A three-day winning streak is stopped when the Sensex and Nifty open weak

India’s stock market is off to a shaky start on Monday, following a three-day winning streak, ahead of important inflation data

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In spite of three straight sessions of gains, Indian market benchmarks are off to a shaky start this week as investors await domestic and global inflation data that will help determine the course of monetary policy.

The Nifty index was down roughly 0.6 percent at 16,126.45, and the BSE Sensex index dropped 372.15 points to 54,109.69, both being dragged down by technology firms after leading IT services giant Tata Consultancy Services (TCS) missed forecasts for the June-quarter profit.

Shares of TCS dropped 2.3% after it significantly missed forecasts for quarterly profits due to soaring employee-related costs. The index heavyweight also caused a 2% decline in the tech index.

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“Some stock specific actions can be seen in Tata Consultancy Services and Avenue Supermarts which declared its Q1FY23 results on Friday post market hours. The IT giant posted a 16% rise in revenue while witnessing a shrink in margins on a sequential and yearly basis on the back of annual wage hike cycle and increase in attrition rate,” Mohit Nigam, Head – PMS at Hem Securities, told ANI.

The top five losers among the Nifty 50 firms were Bharti Airtel, TCS, Tech Mahindra, HCL Technologies, and Wipro, while the top five gainers were NTPC, M&M, ONGC, Eicher Motors, and Tata Consumers.

That tentative beginning signals investor hesitation and trepidation ahead of important economic data releases the following week.

According to Reuters, Asian equities opened cautiously on Monday as investors prepared for a US inflation report that might prompt another significant increase in interest rates as well as the beginning of the earnings season, which could put pressure on profits.

The market is already significantly betting on a Federal Reserve rate increase of 75 basis points this month as a result of the positive US June payrolls report, a crucial indicator of employment health.

Domestic investors will also be watching Thursday at 1730 IST when India releases its retail inflation data.

“Local stocks are likely to drift lower in morning trades Monday, as key Asian indices, especially Chinese gauges, lost considerable ground after its annual inflation climbed to 2.5 per cent in June against the market forecast of 2.4 per cent,” said Prashanth Tapse, Vice President for Research at Mehta Equities.

“However, stock specific action is likely to command investors’ attention, as the undertone of the market remains caution to bearish,” he added.

That occurs as global stock markets have lost more than $20 trillion in value since their January highs and investors prepare for further massive wealth destruction.

We’ll look at the inflation figures for more indications.

“The sharp decline in prices of commodities, particularly of crude, metals, wheat and edible oil augurs well for inflation management in India. This means, RBI can afford to go a bit slow on hiking interest rates in India. This positive trend is likely to keep the domestic equity market resilient,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told ANI.

“The market texture reflects a change in investment strategy from sell on rallies in June to buy on dips in July. Segments like capital goods, autos and high-quality financials indicate strength,” Mr Vijayakumar added.

The market was cautious last week, and Asia equities started off cautiously, despite the fact that Wall Street managed to eke out some gains.

The largest Asia-Pacific share index outside of Japan, according to MSCI, was almost unchanged. Nikkei in Japan increased 1.5% while South Korea’s stock market fell by 0.3%.