added 98 cents or 0.80% to $124.05 a barrel.

Global Markets:

Shares in Europe and Asia tumbled on Friday as investors looked ahead to the release of U.S. inflation data expected later stateside. Investors are looking to see if inflation has peaked or if the Federal Reserve will need to be even more aggressive to tamp down price increases.

The European Central Bank (ECB) on Thursday confirmed its intention to hike interest rates by 25 basis points at its July meeting, with a further hike expected in September, the scale of which will be determined by the medium-term inflation outlook. The ECB also raised its inflation expectations for the euro zone significantly and downgraded its growth forecasts.

The ECB raised its inflation projections but cut its growth outlook as the conflict in Ukraine continues to weigh on confidence, consumption and investment. The ECB now sees inflation over its 2% target throughout its projection horizon, accepting that rapid price growth is not nearly as temporary as it had forecast for the past year.

In Asia, the Chinese producer price index for May jumped 6.4% as compared with a year earlier, according to figures by the country`s Bureau of Statistics. The consumer price index for May climbed 2.1% from a year ago.

Buzzing Segment:

The Nifty Financial Services index fell 2.24% to 15,847.30. The index rose 0.39% in the previous session.

Cholamandalam Investment & Finance Company (down 4.16%), Bajaj Finance (down 4.08%), Kotak Mahindra Bank (down 3.98%), Housing Development Finance Corporation (down 3.76%), HDFC Bank (down 2.1%), Bajaj Finserv (down 2.01%), HDFC Life Insurance Company (down 2%), Piramal Enterprises (down 1.9%), ICICI Bank (down 1.71%), ICICI Prudential Life Insurance Company (down 1.32%), State Bank of India (down 1.04%), Muthoot Finance (down 1.01%) and HDFC Asset Management Company (down 0.85%) declined.

Stocks in Spotlight:

IIFL Finance jumped 7.57% after a wholly owned arm of Abu Dhabi Investment Authority (ADIA) invested Rs 2,200 crore for a 20% stake in IIFL Home Finance. IIFL Home Finance, a wholly owned subsidiary of IIFL Finance, is engaged in the business of providing home loans, loans against property and construction finance. The company has assets under management of Rs 23,617 crore as of 31 March 2022. It is headquartered in Gurugram with presence across 16 states and 2 union territories with over 200 branches.

Oriental Aromatics jumped 11.76% 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.

Welspun Enterprises rallied 7.14% after the company announced that it has executed definitive agreements to exit its portfolio of operating road concessions (Highway Portfolio) to Actis Highway Infra (Actis). The company sold the portfolio for an aggregate enterprise value (EV) of approximately Rs 6,000 crore. The entire transaction is expected to be completed by 31 March 2023, subject to completion of customary and regulatory compliances and approvals from NHAI, PWD, and lenders.

Life Insurance Corporation of India (LIC) fell 1.70% to Rs 709.70 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.

Transformers and Rectifiers (India) jumped 8.75% after the company said that it has been awarded orders of transformers for total contract value of Rs 186 crore from one of the State Utility. With this order, the company`s order book as on date stands at Rs 1,482 crore.

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