Inflation Continues To Dog Domestic Markets

The BSE Sensex slumped 0.68 per cent in the last two weeks to 58,840 on September 16 whereas the Nifty 50 index closed at 17,530.85 points. Meanwhile, the Small-Cap index surged by 0.49 per cent to 29,199.39 and the Mid-Cap index declined by 0.09 per cent to 25,558.21. Rating agency Fitch reduced India’s projected GDP growth for the current fiscal year from 7.8 per cent to 7 per cent earlier this week, citing a slowdown brought on by increased inflation, tighter monetary policy and global economic stress.

The S and P BSE Power index was one of the Top Gainers among all the other indices. It gained 2.12 per cent to quote at 5,250.66 points. India will need additional coal-based capacity of up to 28 GW by FY32 besides the 25 GW already under construction, according to the draft national electricity plan. A sharp rise in commodity prices seen in FY22, if sustained, can reduce players’ profitability as a result of which it affected the Realty index negatively.

The index recorded a fall of 3.42 per cent and closed at 3,622.08 points on September 16. The automotive sector witnessed a fall of 2.05 per cent and closed at a level of 29,717.73 on September 16. Automobile manufacturers are developing aggressive programmes with an emphasis on alluring discounts and fresh merchandise to turn inquiries into purchases. Also, automakers are planning to introduce new items over the season. The oil and gas sector also observed a fall of 1.13 per cent with a closing of 19,447.50 points on September 16. 

As demand declines due to recession worries, the international benchmark price of Brent crude last week dropped below USD 90 a barrel for the first time since early February. On the contrary, the metal sector rose by 0.47 per cent in the last fortnight to a level of 19,164.04. The information technology sector saw its worst fall in the last fortnight of 3.85 per cent. It last traded at a level of 27,317.10 points. The FMCG sector declined by 1.06 per cent to a level of 15,783.08. Given that overall inflation is still a worry, FMCG and packaged food companies stated that any decision regarding price reductions won’t be made until their present inventory is gone.

In 2022, equity markets around the world experienced a rollercoaster ride. Because of the uncertainty about the direction of inflation and the economy trajectory as well as the possibility of further market volatility, investors have been risk averse and have remained away.

This, according to industry observers, may take a few more months. The healthcare sector has also weakened by 0.57 per cent to trade at the 22,664.28 level. According to the government’s announced price control mechanism, the new national list of essential medicines (NLEM) could potentially reduce the Indian pharmaceutical market’s (IPM) revenue by 30 to 40 basis points (bps), according to pharmaceutical sector executives and analysts. The IPM size was around ₹1,73,872 crore for the fiscal year that concluded on August 31, 2022.

The banking index was seen gaining and emerged a topper amongst all the other sectors. It climbed 2.34 per cent during the last 15 days to close at the 46,670.26 level on September 16. Banks should put together a 25-year plan. Artificial intelligence use should take precedence right away. At the IBA AGM, Finance Minister Nirmala Sitharaman warned banks about the importance of having proper cyber protection in place. The foreign portfolio investors (FPIs) bought shares worth ₹4,215.05 crore while domestic institutional investors (DIIs) were net sellers to the tune of ₹3,288.89 crore in the Indian equity market in the past 15 days.