Indian stock benchmarks opened in the red on Tuesday, breaking a four-day winning streak on concerns about the risk of a global recession after poor economic data worldwide pushed Wall Street lower and other Asian stocks continued that weak trend.
The 30-stock BSE Sensex opened more than 100 points lower, while the broader NSE Nifty fell about 0.4 percent early Tuesday.
Among the Sensex constituents, Tata Steel, UltraTech Cement, ICICI Bank, Tech Mahindra, HDFC and Axis Bank were the biggest laggards in early trading.
However, Asian Paints, ITC, Hindustan Unilever, Reliance Industries, IndusInd Bank and State Bank of India were among the winners.
In the previous session, the BSE Sensex closed 545 points higher at 58,116, while the NSE Nifty gained 182 points to settle at 17,340.
Analysts expect the strong capital inflows from foreign institutional investors (FIIs) of recent days to continue and boost Indian equities.
Foreign institutional investors remained net buyers in the capital markets as they bought shares worth Rs 2,320.61 crore on Monday, according to exchange data.
“There is a possibility that the market could move higher as trading progresses on a number of positive catalysts, such as the decline in US Treasury yields during overnight trades, robust GST collections in July, and foreign investors gaining exposure to US Treasuries in recent weeks. keep taking local equities.” said Prashanth Tapse, Senior Vice President of Research at Mehta Equities.
In fact, FIIs bought shares worth Rs 2,321 crore on Monday and were also buyers in Friday’s trading for Rs 1,046 crore. Sentiments are likely to be supported by better-than-expected Q1 results from India Inc, leading China Covid restrictions and hopes for a less aggressive Federal Reserve to continue,” he added.
Meanwhile, Indian Finance Minister Nirmala Sitharaman told parliament on Monday that the country will not plunge into recession or stagflation after opposition parties expressed concerns about rising inflation and its impact on the economy.
In domestic trade, the Nifty Metal Index fell 1.2 percent, making it the worst-performing sub-index. If the losses continue, it is set to hit four consecutive winning sessions.
Cigarette-to-hotel conglomerate ITC Ltd rose more than 2 percent after the company reported late Monday that its quarterly profit was up 38 percent year on year.
But oil prices and Asian stocks fell Tuesday and continued an overnight decline on Wall Street as investors worried about global demand after weak manufacturing data in several countries.
“Data releases from the past 24 hours have provided further evidence that the global economy is slowing,” National Australia Bank strategist Rodrigo Catril wrote in a note to customers, as reported by Reuters.
“There are signs of slowing down” in the United States, while “China’s reopening activity is over,” he said.
All eyes will also be on Friday’s outcome of the RBI’s rate-setting meeting.
A Reuters poll showed a rate hike on Friday was almost certain, but there was no consensus on the size of a rate hike.
“We expect the RBI to hike the repo rate by 25 bps this time around. This will bring the 5.15 percent pre-corona crisis level. Any aggressive move of say 50 bps will indicate that the inflation peak is not yet over. has been reached and thus could send another signal to the market, said Madan Sabnavis, Chief Economist Bank of Baroda.
“In the current situation of falling world prices, we do not expect a change in forecasts of inflation or GDP,” he added.
But on the global front, the week started with China, Europe and the United States reporting weakening factory activity, with the US declining to its lowest level since August 2020.
That slumped in crude, with Brent futures falling to $99.74 Tuesday after losing nearly $4 overnight. US West Texas Intermediate futures also fell to $93.67, extending Monday’s nearly $5 gain.
There were also jitters over an escalation in Sino-US tensions with US House Speaker Nancy Pelosi to begin a visit to Taiwan over objections from China, which views the self-governed island as a breakaway province.
US e-mini stock futures pointed to a 0.31 percent lower restart for the S&P 500, which fell 0.28 percent overnight.
MSCI’s widest index of Asia-Pacific stocks fell 0.8 percent, Chinese blue chips fell 1.06 percent and Hong Kong’s Hang Seng lost 1.1 percent.
Australian equities fell amid uncertain prospects for commodities demand – which also weighed on crude oil prices – as the local dollar neared its highest point against its US counterpart since mid-June, with the exchange widely expected to bank would yield a third consecutive half-point rate hike later in the day.
The Australian and South Korean stock benchmarks each lost about 0.3 percent, while Japan’s Nikkei plunged 1.17 percent.