Indian equity benchmarks ended lower on June 1 after yet another volatile session on mixed global cues, mounting concerns about growth slowing down in FY23 and high oil prices.
The 30-pack Sensex fell 185 points to close at 55,381, and the Nifty50 declined 62 points to 16,523, extending downtrend for the second consecutive session.
Global counterparts, too, traded mixed amid persistent inflation concerns and contraction in China's factory activity. Oil prices remained elevated with Brent crude futures at $117 a barrel after a phased ban on Russian oil by the European Union and the end of Covid-19 lockdown in Shanghai.
"Continuous rise in crude oil prices due to European Union's decision to partially ban Russian oil hindered global market. Indian economy registered a growth of 8.7 percent in FY22 but is expected to slow down in FY23 to 7.2 percent, as per the latest RBI forecast," Vinod Nair, Head of Research at Geojit Financial Services said.
However, there was outperformance in the broader space as the market breadth favoured bulls. The Nifty Midcap 100 index rose 0.04 percent and the smallcap 100 index gained 0.28 percent, as about 1,022 equity shares advanced for 909 declining shares on the NSE.
Auto stocks were in focus, though the Nifty Auto index fell 0.2 percent following monthly sales data.
"Auto sales data, posted by major manufacturers, witnessed growth in passenger and commercial vehicle segments due to pick up in the construction sector. However, two-wheeler and tractor segments continued to remain under pressure," Nair said.
Auto manufacturers showed strong growth in sales in May 2022 compared to the year-ago period, largely due to a low base as May 2021 sales were hit by curbs imposed by states to control the Covid spread.
Volatility remained above 20, pointing to volatile swings ahead. India VIX, which measures the expected volatility in the market, rose 1.79 percent to 20.85 levels.
Stocks and sectors
The sectoral trend was mixed. The Nifty IT and pharma were the biggest losers, down more than a percent each, followed by FMCG, which declined seven-tenth of a percent. However, banks, financial services and metal ended with moderate gains.
JSW Steel, Coal India, HDFC Life, M&M, HDFC and Kotak Mahindra Bank were the biggest gainer in the Nifty50, rising 1-3 percent.
However, Bajaj Auto, Apollo Hospitals Enterprises, Tech Mahindra, Hindalco Industries, Britannia Industries, Bajaj Finserv and Nestle were down 2.5-3.7 percent.
In the futures and options segment, a long build-up was seen in Bharat Electronics, ICICI Prudential Life Insurance, Astral, Torrent Power, JSW Steel and Hindustan Aeronautics.
Syngene International, NALCO, Bajaj Auto, Apollo Hospitals, Hindalco, Tech Mahindra and Piramal Enterprises witnessed a short build-up.
Long unwinding was seen in SRF, Info Edge India, Escorts, SBI Life Insurance, Honeywell Automation, while IOC, Balrampur Chini Mills, M&M Financial Services, NBCC and Kotak Mahindra Bank saw short-covering.
Outlook for June 2
Ajit Mishra, VP-Research, Religare Broking
With macro data behind us, the performance of global markets amid lingering inflation fear would dictate the trend.
Monsoon updates ahead of the monetary policy meet would also be in focus. Amid all, we reiterate a bullish view and suggest continuing with the “buy-on-dips” approach.
Mitul Shah, Head of Research, Reliance Securities
The Reserve Bank of India (RBI) is looking at another phase of coordinated action between fiscal and monetary authorities. More rate hikes are on the way as all eyes are on RBI and the US Federal Reserve, which will be meeting this month, as the economic landscape goes through a furious churn.
The Indian government has rolled out a string of measures to keep prices in control by reducing petrol and diesel prices.
The borrowing plan for FY23 remains firmly on course despite an inflationary environment, reduced revenue after the fuel duty cut and a higher subsidy outgo for food and fertilizer.
The Q4FY22 reported strong performance despite inflationary pressure. Revenue of BSE500 for Q4FY22 grew by 22 percent YoY, while PAT grew by 25 percent YoY.
The primary focus will be on central banks’ policy measures to stabilise inflation. Changes in oil prices and amendments to import and export duties might play a role in assessing the market’s trajectory. However, the continued selling by FIIs and plunging rupee are likely to have economic implications in the near term.
Globally, the Russia-Ukraine war and supply chain disruptions continue to impact global and Indian equities.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.