Benchmark Indices Slump As Heavyweights Drag, Nifty Below 17,550

Indian benchmark indices kicked off the month on a weak note on Thursday and settled in deep red amid weak global cues, lower than expected first quarter GDP growth of the Indian economy and a hike in windfall profit tax on domestically produced crude oil.

At close, the 30-share Sensex slumped 770 points or 1.29 per cent to end at 58,766 while its broader peer Nifty shed 216 points or 1.22 per cent to settle at 17,542.

Except for realty, capital goods, PSU bank and auto, all other sectoral indices ended lower.

“Markets remained volatile during the week as benchmarks simply followed weak global cues and tanked over 1 per cent. The dismal manufacturing data in Europe and Asia worsened the sentiment and reignited fears of slackening global demand,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

“Markets failed to cheer the strong GST collections for August, as the hawkish Fed stance and the prospects of further rate hikes impacting growth going ahead continued to make investors nervous,” Chouhan added.

On the Nifty, Hindalco was the top loser shedding 3.88 per cent followed by Reliance Industries (2.94 per cent), ONGC (2.81 per cent), TCS (2.47 per cent), and SBI Life Insurance Company (2.45 per cent).

Investors took notice of US stocks tumbling for the fourth consecutive day. Wall Street has been volatile since Fed Chair Jerome Powell's speech last Friday where he outlined the Fed's determination to continue with rate hikes for "some time" to tame inflation. 

Asian markets too didn't have a good Thursday which affected investor sentiment. South Korea's Kospi, Japan's Nikkei and China's Shanghai Composite shed 2.28 per cent, 1.53 per cent and 0.54 respectively.

The mood in Asian markets was spoilt due to reports of one of China's biggest cities, Chengdu announcing a lockdown of its 21.2 million residents as it launched four days of citywide Covid-19 testing.

Chengdu accounts for about 1.7 per cent of China's gross domestic product and is home to technology companies and automakers such as Toyota Motor Corp and VW China.

The negative sentiment was also fuelled in Aisa by a possible risk of a conflict between China and Taiwan.

India's GDP number for the quarter ended June 30, 2022 also failed to lift investor sentiment as the growth figure of 13.5 per cent was below some estimates.

Index heavyweight Reliance Industries and shares of ONGC, Chennai Petroleum Corporation, Mangalore Refinery & Petrochemicals and Oil India fell following reports that the government revised upward windfall tax on crude oil.  In the fourth fortnightly review since July 1, the centre has increased the windfall tax on domestic crude oil to Rs 13,300 per tonne from earlier Rs 13,000 per tonne. 

It has also revised the cess on export of aviation turbine fuel (ATF) to Rs 9 per litre from Rs 2 per litre and increased additional excise duty on export of diesel has been increased from to Rs 12 per litre from Rs 6 per litre.

On the technical outlook, Chouhan said, "17,450 would be the important support level while 17,700 could be the immediate hurdle for the market. Below 17,450, the Nifty could slip till 17,350-17,300. On the flip side, a fresh uptrend is possible only after the 17, 700 range breakout. Above the same, the index could move up to 17,820-17, 850."

Overall, the market sentiment remained mixed with about 1904 shares advancing, 1446 shares declining, and 142 shares remaining unchanged.