Indian market traded volatile on March 23 as equity benchmarks the Sensex and the Nifty ended in the red after trading in the green in the first half of the session.
Equity barometer the Sensex opened more than 200 points higher at 58,198.64 but ended 304 points, or 0.53 percent, lower at 57,684.82. In intraday trade, the Sensex swung by 848 points. Nifty ended the day at 17,245.65, down 70 points, or 0.40 percent. Volatility index India VIX climbed 2.81 percent to 24.75.
The market fell prey to profit-booking as investors remained skeptical over the sustainability of gains amid global uncertainty. The Russia-Ukraine war is going to complete a month on March 24 and still, a sign of an end to it looks remote.
Meanwhile, media reports suggested US President Joe Biden had flown to Europe on March 23 for an emergency NATO summit on Ukraine. A Reuters report suggested, Russian President Vladimir Putin plans to attend the next G20 summit in Indonesia later this year while the US and its Western allies are assessing whether Russia should remain within G20 following its invasion of Ukraine.
Crude oil prices remained up. Benchmark Brent Crude traded near the $120 a barrel mark. The Indian currency rupee declined by 16 paise to 76.34 against the US dollar.
Elevated crude oil prices are fuelling inflation which will drag the growth down. Several rating agencies have projected sombre growth outlook for India.
The Organization for Economic Cooperation and Development (OECD) on March 22 said India’s real gross domestic product (GDP) may come at 5.5 percent in FY24, lower than 8.1 percent in FY23.
Global rating agency Fitch Ratings has cut its growth forecast for India for FY23 to 8.5 percent (-1.8pp) on sharply higher energy prices.
Morgan Stanley has slashed India's economic growth forecast by 50 basis points to 7.9 percent for the financial year 2022-23. Furthermore, the US investment bank and financial services company raised the country's retail inflation estimate to 6 percent.
"After the recent rally, the market is getting cautious. Volatility is back due to inflationary pressures triggered by supply constraints. Consistently rising input cost and fall in demand due to surge in Covid cases in parts of the world, war and high commodity prices are impacting earnings growth which can lead to downgrading in outlook. An end to the war and rise in supply can help India to sustain its resilience or else it will be a challenge in the short-term," said Vinod Nair, Head of Research at Geojit Financial Services.
While the market benchmarks fell, mid and smallcaps showed strength and outperformed their large peers. The BSE Midcap index rose 0.39 percent while the smallcap index settled with a nominal loss of 0.02 percent.
Among the sectors, BSE Metal (up 1.53 percent), Utilities (up 1.36 percent) and Power (up 1.30 percent) clocked strong gains. On the flip side, BSE Bankex (down 0.81 percent), Finance (down 0.74 percent) and Auto (down 0.72 percent) fell almost a percent each.
While the market benchmarks fell, as many as 126 stocks, including Century Plyboards, Chalet Hotels, Cholamandalam Investment and Finance Company, Cummins India, Delta Corp and Jindal Steel & Power, hit their fresh 52-week highs on BSE in intraday trade.
"Nifty is witnessed strong recovery in recent times. Currently, we see strong resistance at 17,650 for the Nifty50; failure to cross the same can invite selling pressure. For the short term, expect range-bound movement at 17,000-17,500. FMCG, IT remains in momentum while the high beta space is expected to remain volatile," said Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities.
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