Indian benchmarks BSE Sensex and NSE Nifty are set to fall in opening trade on Wednesday, in line with global equities as investors’ appetite for riskier assets soared amid concerns about a slowdown in the global economy. The weak trends on SGX Nifty also indicated a weak opening for the domestic bourses, with SGX Nifty futures trading 160 points, 0.94%, lower at 16,861 levels on the Singapore Stock Exchange at 7:55 AM. Last week, the United States as well as many other countries raised interest rates and vowed to hike further to combat rising inflation, which many fear would push the global economy into recession. Investors are also awaiting policy announcement by the Reserve Bank, with the Monetary Policy Committee (MPC) starting its three-day meeting today. The policy decision will be announced on Friday, while the market is expecting a 50 basis point hike in the interest rate.
Extending losses for the fifth straight session, the Indian equity benchmarks ended lower in volatile trade on Tuesday as persistent foreign fund outflows and weak cues from global peers weighed on market sentiment. The caution also prevailed in the market ahead of the RBI policy meeting, with the central bank widely expected to raise the interest rate by 50 basis points. The BSE index ended 38 points lower at 57,108, after rising nearly 560 points in early trade. Similarly, the NSE Nifty dropped 9 points to settle at 17,007. The top laggards on the Sensex pack were Tata Steel, Titan, SBI, Kotak Bank, Tech Mahindra, ICICI Bank, and HDFC twins. On the other hand, PowerGrid, IndusInd Bank, Dr. Reddy's, HCL Tech, and Nestle India were among notable gainers.
Stocks to watch
Reliance Industries: The conglomerate’s retail arm, Reliance Retail, has announced the launch of its fashion and lifestyle departmental store format, Reliance Centro. “Reliance Centro’s core offerings are curated to make it a one-stop fashion destination for the fashion conscious mid-premium segment customer,” the company said in its release.
Torrent Pharmaceuticals: The homegrown pharma company has entered into definitive agreements to acquire 100% of Curatio Healthcare (Curatio) for ₹2,000 crore. The transaction includes ₹115 crore (on the date of signing) of cash and cash equivalents in the acquired business indicating an enterprise value of ₹1,885 crore. The deal is subject to conditions precedent and is expected to close within one month.
Jet Airways: The airline, which is set to resume operations soon, is reportedly in talks with aircraft makers and lessors to lease planes. In May this year, the Jalan-Kalrock consortium-led operator had received clearance from aviation regulator DGCA to return to the sky.
Bharat Heavy Electrical: The state-owned company has secured an order for setting up the 2x660 MW Talcher thermal power project Stage-III on EPC (engineering, procurement and construction) basis from NTPC.
Bharat Petroleum Corporation Ltd (BPCL): LIC has acquired over a 2% stake in the state-owned oil marketing company for nearly ₹1,598 crore since December last year. With this, the insurance major’s stake in the oil retailer increased from 7.03% to 9.04%.
Power Grid Corporation of India: The company has received its board approval for the appointment of G Ravisankar, Director (Finance) as Chief Financial Officer (CFO).
Mahindra CIE Automotive: Mahindra & Mahindra has sold a 2.17% stake in associate company Mahindra CIE Automotive through a bulk deal at a gross price of ₹285 apiece.
NSE F&O ban: Vodafone Idea and Zee Entertainment Enterprises will be under the NSE F&O ban today.
Here are the key things investors should know before the market opens today:
Wall Street extends losing streak
In the overnight trade, the U.S. indices ended mostly lower in choppy trade as investors remain concerned about a potential global recession following hawkish comments from the Federal Reserve officials. The market weighed Federal Reserve Bank of St. Louis President James Bullard’s comment that the central bank needs to further raise the interest rate to combat inflation. In a separate event, Chicago Fed President Charles Evans stated the Fed needs to hike rates by at least another percentage point this year to quash boiling inflation. Last week, the central bank increased the interest rate by 0.75% for its third straight month, taking the policy rate to 3-3.25%, and vowed to raise further to curb inflation. The Dow Jones Industrial Average ended 0.4% lower, the S&P 500 shed 0.2%, while the Nasdaq Composite rose 0.3%.
Asian shares fall
Shares in the Asia-Pacific region opened mostly lower on Wednesday, tracking weak cues from the U.S. market as the Federal Reserve is likely to raise the interest rate by another 75 bps in its next meeting in November. Investors fear that the Fed's aggressive approach to cool U.S. inflation may push the world’s largest economy into a recession as a higher rate would impact consumer spending.
South Korea’s Kospi was the biggest loser in the regional market with a 2.3% loss, followed by Japan’s benchmark index Nikkei 225, which dropped 2.2%. The Hang Seng index in Hong Kong was down 1.8%, Taiwan’s Weighted index shed 1.5%, and Australia’s ASX 200 index lost 0.85%.
Similarly, the Straits Times in Singapore dipped 0.85%, and Indonesia’s Jakarta Composite fell 0.2% in opening trade.
Markets in mainland China were also reeling under stress, with the Shanghai Composite and the Shenzhen Component falling by 0.65% and 1.4%, respectively.
DIIs turn net buyers, FIIS net sellers
Foreign institutional investors (FIIs) turned into net sellers in the Indian equity market on September 27, while domestic institutional investors (DIIs) remained net buyers. As per the exchange data, FIIs net sold shares worth ₹2,823.96 crore, while DIIs net brought stocks worth ₹3,504.76 crore.
Crude prices fall nearly 2%
The crude prices fell sharply in early trade on Wednesday amid concerns about demand outlook in the wake of the global economic slowdown. In the overnight trade, oil rallied amid expectations that OPEC+ will take more action to cut production in the coming meeting, while supply curbs in the U.S. Gulf of Mexico ahead of Hurricane Ian also pushed prices higher.
At the time of reporting, the Brent oil for December delivery was down 1.76% to $83.38 per barrel, while the U.S. West Texas Intermediate (WTI) crude November futures dropped 1.67% to $77.20 a barrel.