The Indian equity benchmarks fell for second straight session on Monday mirroring losses in global markets after US Federal Reserve chair Jerome Powell on Friday hinted at aggressive rate hikes going ahead to control inflation. The Sensex fell as much as 840 points and Nifty 50 index below its important psychological level of 16,900 at the day’s lowest level. Reliance Industries, Infosys, Tata Consultancy Services, ITC, Tata Steel and Larsen & Toubro were among the top drags on the Sensex.
The Sensex slumped 617 points to close at 56,580 and Nifty 50 index declined 218 points to close at 16,954.
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Sentiment was also shaken on worries of high inflation negatively impacting profit margins of Indian companies after Indonesia announced ban on palm oil exports. Indonesia, which is the world's largest producer of palm oil and meets nearly 50 per cent of the total palm oil requirement in India annually, had announced to ban exports till further notice apparently to contain edible oil prices in their domestic market, analysts said.
"India is the largest importer of palm oil in the world and is dependent on Indonesia and Malaysia for its demand. Due to Ukraine War, the world cooking oil supply was already in a huge supply deficit, driving prices of palm and soy oils to record highs. This export ban and increase in Malaysian taxes will further exacerbate the problem. Palm oil and its derivatives are used in producing several goods for daily consumption such as soaps, shampoos, biscuits, and noodles. This will negatively affect FMCG companies like HUL, Nestle, Britannia, Godrej Consumer Products Ltd, Marico Ltd., etc. The high prices will leave packaged food products manufacturers, soap manufacturers, and other personal care manufacturers with no other option than to raise prices and thus affecting their volumes," said Santosh Meena, head of research at Swastika Investmart.
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Selling pressure was broad based as twelve of 15 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Realty index’s nearly 4 per cent decline. Nifty Healthcare, IT, FMCG, Realty, Media, Metal and Pharma indices also declined between 1-2.7 per cent.
On the other hand, select banking and financial services shares witnessed buying interest.
Mid- and small-cap shares also witnessed selling pressure as Nifty Midcap 100 index fell 1.9 per cent and Nifty Smallcap index dropped 2.35 per cent.
Coal India was to Nifty loser, the stock fell 6.5 per cent to close at Rs 189. Bharat Petroleum, Tata Steel, SBI Life, Hindalco, NTPC, Apollo Hospitals, Tata Motors, Tata Consumer Products, Sun Pharma and Tech Mahindra also fell between 2.5-6.5 per cent.
On the flipside, ICICI Bank advanced 1 per cent to close at Rs 755 after its net profit in March quarter jumped 59 per cent to Rs 7,018.71 crore compared with Rs 4,402 crore during the same period last year. Sharp rise in profit came on the back of lower provisioning as its provisions for contingencies fell 63 per cent to Rs 1,069 crore versus Rs 2,883 crore in the year ago period, the country's second largest private lender said in an exchange filing.
ICICI Bank's net interest income or the difference between interest earned on loans and expended on deposits rose 21 per cent to Rs 12,604.56 crore versus Rs 10,431.13 crore in the last financial year.
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Bajaj Auto, HDFC Bank, Axis Bank, HDFC and Nestle India were among the notable losers.
The overall market breadth was extremely negative as 2,494 shares ended lower while 1,037 closed higher on the BSE.
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