Market Commentary End Session News Details

Sensex drops 303 pts, declines for 3rd day; Nifty holds 16k level; Asian Paints slumps 8%

(25-May-22   17:25)

The domestic equity benchmarks declined sharply on Wednesday, extending losses for the third day. Continuous selling from FIIs, persisting inflation worries and looming fears of sharp interest rates hikes spooked investors. The Nifty hit the day's high of 16,223.35 in early trade. However, it slipped lower as the session progressed and hit the day's low of 16,006.95 in late trade. IT, PSU banks, metals, and realty stocks tumbled while private banks, insurance and financial stocks bucked the trend.

The barometer index, the S&P BSE Sensex, declined 303.35 points or 0.56% to 53,749.26. The Nifty 50 index fell 99.35 points or 0.62% to 16,025.80. The 50-unit index has shed 1.48% in three sessions.

Asian Paints (down 8.04%), TCS (down 3.69%), Larsen & Toubro (down 3.09%) and Infosys (down 2.06%) dragged the indices today.

The broader indices dropped. The S&P BSE Mid-Cap index slipped 1.93% and the S&P BSE Small-Cap index declined 2.94%.

The market breadth was weak. On the BSE, 662 shares rose and 2,671 shares fell. A total of 111 shares were unchanged.

Investors awaited the release of minutes from the last U.S. Federal Reserve meeting, due later today. The minutes will give more clues on whether the monetary tightening would continue. Investors are worried about a potential U.S. recession caused by the monetary tightening.

Numbers to Watch:

The yield on India's 10-year benchmark federal paper fell to 7.304% 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 77.55, compared with its close of 77.57 during the previous trading session.

MCX Gold futures for 3 June 2022 settlement fell 0.34% to Rs 50,982.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, increased 0.38% to 102.24.

In the commodities market, Brent crude for July 2022 settlement fell $1.47 or 1.29% at $115.03 a barrel. The contract rose 14 cents or 0.12% to settle at $113.56 a barrel during the previous trading session.

Foreign Markets:

The Dow Jones index futures were down 141 points, indicating a weak opening in the US stocks.

Shares in Europe and Asia were mixed on Wednesday. The flash purchasing managers' index (PMI) reading for the Euro Zone in May stood at 55.8, slightly ahead of estimates, as business growth across the continent slowed but remained resilient. Still, global concerns about inflation and growth are prevalent and continue to weigh on sentiment.

On the data front, German GDP grew 0.2% in the first quarter of 2022, the Federal Statistics Office said on Wednesday, as Europe's largest economy narrowly avoided a recession on the back of strong construction and machinery investments.

Meanwhile, New Zealand's central bank has announced yet another 50 basis point rate hike. The Reserve Bank of New Zealand announced Wednesday its decision to hike its official cash rate by 50 basis points to 2%.

In the US, the S&P 500 and the Nasdaq finished in the red on Tuesday as worries that aggressive moves to curb decades-high inflation might tip the US economy into recession dampened investors' risk appetite.

Investors continued to assess the global macroeconomic outlook as they await the minutes from the last U.S. Federal Reserve meeting, due on Wednesday, which could give clues on whether the monetary tightening would continue.

Economy:

The government has announced a curb on export of sugar beyond 10 million tonnes during this sugar season ending September. The decision came in the light of record exports of the sugar. The government notification said that this has been done to maintain the domestic availability and price stability during the sugar season 2021-22. Export of sugar in the current sugar season is historically the highest.

As per the new guideline, sugar mills and exporters need to take approvals in form of Export Release Orders (EROs) from Directorate of Sugar, Department of Food and Public Distribution. Sugar exports have been allowed up to 31 May 2022 without any ERO or approval. For exports between 1 June 2022 and 30 October 2022, ERO will be required. The Ministry of Consumer Affairs, Food & Public Distribution said the decision will ensure that the closing stock of sugar at the end of sugar season (30th Sept 2022) remains 60-65 lakh tonnes which is 2-3 months stocks (monthly requirement is around 24 lakh tonnes in those months) required for domestic use.

Sugar stocks tumbled after this notification. Balrampur Chini Mills (down 8.56%), Dhampur Sugar Mills (down 5%), Rana Sugars (down 5.32%), Dwarikesh Sugar Industries (down 9.38%), Uttam Sugar Mills (down 9.30%), Sakthi Sugar (down 4.31%), Avadh Sugar & Energy (down 7.79%), Shree Renuka Sugar (down 6.69%), Bajaj Hindusthan Sugar (down 4.86%), Triveni Engineering & Industries (down 7.86%) and EID-Parry (India) (down 0.57%) slumped.

Dalmia Bharat Sugar and Industries slumped 14.72%. The company recorded 7.2% increase in consolidated net profit to Rs 55.60 crore on a 75.2% rise in net sales to Rs 856 crore in Q4 March 2022 over Q4 March 2021.

Stocks in Spotlight:

Shares of four paint makes slumped on fears of intense competition after Grasim Industries announced doubling its capex plan to Rs 10,000 crore by FY2025.

Asian Paints (down 8.04%), Berger Paints India (down 7.32%), Akzo Nobel India (down 3.07%) and Indigo Paints (down 2.69%) dropped.

Grasim Industries slipped 1.95%. The company's consolidated net profit rose 61.89% to Rs 2,777.15 crore on an 18.07% rise in net sales to Rs 28,811.39 crore in Q4 March 2022 over Q4 March 2021.

Adani Ports and Special Economic Zone (APSEZ) slumped 5.77%. The company's consolidated net profit dropped to Rs 1033 crore in Q4 March 2022 from Rs 1321 crore in Q4 March 2021. Total income rose to Rs 4,418 crore from Rs 4,072 crore.

Max Healthcare Institute fell 3.30%. The Max Network gross revenue stood at Rs 1,298 crore during the fourth quarter reflecting a growth of 12% YoY. The Network Operating EBITDA stood at Rs 304 crore compared to Rs 263 crore in corresponding quarter last year (Q4 FY21) and Rs 364 crore in the previous quarter (Q3 FY22). The Operating EBITDA margin stood at 24.8% for the quarter, compared to 24.1% in the corresponding period in FY21 and 27.6% in Q3 FY22. The Operating EBITDA per bed grew by 21% YoY. Profit after tax for the quarter stood at Rs 172 crore higher than Rs 109 crore in Q4 last year and lower than Rs 252 crore in Q3 FY22.

Strides Pharma Science rose 1.19%. The drug maker's consolidated net profit declined 36.6% to Rs 29.22 crore on a 4.7% fall in net sales to Rs 866.02 crore in the fourth quarter of the financial year 2021-22 as compared with the same period last year.

Aster DM Healthcare rose 3.94%. The company's consolidated net profit jumped 114.7% to Rs 226.27 crore on a 14% rise in revenue from operations to Rs 2,727.79 crore in Q4 FY22 over Q4 FY21.

Metropolis Healthcare tumbled 6.84%. The company's consolidated net profit fell 35% to Rs 40.10 crore on 5% rise in total income to Rs 305.90 crore in Q4 March 2022 over Q4 March 2021.

RITES fell 1.80%. The company's consolidated net profit rose to Rs 142.36 crore in Q4 March 2022 from Rs 141.55 crore in Q4 March 2021. Total income rose to Rs 787.52 crore from Rs 649.55 crore.

Minda Industries jumped 6.78%. The company's board approved the issue of bonus shares to the shareholders of the company. The company will issue one bonus equity share for every one existing equity share held by the shareholders as on the 'record date'.

Minda Industries reported 2.9% rise in consolidated net profit to Rs 144.37 crore on a 7.9% increase in net sales to Rs 2,415.08 crore in Q4 FY22 over Q4 FY21.

Bayer Cropscience rallied 4.88%. The company's standalone net profit surged 146.69% to Rs 152.70 crore on 31.29% rise in net sales to Rs 963.30 crore in Q4 March 2022 over Q4 March 2021.

eClerx Services declined 5.28%. The company's consolidated net profit jumped 20.3% YoY to Rs 118.76 crore in the quarter ended on 31 March 2022. Net sales during the period under review increased by 25.1% YoY to Rs 591.67 crore.

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