The BSE Sensex and the NSE Nifty are set to open sharply lower on Wednesday, following carnage in Asia and the U.S. markets as higher-than-expected inflation reinforced expectations for aggressive Federal Reserve rate hikes. The bearish trends on SGX Nifty also indicated a gap-down opening for the domestic bourses, with SGX Nifty futures trading 291 points, 1.6%, lower at 17,800 levels on the Singapore Stock Exchange at 7:00 AM. Investors will also keep an eye on wholesale inflation data, which will be released by the Ministry of Commerce & Industry today. The wholesale price index (WPI) eased to 13.93% July, from 15.18% in June, while it stood at a record high of 16.63 per cent in May.
On Tuesday, the Indian equity benchmarks ended higher for the fourth consecutive session, with the broader NSE Nifty closing above the crucial levels of 18,000 for the first time since April amid sustained buying by foreign investors as well as firm global cues. The BSE Sensex rose 456 points, or 0.76%, to close at a five-month high 60,571, with 24 constituents of the 30-share index ending in the green. Similarly, the broader Nifty rose 134 points, or 0.75%, to settle at 18,070 points. The top gainers on the Sensex pack were Bajaj Finserv, IndusInd Bank, Bharti Airtel, Titan, and Bajaj Finance. On the losing side, HDFC Bank, HDFC, Power Grid, L&T, ITC, Reliance, SBI, and Infosys topped the chart. Among sectors, FMCG, finance, industrials, metals, capital goods were among top performers, while energy, oil & gas and realty indices were among notable losers.
Stocks to watch
Infosys: The IT major has teamed up with Bpost (Belgium Post), a leading postal operator in Europe, to secure the cloud environment and build robust cyber resilience for Bpost’s mail delivery and logistics services.
JSW Steel: The flagship company of the JSW Group has entered into collaboration with Germany-based engineering and technology company SMS group to explore multiple cutting-edge solutions and R&D projects to reduce carbon emission in its iron and steelmaking operations in India.
Maharashtra Scooters: The board of directors of the company has declared an interim dividend of ₹100 per share of face value of ₹10, for the financial year ending March 2023. The record date for determining the eligibility of members to receive the interim dividend has been fixed as September 23.
Bharat Forge: The company’s subsidiary, Kalyani Powertrain, has announced a joint venture with commercial electric vehicle company Harbinger Motors Inc to develop electrified drivetrains for the commercial trucking industry.
KEC International: The global infrastructure EPC major has secured new orders of ₹1,108 crore across its various businesses including Railways, oil and gas pipelines, and transmission & distribution.
Bajaj Holdings & Investment: The company has announced an interim dividend of ₹110 per share of face value of ₹10 for the financial year ending March 2023. The record date for determining the eligibility of members to receive the interim dividend has been fixed as September 23.
PVR, INOX Leisure: In a major boost to multiplex chains, the Competition Commission of India (CCI) has rejected a complaint against the proposed merger of PVR and INOX Leisure, saying apprehension of likelihood of anti-competitive practices by an entity cannot be a subject of probe.
Adani Transmission: The Adani group company has incorporated a wholly-owned subsidiary, Adani Electricity Jewar, to carry on business of transmission, distribution and supply of power and other related infrastructure services.
Brightcom Group: The digital marketing company has called-off deal to acquire MediaMint for ₹566 crore and will now go for a strategic alliance with the latter.
NSE F&O ban: Indiabulls Housing Finance, Ambuja Cements, and Delta Corp will remain under the NSE F&O ban list for the second day on Wednesday as their derivative contracts have crossed 95% of the market-wide position limit.
Here are the key things investors should know before the market opens today:
Wall Street suffers biggest loss since 2020
Snapping a four-session gaining streak, all three major U.S. indices closed sharply lower on Tuesday, registering their biggest loss in two years, after data showed that inflation rose higher than expected in August, igniting fear that the Federal Reserve would continue its aggressive policy stance to combat rising costs. The U.S. inflation in August climbed to 8.3% y-o-y against expectations of 8.1% and 8.5% in July, as a decline in energy prices was offset by higher food as well as shelter costs. The market sentiment was also dented by a sharp rise in the dollar index, a measure of the greenback against a basket of currencies, which climbed 1.5% to 109.85 in its biggest one-day percentage gain since March 2020. The U.S. dollar hit a two-decade high of 110.79 last week.
“With inflation being ‘stickier’ than expected, it is highly likely that the Fed will go for another jumbo rate hike of 75 bps in its next FOMC meeting on 21st September,” says Ritika Chhabra, Economist and Quant Analyst, Prabhudas Lilladher.
Halting four-session rally, the Dow Jones Industrial Average ended 3.9% lower, the S&P 500 tumbled 4.3%, and the Nasdaq Composite plunged 5.2%. This was the biggest one-day percentage loss suffered by the indices since June 2020, during the Covid-19 pandemic.
Asian shares fall as U.S. inflation rises
Shares in the Asia-Pacific region opened sharply lower on Tuesday, led by regional heavyweight Japan and Taiwan, as higher-than-expected U.S. inflation triggered a rout in global equities. The U.S. Consumer Price Index (CPI) inflation increased by 8.3% over the year to August, from 8.5% in the previous month, paving the way for aggressive interest rates hike by the Federal Reserve. The U.S. Fed, in its meeting next week, is expected to raise interest rates again by 0.75% for the third straight month.
Taiwan’s Weighted index was the worst performer in the region with a loss of 2.5%, followed by Japan’s benchmark index Nikkei 225, which dropped 2.2%. South Korea’s Kospi plunged 1.8%, while the Straits Times in Singapore shed 1.2%.
Similarly, Australia's ASX 200 dived 2.4%, and the Hang Seng index in Hong Kong tumbled 2%.
Markets in mainland China were trading lower, with the Shanghai Composite and the Shenzhen Component falling by 0.6% and 0.9%, respectively.
FIIs remain net buyers, DIIs net sellers
Foreign institutional investors (FIIs) extended their buying streak in the Indian equity market on September 13, while domestic institutional investors (DIIs) remained net sellers. As per the exchange data, FIIs net brought shares worth ₹1,956.98 crore, while DIIs net sold stocks worth ₹1,268.43 crore.
Crude prices steady
The crude prices were steady in early trade on Wednesday as caution prevailed in the market after a rise in monthly U.S. inflation. However, concerns about global supply when a European Union oil embargo on Russian oil takes effect in early December limited losses.
In early Asian trading hours on Wednesday, the Brent oil for November delivery fell 0.36% to $93.18 per barrel, while the U.S. West Texas Intermediate (WTI) crude October futures dropped 0.05% to $87.35 a barrel.